EXHIBIT 4.1
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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SEMOTUS SOLUTIONS, INC.
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by SEMOTUS SOLUTIONS,
INC., a Nevada corporation (the "Company"), Southshore Capital Fund Ltd. or
registered assigns (the "Holder") is hereby granted the right to purchase
beginning November 16, 2006 ("Grant Date") until 5:00 P.M., New York City time,
on May 16, 2011 (the "Expiration Date"), four hundred twenty one thousand five
hundred (421,500) fully paid and nonassessable shares of the Company's Common
Stock, $0.01 par value per share (the "Common Stock"), at an exercise price per
share (the "Exercise Price") of $0.30 per share, subject to further adjustment
as set forth herein.
2. Exercise of Warrants.
(a) This Warrant is exercisable in whole or in part at any time
beginning six months after the Grant Date. Such exercise shall be effectuated by
submitting to the Company (either by delivery to the Company or by facsimile
transmission as provided in Section 8 hereof) a completed and duly executed
Notice of Exercise (substantially in the form attached to this Warrant) as
provided in this paragraph. The date such Notice of Exercise is faxed to the
Company shall be the "Exercise Date", provided that the Holder of this Warrant
tenders this Warrant Certificate and appropriate payment of the aggregate
Exercise Price to the Company within five (5) business days thereafter. The
Notice of Exercise shall be executed by the Holder of this Warrant and shall
indicate the number of shares then being purchased pursuant to such exercise.
Upon surrender of this Warrant Certificate, together with appropriate payment of
the aggregate Exercise Price for the shares of Common Stock purchased, the
Holder shall be entitled to receive a certificate or certificates for the shares
of Common Stock so purchased.
(b) The Exercise Price per share of Common Stock for the shares then
being exercised shall be payable in cash or by certified or official bank check.
(c) In addition to and without limiting the rights of the Warrant
holder under the terms of the Warrant, but only if the Registration Statement is
not declared effective within one year from the Closing date, the Holder shall
have the right (the "Conversion Right") to convert this Warrant or any portion
thereof into Shares as provided in this Section 2 prior to its expiration. Upon
exercise of the Conversion Right with respect to a particular number of Warrants
(the "Converted Warrants"), the Company shall deliver to the Holder, without
payment
by the Holder of any Exercise Price or any cash or other consideration,
that number of Shares computed using the following formula:
X = Y (A-B)
-------
A
Where: X = the number of Shares and/or Warrants to
------ be issued to the Holder;
Y = the number of Shares and/or Warrants to
be converted under this Warrant;
A = the Current Market
Price of one share of Common Stock, to be
defined as the average of the closing prices
for the common stock for the five (5)
trading days ending immediately prior to the
Exercise Date; and
B = the Exercise Price.
For purposes of Rule 144, it is intended and acknowledged that the Warrant
Shares issued in a cashless exercise transaction shall be deemed to have been
acquired by the Holder, and the holding period for the Warrant Shares shall be
deemed to have commenced, on the date this Warrant was originally issued.
Otherwise, the Holder shall be deemed to be the holder of the shares issuable to
it in accordance with the provisions of this section 2 on the Exercise Date,
provided that the Holder complies with all the delivery requirements of section
2.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) receipt of reasonably
satisfactory indemnification, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new Warrant
of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant
shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
6. Protection Against Dilution and Other Adjustments.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6, the Holder shall be entitled to purchase
such number of additional
shares of Common Stock as will cause (i) the total number of shares of Common
Stock Holder is entitled to purchase pursuant to this Warrant, multiplied by
(ii) the adjusted Exercise Price per share, to equal (iii) the dollar amount of
the total number of shares of Common Stock Holder is entitled to purchase before
adjustment multiplied by the total Exercise Price immediately before adjustment.
6.2 Capital Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the Common Stock, recapitalization,
merger or consolidation, or like capital adjustment affecting the Common Stock
of the Company prior to the exercise of this Warrant or its applicable portion,
the provisions of this Section 6 shall be applied as if such capital adjustment
event had occurred immediately prior to the exercise date of this Warrant and
the original Exercise Price had been fairly allocated to the stock resulting
from such capital adjustment; and in other respects the provisions of this
Section shall be applied in a fair, equitable and reasonable manner so as to
give effect, as nearly as may be, to the purposes hereof.
6.3 Spin Off. If, for any reason, prior to the exercise of this
Warrant in full, the Company spins off or otherwise divests itself of a part of
its business or operations or disposes all or of a part of its assets in a
transaction (the "Spin Off") in which the Company does not receive compensation
for such business, operations or assets, but causes securities of another entity
to be issued to security holders of the Company, then the Company shall notify
the Holder at least thirty (30) days prior to the record date with respect to
such Spin-Off.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Except for transfers to officers, employees and
affiliates of the Holder, neither this Warrant nor any of the Warrant Shares or
any other security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act relating to such security or an opinion of counsel
satisfactory to the Company that registration is not required under the Act.
Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2 Registration Rights. Reference is made to the Registration Rights
Agreement. The Company's obligations under the Registration Rights Agreement and
the other terms and conditions thereof with respect to the Warrant Shares,
including, but not necessarily limited to, the Company's commitment to file a
registration statement including the Warrant Shares, to use its reasonable best
efforts to have the registration of the Warrant Shares completed and effective,
and to maintain such registration, are incorporated herein by reference.
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
sent by facsimile transmission or sent by certified, registered or express mail,
postage pre-paid. Any such notice shall be deemed given when so delivered
personally, telegraphed, telexed or sent by facsimile
transmission, or, if mailed, four days after the date of deposit in the United
States mails, as follows:
(i) if to the Company, to:
SEMOTUS SOLUTIONS, INC.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Legal Counsel
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Silicon Valley Law Group
Attn: Xxxxx Xxxxx
(ii) if to the Holder, to:
Address listed in Annex I to the Purchase Agreement
with a copy to:
Southridge Capital Management LLC
00 Xxxxx Xxxxxx, Xxx 000
Xxxxxxxxxx XX 00000
Any party may give notice in accordance with this Section to the other parties
designate to another address or person for receipt of notices hereunder.
9. Supplements and Amendments; Whole Agreement. This Warrant may be amended
or supplemented only by an instrument in writing signed by the parties hereto.
This Warrant contains the full understanding of the parties with respect to the
subject matter hereof and thereof and there are no representations, warranties,
agreements or understandings other than expressly contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a contract made under
the laws of the State of New York for contracts to be wholly performed in such
State and without giving effect to the principles thereof regarding the conflict
of laws. Each of the parties consents to the jurisdiction of the federal courts
whose districts encompass any part of the State of New York, New York County in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
FORUM NON CONVENIENS, to the bringing of any such proceeding in such
jurisdictions.
11. Jury Trial Waiver. The Company and the Holder hereby waive a trial by
jury in any action, proceeding or counterclaim brought by either of the parties
hereto against the other in respect of any matter arising out or in connection
with this Warrant.
12. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
13. Descriptive Headings. Descriptive headings of the several Sections of
this Warrant are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
14. Exercise Restrictions. Notwithstanding anything to the contrary
contained herein, the Holder shall not have the right to exercise this Warrant
such that, as the result of such exercise, the number of shares of the Company's
Common Stock then beneficially held by the Holder and its affiliates, when
aggregated with such Holder for purposes of Section 13(d) of the Exchange Act,
would exceed 9.999% of the total number of issued and outstanding shares of the
Company's Common Stock. For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder.
IN WITNESS WHEREOF, the Company has executed this Warrant as of the 16th
day of May, 2006.
SEMOTUS SOLUTIONS, INC.
By: /s/ Xxxxxxx XxXxxx
------------------
Name: Xxxxxxx XxXxxx
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Title: CEO
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ______________, ______, to
purchase _____________ shares of the Common Stock, $0.01 par value, of SEMOTUS
SOLUTIONS, INC., and tenders herewith payment in accordance with Section 1 of
said Common Stock Purchase Warrant.
CASH: $_____________ = (Exercise Price x Exercise Shares)
Payment is being made by:
enclosed check
wire transfer
other
Please deliver the stock certificate to:
Dated: _______________________
Southshore Capital Fund Ltd.
By: __________________________
Name: ________________________
Title: _______________________
FORM OF ELECTION TO CONVERT
TO: Semotus Solutions, Inc.
Pursuant to Section 2(c) of the Warrant, the undersigned hereby irrevocably
elects to convert ____________ Warrants, evidenced by the within Warrant
Certificate for, and to purchase thereunder, ________________ full shares of
Common Stock issuable upon conversion of said Warrants. A conversion calculation
is attached hereto.
The undersigned requests that certificates for such shares be issued in the
name of:
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
------------------------------- ---------------------------------
(Please print name and address)
If said number of Warrants shall not be all the Warrants evidenced by the
within Warrant Certificate, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so converted be issued in the name of
and delivered to:
---------------------------------------------
---------------------------------------------
(Please print name and address)
Dated: ____________________ Signature: _________________________________
NOTICE: The above signature must correspond with the
name as written upon the face of the within
Warrant Certificate in every particular,
without alteration or enlargement or any
change whatsoever, or if signed by any other
person the Form of Assignment hereon must be
duly executed and if the certificate
representing the shares or any Warrant
Certificate representing Warrants not
exercised is to be registered in a name
other than that in which the within Warrant
Certificate is registered, the signature of
the holder hereof must be guaranteed.
CALCULATION OF WARRANT CONVERSION
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X = Y (A-B)
-------
A
Where: X = the number of Shares and/or Warrants to be issued to the Holder;
Y = the number of Shares and/or Warrants to be converted;
A = the Current Market Price of one share of Common Stock, to be
defined as the average of the closing prices for the common stock for
the five (5) trading days ending immediately prior to the Exercise
Date; and
B = the Share Exercise Price.
