EXHIBIT 10.22
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
WARRANT TO PURCHASE COMMON STOCK
OF
ARIEL WAY, INC.
Issued on May 28, 2005 ("ISSUE DATE")
Void after May 29, 2010 ("EXPIRATION DATE")
This certifies that in consideration of the execution of that certain
initial warrant agreement (the "WARRANT AGREEMENT"), dated as of May 28, 2005,
as amended, by and between Ariel Way, Inc., a Florida corporation (the
"COMPANY"), with principal offices at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxx, XX 00000, and Oberon Securities, LLC, a Delaware company, with principal
offices at 00 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000 ("OBERON") is
entitled, subject to the terms and conditions of this Warrant, to purchase from
the Company at any time during the Exercise Period (as defined below), up to One
Million (1,000,000) shares (the "NUMBER OF SHARES") of Warrant Stock (as defined
below) at a price per share equal to the Warrant Price (as defined below), upon
surrender of this Warrant at the principal offices of the Company, together with
a duly executed subscription form in the form attached hereto as Exhibit 1 and
simultaneous payment of the full Warrant Price for the shares of Warrant Stock
so purchased in lawful money of the United States or cancellation of
indebtedness of the Company to the Warrant Holder of the same equal amount, at
the option of Oberon. The Warrant Price and the number and character of shares
of Warrant Stock purchasable under this Warrant are subject to adjustment as
provided herein. The shares underlying the warrants shall entitle the Warrant
Holder to one-time "piggyback" registration rights.
1. DEFINITIONS. The following definitions shall apply for purposes of
this Warrant:
1.1 "COMPANY" means the "COMPANY" as defined above and includes
any corporation which shall succeed to or assume the obligations of the Company
under this Warrant.
1.2 "EXERCISE PERIOD" means the period (A) commencing on the Issue
Date and (B) ending at 5:00 p.m. Eastern Standard Time on the Expiration Date
(as defined on the first page of this Warrant, and as subject to adjustment as
provided herein).
1.3 "SEC" means the U.S. Securities and Exchange Commission.
1.4 "WARRANT" means this Warrant and any warrant(s) delivered in
substitution or exchange therefor, as provided herein.
1.5 "WARRANT HOLDER" means any person who shall at the time be the
registered holder of this Warrant.
1.6 "WARRANT PRICE" means $0.06 per share. The Warrant Price is
subject to adjustment as provided herein.
1.7 "WARRANT STOCK" means the Common Stock of the Company, $0.001
par value per share. The number and character of shares of Warrant Stock are
subject to adjustment as provided herein and the term "WARRANT STOCK" shall
include stock and other securities and property at any time receivable or
issuable upon exercise of this Warrant in accordance with its terms.
2. EXERCISE.
2.1 METHOD OF EXERCISE. Subject to the terms and conditions of
this Warrant, the Warrant Holder may exercise this Warrant in whole or in part,
at any time or from time to time, on any business day during the Exercise
Period, for up to that number of shares of Warrant Stock that has vested
pursuant to Section 2.2 below by surrendering this Warrant at the principal
offices of the Company, with the subscription form attached hereto duly executed
by the Warrant Holder, and payment of an amount equal to the product obtained by
multiplying (i) the number of shares of Warrant Stock to be purchased by the
Warrant Holder by (ii) the Warrant Price or adjusted Warrant Price therefor, if
applicable, as determined in accordance with the terms hereof or cancellation of
indebtedness of the Company to the Warrant Holder of the same equal amount at
the option of the Warrant Holder. The Warrant Holder shall also have a
"cash-less" exercise option such that exercising certain number of shares of
Warrant Stock and the sales proceeds from the sale of such shares shall provide
for the payment to the Company of an amount equal to the total warrant purchase
price as defined above.
2.2 VESTING AND EXERCISABILITY OF WARRANT. This Warrant shall be
fully vested and immediately exercisable as to One Million (1,000,000) shares of
Warrant Stock as of the date hereof.
2.3 FORM OF PAYMENT. Payment may be made by (i) a check payable to
the Company's order, (ii) wire transfer of funds to the Company, (iii)
cancellation of indebtedness of the Company to the Warrant Holder, or (iv) any
combination of the foregoing.
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2.4 PARTIAL EXERCISE. Upon a partial exercise of this Warrant,
this Warrant shall be surrendered by the Warrant Holder and replaced with a new
Warrant of like tenor in which the Number of Shares shall be reduced by the
number of shares of Warrant Stock purchased upon such exercise.
2.5 NO FRACTIONAL SHARES. No fractional shares may be issued upon
any exercise of this Warrant, and any fractions shall be rounded down to the
nearest whole number of shares. If upon any exercise of this Warrant a fraction
of a share results, the Company will pay the cash value of any such fractional
share, calculated on the basis of the Warrant Price.
2.6 RESTRICTIONS ON EXERCISE. This Warrant may not be exercised if
the issuance of the Warrant Stock upon such exercise would constitute a
violation of any applicable federal or state securities laws or other laws or
regulations. As a condition to the exercise of this Warrant, the Warrant Holder
shall execute the subscription form attached hereto as Exhibit 1, confirming and
acknowledging that the representations and warranties of the Warrant Holder set
forth in Section 5 are true and correct as of the date of exercise.
3. ISSUANCE OF STOCK. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
shares of Warrant Stock issuable upon such exercise shall be treated for all
purposes as the holder of record of such shares as of the close of business on
such date. As soon as practicable on or after such date, the Company shall issue
and deliver to the person or persons entitled to receive the same a certificate
or certificates for the number of whole shares of Warrant Stock issuable upon
such exercise.
4. ADJUSTMENT PROVISIONS. The number and character of shares of Warrant
Stock issuable upon exercise of this Warrant (or any shares of stock or other
securities or property at the time receivable or issuable upon exercise of this
Warrant) and the Warrant Price therefor, are subject to adjustment upon the
occurrence of the following events between the date this Warrant is issued and
the date it is exercised:
4.1 ADJUSTMENT FOR STOCK SPLITS AND STOCK DIVIDENDS. The Warrant
Price of this Warrant and the Number of Shares of Warrant Stock issuable upon
exercise of this Warrant (or any shares of stock or other securities at the time
issuable upon exercise of this Warrant) shall each be proportionally adjusted to
reflect any stock dividend, stock split or reverse stock split, or other similar
event affecting the number of outstanding shares of Warrant Stock (or such other
stock or securities).
4.2 ADJUSTMENT FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In case the
Company shall make or issue, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other distribution payable
respect to the Warrant Stock that is payable in (a) securities of the Company
(other than issuances with respect to which adjustment is made under Sections
4.1 or 4.3) or (b) assets (other than cash dividends paid or payable solely out
of retained earnings), then, and in each such case, the Warrant Holder, upon
exercise of this Warrant at any time after the consummation, effective date or
record date of such event, shall receive, in addition to the shares of Warrant
Stock issuable upon such exercise prior to such date, the securities or such
other assets of the Company to which the Warrant Holder would have been entitled
upon such date if the Warrant Holder had exercised this Warrant immediately
prior thereto (all subject to further adjustment as provided in this Warrant).
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4.3 ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER. In case
of any recapitalization or reorganization of the Company after the date of this
Warrant, or in case, after such date, the Company shall consolidate with or
merge into another corporation, then, and in each such case, the Warrant Holder,
upon the exercise of this Warrant (as provided in Section 2), at any time after
the consummation of such recapitalization, reorganization, consolidation or
merger, shall be entitled to receive, in lieu of the stock or other securities
and property receivable upon the exercise of this Warrant prior to such
consummation, the stock or other securities or property to which the Warrant
Holder would have been entitled upon the consummation of such recapitalization,
reorganization, consolidation or merger if the Warrant Holder had exercised this
Warrant immediately prior thereto, all subject to further adjustment as provided
in this Warrant, and the successor or purchasing corporation in such
reorganization, consolidation or merger (if other than the Company) shall duly
execute and deliver to the Warrant Holder a supplement hereto acknowledging such
corporation's obligations under this Warrant; and in each such case, the terms
of this Warrant shall be applicable to the shares of stock or other securities
or property receivable upon the exercise of this Warrant after the consummation
of such reorganization, consolidation or merger.
4.4 CONVERSION OF STOCK. In case all the authorized Common Stock
of the Company is converted, pursuant to the Company's Certificate of
Incorporation, into other securities or property, or the Common Stock otherwise
ceases to exist, then, in such case, the Warrant Holder, upon exercise of this
Warrant at any time after the date on which the Common Stock is so converted or
ceases to exist (the "TERMINATION DATE"), shall receive, in lieu of the number
of shares of Common Stock that would have been issuable upon such exercise
immediately prior to the Termination Date (the "FORMER NUMBER OF SHARES OF
WARRANT STOCK"), the stock and other securities and property which the Warrant
Holder would have been entitled to receive upon the Termination Date if the
Warrant Holder had exercised this Warrant with respect to the Former Number of
Shares of Warrant Stock immediately prior to the Termination Date (all subject
to further adjustment as provided in this Warrant).
4.5 NOTICE OF ADJUSTMENTS. The Company shall promptly give written
notice of each adjustment or readjustment of the Warrant Price or the number of
shares of Warrant Stock or other securities issuable upon exercise of this
Warrant. The notice shall describe the adjustment or readjustment and show in
reasonable detail the facts on which the adjustment or readjustment is based.
4.6 NO CHANGE NECESSARY. The form of this Warrant need not be
changed because of any adjustment in the Warrant Price or in the number of
shares of Warrant Stock issuable upon its exercise.
4.7 RESERVATION OF STOCK. If at any time the number of shares of
Warrant Stock or other securities issuable upon exercise of this Warrant shall
not be sufficient to effect the exercise of this Warrant, the Company will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Warrant Stock or other securities
issuable upon exercise of this Warrant as shall be sufficient for such purpose.
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5. REPRESENTATIONS AND WARRANTIES OF WARRANT HOLDER. Warrant Holder
represents and warrants to the Company as follows:
5.1 PURCHASE FOR OWN ACCOUNT FOR INVESTMENT. Warrant Holder is
purchasing the Warrant Stock for Warrant Holder's own account for investment
purposes only and not with a view to, or for sale in connection with, a
distribution of the Warrant Stock within the meaning of the Securities Act of
1933, as amended (the "1933 ACT"). Warrant Holder has no present intention of
selling or otherwise disposing of all or any portion of the Warrant Stock and no
one other than Warrant Holder has any beneficial ownership of any of the Warrant
Stock.
5.2 ACCESS TO INFORMATION. Warrant Holder has had access to all
information regarding the Company and its present and prospective business,
assets, liabilities and financial condition that Warrant Holder reasonably
considers important in making the decision to purchase the Warrant Stock, and
Warrant Holder has had ample opportunity to ask questions of the Company's
representatives concerning such matters and this investment.
5.3 UNDERSTANDING OF RISKS. Warrant Holder is fully aware of: (a)
the highly speculative nature of the investment in the Warrant Stock; (b) the
financial hazards involved; (c) the lack of liquidity of the Warrant Stock and
the restrictions on transferability of the Warrant Stock (e.g., that Warrant
Holder may not be able to sell or dispose of the Warrant Stock or use them as
collateral for loans); (d) the qualifications and backgrounds of the management
of the Company; and (e) the tax consequences of investment in the Warrant Stock.
5.4 WARRANT HOLDER'S QUALIFICATIONS. Warrant Holder has a
preexisting personal or business relationship with the Company and/or certain of
its officers and/or directors of a nature and duration sufficient to make
Warrant Holder aware of the character, business acumen and general business and
financial circumstances of the Company and/or such officers and directors. By
reason of Warrant Holder's business or financial experience, Warrant Holder is
capable of evaluating the merits and risks of this investment, has the ability
to protect Warrant Holder's own interests in this transaction and is financially
capable of bearing a total loss of this investment.
5.5 NO GENERAL SOLICITATION. At no time was Warrant Holder
presented with or solicited by any publicly issued or circulated newspaper,
mail, radio, television or other form of general advertising or solicitation in
connection with the offer, sale and purchase of the Warrant Stock.
5.6 COMPLIANCE WITH SECURITIES LAWS. Warrant Holder understands
and acknowledges that, in reliance upon the representations and warranties made
by Warrant Holder herein, the Warrant Stock are not being registered with the
SEC under the 1933 Act, but instead are being issued under an exemption or
exemptions from the registration and qualification requirements of the 1933 Act
which impose certain restrictions on Warrant Holder's ability to transfer the
Warrant Stock.
5.7 RESTRICTIONS ON TRANSFER. Warrant Holder understands that
Warrant Holder may not transfer any Warrant Stock unless such Warrant Stock is
registered under the 1933 Act or other applicable state securities laws or
unless, in the opinion of counsel to the Company, exemptions from such
registration and qualification requirements are available. Warrant Holder
understands that only the Company may file a registration statement with the
SEC. Warrant Holder has also been advised that exemptions from registration and
qualification may not be available or may not permit Warrant Holder to transfer
all or any of the Warrant Stock in the amounts or at the times proposed by
Warrant Holder.
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5.8 LEGENDS. It is understood that the certificates evidencing the
Warrant Stock and the Common Stock issuable upon exercise thereof, will bear the
legend set forth below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY
REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN
COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
6. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. This Warrant does not by
itself entitle the Warrant Holder to any voting rights or other rights as a
shareholder of the Company. In the absence of affirmative action by the Warrant
Holder to purchase Warrant Stock by exercise of this Warrant, no provisions of
this Warrant, and no enumeration herein of the rights or privileges of the
Warrant Holder, shall cause the Warrant Holder to be a shareholder of the
Company for any purpose.
7. NO IMPAIRMENT. The Company will not, by amendment of its Certificate
of Incorporation or Bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, willfully avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder against
wrongful impairment. Without limiting the generality of the foregoing, the
Company will take all such action as may be necessary or appropriate in order
that the Company may duly and validly issue fully paid and nonassessable shares
of Warrant Stock upon the exercise of this Warrant.
8. ATTORNEYS' FEES. In the event any party is required to engage the
services of any attorneys for the purpose of enforcing this Warrant, or any
provision thereof, the prevailing party shall be entitled to recover its
reasonable expenses and costs in enforcing this Warrant, including attorneys'
fees.
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9. TRANSFER. Neither this Warrant nor any rights hereunder may be
assigned, conveyed or transferred, in whole or in part, without the Company's
prior written consent, which the Company may withhold in its sole discretion.
The rights and obligations of the Company and the Warrant Holder under this
Warrant shall be binding upon and benefit their respective permitted successors,
assigns, heirs, administrators and transferees.
10. GOVERNING LAW. This Warrant shall be governed by and construed under
the internal laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware,
without reference to principles of conflict of laws or choice of laws.
11. HEADINGS. The headings and captions used in this Warrant are used
only for convenience and are not to be considered in construing or interpreting
this Warrant. All references in this Warrant to sections and exhibits shall,
unless otherwise provided, refer to sections hereof and exhibits attached
hereto, all of which exhibits are incorporated herein by this reference.
12. NOTICES. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given (i) at the time of personal delivery, if delivery is in person; (ii) one
(1) business day after deposit with an express overnight courier for United
States deliveries, or two (2) business days after such deposit for deliveries
outside of the United States, with proof of delivery from the courier requested;
or (iii) three (3) business days after deposit in the United States mail by
certified mail (return receipt requested) for United States deliveries when
addressed to the party to be notified at the address indicated for such party in
the first paragraph of this Warrant or, in the case of the Company, at 0000
Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, XX 00000, or at such other address as
any party or the Company may designate by giving ten (10) days' advance written
notice to all other parties.
13. AMENDMENT; WAIVER. Any term of this Warrant may be amended, and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Warrant Holder. Any amendment or waiver
effected in accordance with this Section shall be binding upon the Warrant
Holder, each future holder of such securities, and the Company.
14. SEVERABILITY. If one or more provisions of this Warrant are held to
be unenforceable under applicable law, such provision(s) shall be excluded from
this Warrant and the balance of the Warrant shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
15. TERMS BINDING. By acceptance of this Warrant, the Warrant Holder
accepts and agrees to be bound by all the terms and conditions of this Warrant.
16. COUNTERPARTS. This Warrant may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, and all of which together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the date first above written.
THE COMPANY:
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ARIEL WAY, INC.
By:
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Name: Xxxx Xxxxxx
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Title: President and CEO
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AGREED AND ACKNOWLEDGED
THE HOLDER:
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OBERON SECURITIES, LLC
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EXHIBIT 1
FORM OF SUBSCRIPTION
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
To: Ariel Way, Inc.
(1) The undersigned Warrant Holder hereby elects to purchase shares of
Common Stock of Ariel Way, Inc. (the "WARRANT STOCK"), pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price for
such shares in full or accepts cancellation of indebtedness of the Company to
the Warrant Holder of the same equal amount.
(2) In exercising the Warrant, the undersigned Warrant Holder hereby
confirms and acknowledges that the representations and warranties set forth in
Section __ of the Warrant as they apply to the undersigned Warrant Holder
continue to be true and correct as of this date.
(3) Please issue a certificate or certificates representing such shares of
Warrant Stock in the name specified below:
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(Name)
-----------------------------------
(Address)
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(City, State, Zip Code)
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(Federal Tax Identification Number)
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(Date)
