EXHIBIT 10.4.1
THIS WARRANT AND THECOMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE
SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD,ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS
OF THE COMPANY SET FORTH IN A STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY
AND BWY HOLDINGS LLC, A DELAWARE CORPORATION DATED AS OF THE SUBSCRIPTION
DATE. A COPY OF THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES.
Right to Purchase Up to 2,300,000 Shares of Common
Stock of Borough Corporation (subject to adjustment
as provided herein)
COMMON STOCK PURCHASE WARRANT
W-BWY1
Issue Date: May 31, 2002
BOROUGH CORPORATION, a corporation organized under the
laws of the State of Delaware (the "Company"), hereby certifies that, for
value received, BWY Holdings LLC, a Delaware limited liability
corporation, or assigns, is entitled, subject to the terms set forth below,
to purchase from the Company up to 2,300,000 fully paid and nonassessable
shares of Common Stock (as hereinafter defined), of the Company, at a
per share purchase price of $1.09 (such purchase price per share as
adjusted from time to time as herein provided is referred to herein as the
"Purchase Price") , at such time as the shares of common stock underlying
the Warrants shall be registered with the Securities and Exchange Common
and continuing for a period of Twelve (12) Months thereafter (the
"Expiration Date"). The number and character of such shares of Common
Stock and the Purchase Price are subject to adjustment as provided herein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Common Stock" includes (a) the Company's
Common Stock, (b) any other capital stock of any class or classes
(however designated) of the Company, authorized on or after such date,
the holders of which shall have the right, without limitation, as to amount,
either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on
any shares entitled to preference, and the holders of which shall ordinarily,
in the absence of contingencies, be entitled to vote for the election of a
majority of directors of the Company (even if the right so to vote has been
suspended by the happening of such a contingency) and (c) any other
securities into which or for which any of the securities described in (a) or
(b) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holder of the Warrant at any time shall
be entitled to receive, or shall have received, on the exercise of the
Warrant, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement
of Common Stock or Other Securities pursuant to Section 4 or otherwise.
1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From
and after the date hereof through and including the Expiration Date, the
holder hereof shall be entitled to receive, upon exercise of this Warrant in
whole in accordance with the terms of subsection 1.2 or upon exercise of
this Warrant in part in accordance with subsection 1.3, shares of Common
Stock of the Company, subject to adjustment pursuant to Section 4.
1.2. Full Exercise. This Warrant may be exercised in full
by the holder hereof by delivery of an original or fax copy of the form of
subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such holder, and surrender of the original Warrant within
seven (7) days of exercise to the Company at its principal office or at the
office of its Warrant agent (as provided hereinafter), accompanied by
payment, in cash or by certified or official bank check payable to the order
of the Company, in the amount obtained by multiplying the number of
shares of Common Stock for which this Warrant is then exercisable by the
Purchase Price (as hereinafter defined) then in effect.
1.3. Partial Exercise. This Warrant may be exercised in
part (but not for a fractional share) by surrender of this Warrant in the
manner and at the place provided in subsection 1.2 except that the amount
payable by the holder on such partial exercise shall be the amount obtained
by multiplying (a) the number of shares of Common Stock designated by
the holder in the Subscription Form by (b) the Purchase Price then in effect.
On any such partial exercise, the Company, at its expense, will forthwith
issue and deliver to or upon the order of the holder hereof a new Warrant
of like tenor, in the name of the holder hereof or as such holder (upon
payment by such holder of any applicable transfer taxes) may request, the
number of shares of Common Stock for which such Warrant may still be
exercised.
1.4. Fair Market Value. Fair Market Value of a share of
Common Stock as of a particular date (the "Determination Date") for each
share of Common Stock as of a Determination Date shall mean:
(a) If the Company's Common Stock is traded
on an exchange or is quoted on the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") National Market System
or the NASDAQ SmallCap Market, then the closing or last sale price,
respectively, reported for the last business day immediately preceding the
Determination Date.
(b) If the Company's Common Stock is not
traded on an exchange or on the NASDAQ National Market System or the
NASDAQ SmallCap Market but is traded on the over-the-counter market
or on the "pink sheets" or, then the mean of the closing bid and asked
prices reported for the last business day immediately preceding the
Determination Date.
(c) Except as provided in clause (d) below, if the
Company's Common Stock is not publicly traded, then as the Holder and
the Company agree or in the absence of agreement by arbitration in
accordance with the rules then standing of the American Arbitration
Association, before a single arbitrator to be chosen from a panel of persons
qualified by education and training to pass on the matter to be decided.
(d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a
liquidation, dissolution or winding up pursuant to the Company's charter,
then all amounts to be payable per share to holders of the Common Stock
pursuant to the charter in the event of such liquidation, dissolution or
winding up, plus all other amounts to be payable per share in respect of the
Common Stock in liquidation under the charter, assuming for the purposes
of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of all of the Warrants are outstanding at the Determination
Date.
1.5. Company Acknowledgment. The Company will, at
the time of the exercise of the Warrant, upon the request of the holder
hereof acknowledge in writing its continuing obligation to afford to such
holder any rights to which such holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the
holder shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such
rights.
1.6. Trustee for Warrant Holders. In the event that a
bank or trust company shall have been appointed as trustee for the holders
of the Warrants pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the
Company or such successor person as may be entitled thereto, all amounts
otherwise payable to the Company or such successor, as the case may be,
on exercise of this Warrant pursuant to this Section 1.
2.1 Delivery of Stock Certificates, etc. on Exercise. The
Company agrees that the shares of Common Stock purchased upon
exercise of this Warrant shall be 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 this Warrant shall have been surrendered and payment made for
such shares as aforesaid. As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within seven (7) days thereafter,
the Company, at its expense, (including the payment by it of any applicable
issue taxes), will cause to be issued in the name of and delivered to the
holder hereof, or as such holder (upon payment by such holder of any
applicable transfer taxes) may direct in compliance with applicable
Securities Laws, a certificate or certificates for the number of duly and
validly issued, fully paid and nonassessable shares of Common Stock (or
Other Securities) to which such holder shall be entitled on such exercise,
plus, in lieu of any fractional share to which such holder would otherwise
be entitled, cash equal to such fraction multiplied by the then Fair Market
Value of one full share, together with any other stock or other securities
and property (including cash, where applicable) to which such holder is
entitled upon such exercise pursuant to Section 1 or otherwise.
2.2. LEFT INTENTIONALLY BLANK
3. Adjustment for Reorganization, Consolidation, Merger, etc.
3.1. Reorganization, Consolidation, Merger, etc. In case
at any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person, or (c)
transfer all or substantially all of its properties or assets to any other
person under any plan or arrangement contemplating the dissolution of the
Company, then, in each such case, as a condition to the consummation of
such a transaction, proper and adequate provision shall be made by the
Company whereby the holder of this Warrant, on the exercise hereof as
provided in Section 1 at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock
(or Other Securities) issuable on such exercise prior to such consummation
or such effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be,
if such holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.
3.2. Dissolution. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties
or assets, the Company, prior to such dissolution, shall at its expense deliver
or cause to be delivered the stock and other securities and property
(including cash, where applicable) receivable by the holders of the Warrants
after the effective date of such dissolution pursuant to this Section 3 to a
bank or trust company having its principal office in Florida, NY, as trustee
for the holder or holders of the Warrants.
3.3. Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any
transfer) referred to in this Section 3, this Warrant shall continue in full
force and effect and the terms hereof shall be applicable to the shares of
stock and other securities and property receivable on the exercise of this
Warrant after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as
the case may be, and shall be binding upon the issuer of any such stock or
other securities, including, in the case of any such transfer, the person
acquiring all or substantially all of the properties or assets of the Company,
whether or not such person shall have expressly assumed the terms of this
Warrant as provided in Section 4. In the event this Warrant does not
continue in full force and effect after the consummation of the transaction
described in this Section 3, then only in such event will the Company's
securities and property (including cash, where applicable) receivable by the
holders of the Warrants be delivered to the Trustee as contemplated by
Section 3.2.
4. Extraordinary Events Regarding Common Stock. In the
event that the Company shall (a) issue additional shares of the Common
Stock as a dividend or other distribution on outstanding Common Stock,
(b) subdivide its outstanding shares of Common Stock, or (c) combine its
outstanding shares of the Common Stock into a smaller number of shares
of the Common Stock, then, in each such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by
multiplying the then Purchase Price by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect.
The Purchase Price, as so adjusted, shall be readjusted in the same manner
upon the happening of any successive event or events described herein in
this Section 4. The number of shares of Common Stock that the holder of
this Warrant shall thereafter, on the exercise hereof as provided in Section
1, be entitled to receive shall be increased to a number determined by
multiplying the number of shares of Common Stock that would otherwise
(but for the provisions of this Section 4) be issuable on such exercise by a
fraction of which (a) the numerator is the Purchase Price that would
otherwise (but for the provisions of this Section 4) be in effect, and (b) the
denominator is the Purchase Price in effect on the date of such exercise.
5. Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of the Warrants, the Company at its
expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with
the terms of the Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional
shares of Common Stock (or Other Securities) issued or sold or deemed to
have been issued or sold, (b) the number of shares of Common Stock (or
Other Securities) outstanding or deemed to be outstanding, and (c) the
Purchase Price and the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such
adjustment or readjustment and as adjusted or readjusted as provided in
this Warrant. The Company will forthwith mail a copy of each such
certificate to the holder of the Warrant and any Warrant agent of the
Company (appointed pursuant to Section 11 hereof).
6. Reservation of Stock, etc. Issuable on Exercise of Warrant;
Financial Statements. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of the Warrants,
all shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant. This Warrant entitles the holder
hereof to receive copies of all financial and other information distributed or
required to be distributed to the holders of the Company's Common Stock.
7. Assignment; Exchange of Warrant. Subject to compliance
with applicable Securities laws, this Warrant, and the rights evidenced
hereby, may be transferred by any registered holder hereof (a "Transferor")
with respect to any or all of the Shares. On the surrender for exchange of
this Warrant, with the Transferor's endorsement in the form of Exhibit B
attached hereto (the "Transferor Endorsement Form") and together with
evidence reasonably satisfactory to the Company demonstrating
compliance with applicable securities laws, the Company at its expense (but
with payment by the Transferor of any applicable transfer taxes) will issue
and deliver to or on the order of the Transferor thereof a new Warrant or
Warrants of like tenor, in the name of the Transferor and/or the
transferee(s) specified in such Transferor Endorsement Form (each a
"Transferee"), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the
Warrant so surrendered by the Transferor.
8. Replacement of Warrant. On 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 of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company, at
its expense, will execute and deliver, in lieu thereof, a new Warrant of like
tenor.
9. Registration Rights. This Warrant is issued pursuant to a
Stock Purchase Agreement and Registration Rights Agreement dated at or
about June 3, 2002. The terms of the Stock Purchase Agreement are
incorporated herein by this reference.
10. INTENTIONALLY LEFT BLANK.
11. Warrant Agent. The Company may, by written notice to the
each holder of the Warrant, appoint an agent for the purpose of issuing
Common Stock (or Other Securities) on the exercise of this Warrant
pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and
replacing this Warrant pursuant to Section 8, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be,
shall be made at such office by such agent.
12. Transfer on the Company's Books. Until this Warrant is
transferred on the books of the Company, the Company may treat the
registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
13. Notices, etc. All notices and other communications from
the Company to the holder of this Warrant shall be mailed by first class
registered or certified mail, postage prepaid, at such address as may have
been furnished to the Company in writing by such holder or, until any such
holder furnishes to the Company an address, then to, and at the address of,
the last holder of this Warrant who has so furnished an address to the
Company.
14. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. This Warrant shall be construed and
enforced in accordance with and governed by the laws of Delaware. Any
dispute relating to this Warrant shall be adjudicated in Florida State. The
headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity
or enforceability of any other provision.
IN WITNESS WHEREOF, the Company has executed this
Warrant under seal as of the date first written above.
BOROUGH CORPORATION
By:___________________________
Xxxxx X. Xxxxxxx, Xx.
Witness:
______________________________
Exhibit A
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: ___________________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase (check
applicable box):
___ ________ shares of the Common Stock covered by such Warrant;
or
The undersigned herewith makes payment of the full purchase price for
such shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or
boxes):
____ $__________ in lawful money of the United States; and/or
___ the cancellation of such portion of the attached Warrant as is
exercisable for a total of _______ shares of Common Stock (using a Fair
Market Value of $_______ per share for purposes of this calculation).
The undersigned requests that the certificates for such shares be issued in
the name of, and delivered to ____________________ whose address
is ________________________________________________
____________________________________ .
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Common Stock under the
Securities Act of 1933, as amended (the "Securities Act") or pursuant to an
exemption from registration under the Securities Act.
Dated:___________________
_____________________________________________
(Signature must conform to
name of holder as specified
on the face of the Warrant)
____________________
_________________
(Address)
Exhibit B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns,
and transfers unto the person(s) named below under the heading
"Transferees" the right represented by the within Warrant to purchase the
percentage and number of shares of Common Stock of __________________ to
which the within Warrant relates specified under the headings "Percentage
Transferred" and "Number Transferred," respectively, opposite the name(s)
of such person(s) and appoints each such person Attorney to transfer its
respective right on the books of ___________________ with full power of
substitution in the premises.
Transferees
Percentage
Transferred
Number
Transferred
Dated: , __ ___
_______________________________
(Signature must conform to
name of holder as specified
on the face of the warrant)
Signed in the presence of:
_______________________________
______________________________
(Name) (address)
________________________
ACCEPTED AND AGREED: (address)
[TRANSFEREE]
_________________________________
(Name)
