Exhibit 4.2
EXECUTION VERSION
NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
Right to Purchase Shares of Common Stock of China Biopharmaceuticals Holdings,
Inc. (subject to adjustment as provided herein)
ADDITIONAL COMMON STOCK PURCHASE WARRANT (this "Warrant")
No. R-2 Issue Date: November 16, 2007 (the "Issue Date")
China Biopharmaceuticals Holdings, Inc., a corporation organized under the
laws of the State of Delaware (the "Company"), hereby certifies that, for value
received, RimAsia Capital Partners, L.P. or its assigns (the "Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company, on
the Exercise Date (as defined below), up to the total of the Additional Shares
(as defined below) of the Common Stock (as defined below), at the Exercise Price
(as defined below), in lawful money of the United States (the "Warrant Shares").
The number and character of such shares of Common Stock and the Exercise Price
are subject to adjustment as provided herein.
This Warrant may only be exercised as a result of either the Optional
Redemption (as such term is defined below) or the Mandatory Redemption (as such
term is defined below). This Warrant shall automatically expire upon the
conversion of any shares of the Series B Preferred Stock (as such term is
defined below) held by the Holder into shares of the Common Stock.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
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The term "Additional Shares" means such number of shares of Common Stock
equal to X in the following formula:
20% = (X + 12,000,000)/(58,472,444 + X + Y)
wherein 12,000,000 is the number of shares of Common Stock covered by a
separate modified warrant issued to the Holder as of the Issue Date, 58,472,444
is the number of the issued and outstanding shares of Common Stock on a fully
diluted basis on the day immediately preceding the Issue Date, and Y is the
number of shares of Common Stock and equivalent securities (on an as converted,
as exercised basis) issued in the first to occur of the Acquisitions (as such
term is defined in a Side Letter between the Company and the Holder as of the
Issue Date), all as adjusted for any stock splits, stock dividends,
combinations, subdivisions, recapitalizations or the like.
20% = (X + 12,000,000)/(58,472,444 + X + Y)
The term "Company" means China Biopharmaceuticals Holdings, Inc. and any
corporation which shall succeed or assume the obligations of China
Biopharmaceuticals Holdings, Inc. hereunder.
The term "Common Stock" means (a) the Company's Common Stock, $0.01 par
value per share, and (b) any other class of securities into which such
securities may hereafter have been reclassified or changed into.
The term "Exercise Date" means (a) any time between the Optional
Redemption through the fourth anniversary of the Issue Date if this Warrant is
exercised as a result of the Optional Redemption or (b) the same date as the
Mandatory Redemption if this Warrant is exercised as a result of the Mandatory
Redemption.
The term "Exercise Price" means a per-share purchase price equal to the
Fair Market Value.
The term "Fair Market Value" of a Warrant Share as of a particular date
shall mean:
(a) If traded on a securities exchange or market, the Fair Market Value
shall be deemed to be the average of the closing prices of the Company's Common
Stock on such exchange or market over the 30 business days ending immediately
prior to the earlier of the date of the Optional Redemption or the date of the
Mandatory Redemption.
(b) If actively traded over-the-counter, the Fair Market Value shall be
deemed to be the average of the closing bid prices over the 30-day period ending
immediately prior to the earlier of the date of the Optional Redemption or the
date of the Mandatory Redemption; and
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(c) If there is no active public market, the Fair Market Value shall be
the price per share of Common Stock that the Company could obtain from a willing
buyer for Warrant Shares sold by the Company from authorized but unissued
shares, as such prices shall be determined in good faith by the Board of
Directors of the Company and the Holder.
The term "Fundamental Transaction" means any of the following: (1) the
Company effects any merger or consolidation of the Company with or into another
Person, (2) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (3) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, or (4) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property.
The term "Mandatory Redemption" means the Company's redemption of all the
then outstanding shares of the Series B Preferred Stock pursuant to the terms
and conditions set forth in the Certificate of Designation for the Series B
Preferred Stock on the fourth anniversary of the issuance date of the Series B
Preferred Stock.
The term "Optional Redemption" means the Company's redemption of all the
then outstanding shares of the Series B Preferred Stock pursuant to the terms
and conditions set forth in the Certificate of Designation for the Series B
Preferred Stock prior to the fourth anniversary of the issuance date of the
Series B Preferred Stock.
The term "Redemption Notice" means (a) any notice of the Company sent to
holders of the Series B Preferred Stock announcing the Company's intention to
effect the Optional Redemption or (b) any notice of the holders of the Series B
Preferred Stock announcing their intention to effect the Mandatory Redemption.
The term "Series B Preferred Stock" means the Company's convertible,
redeemable Series B Preferred Stock.
The term "Trading Day" means a day on which the Common Stock is traded on
a Trading Market.
The term "Trading Market" means the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the NASDAQ Capital Market, the American Stock Exchange, the New York Stock
Exchange, the NASDAQ National Market or the OTC Bulletin Board.
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1. Exercise. (a) This Warrant may be exercised in full or in part by the
Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such Xxxxxx and surrender of the original Warrant within ten (10)
days of exercise, to the Company at its principal office or at the office of its
Warrant Agent (as provided hereinafter), accompanied by payment, (i) by wire
transfer, (ii) by cancellation of indebtedness of the Company owed to the Holder
or (iii) by a combination of (i) and (ii), of an amount obtained by multiplying
the number of shares of Common Stock for which this Warrant is then exercisable
by the Exercise Price then in effect. Upon delivery of the Warrant to the
Company and upon payment of the Exercise Price multiplied by the number of
Warrant Shares that the Holder intends to purchase hereunder, the Company shall
promptly (but in no event later than thirty (30) days after the Date of Exercise
(as defined herein)) register the Holder as a member of the Company in the
Company's stock register in respect to the number of Warrant Shares issuable
upon such exercise and issue and deliver to the Holder, a certificate for the
Warrant Shares issuable upon such exercise, together with cash in lieu of any
fraction of a Warrant Share equal to such fraction of the current Fair Market
Value of one (1) whole Warrant Share as of the Date of Exercise. A "Date of
Exercise" means the date on which the Holder shall have delivered to the
Company: (i) the Warrant and (ii) payment of the Exercise Price for the number
of Warrant Shares so indicated by the Holder to be purchased.
(b) In case of any partial exercise of this Warrant, the Company shall,
upon the deemed exercise hereof (as defined below), cancel this Warrant and
execute and deliver a new warrant with the same terms and date for the balance
of the Warrant Shares purchasable hereunder.
2. Certain Adjustments. The Exercise Price and the number of the
Additional Shares issuable upon exercise of this Warrant are subject to
adjustment from time to time as set forth in this Section 2.
(a) Stock Dividends and Splits. If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Additional Shares
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.
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(b) Fundamental Transactions. If, at any time while this Warrant is
outstanding there is a Fundamental Transaction, then the Holder shall have the
right thereafter to receive, upon exercise of this Warrant, the same amount and
kind of securities, cash or property as it would have been entitled to receive
upon the occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the Holder of the number of the
Additional Shares then issuable upon exercise in full of this Warrant (the
"Alternate Consideration"). If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder's option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall, either (1) issue to the
Holder a new warrant substantially in the form of this Warrant and consistent
with the foregoing provisions and evidencing the Holder's right to acquire the
Alternate Consideration for the aggregate Exercise Price upon exercise thereof,
or (2) purchase the Warrant from the Holder for a purchase price, payable in
cash within five Trading Days after such request (or, if later, on the effective
date of the Fundamental Transaction), equal to the Fair Market Value of the
remaining unexercised portion of this Warrant on the date of such request. The
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this paragraph (b) and insuring that the Warrant (or any
such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
(c) Notice of Adjustments. Upon the occurrence of each adjustment pursuant
to this Section 2, the Company at its expense will promptly compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. The Company will then promptly deliver a
copy of each such certificate to the Holder and to the Company's Transfer Agent.
(d) Notice of Corporate Events. If the Company (i) declares a dividend or
any other distribution of cash, securities or other property in respect of its
Common Stock, including without limitation any granting of rights or warrants to
subscribe for or purchase any capital stock of the Company or any Subsidiary,
(ii) authorizes or approves, enters into any agreement contemplating or solicits
stockholder approval for any Fundamental Transaction or (iii) authorizes the
voluntary dissolution, liquidation or winding up of the affairs of the Company,
then the Company shall deliver to the Holder a notice describing the material
terms and conditions of such transaction (but only to the extent such disclosure
would not result in the dissemination of material, non-public information to the
Holder) at least 15 calendar days prior to the applicable record or effective
date on which a Person would need to hold Common Stock in order to participate
in or vote with respect to such transaction, and the Company will take all steps
reasonably necessary in order to insure that the Holder is given the practical
opportunity to exercise this Warrant prior to such time so as to participate in
or vote with respect to such transaction; provided, however, that the failure to
deliver such notice or any defect therein shall not affect the validity of the
corporate action required to be described in such notice.
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3. Valid Issuance; Taxes. All Warrant Shares issued upon the exercise of
this Warrant shall be validly issued, fully paid and non-assessable, and the
Company shall pay all taxes and other governmental charges that may be imposed
in respect of the issue or delivery thereof
4. Loss or Mutilation. Upon receipt of evidence reasonably satisfactory to
the Company of the ownership of and the loss, theft, destruction or mutilation
of this Warrant, and of indemnity reasonably satisfactory to it, and (in the
case of mutilation) upon surrender and cancellation of this Warrant, the Company
will execute and deliver in lieu thereof a new Warrant of like tenor as the
lost, stolen, destroyed or mutilated Warrant.
5. Reservation of Shares. The Company hereby covenants and agrees that at
all times there shall be reserved in the Company's authorized but unissued share
capital for issuance and delivery upon exercise of this Warrant such number of
Warrant Shares (or other shares of the Company as are from time to time issuable
upon exercise of this Warrant) and Common Stock for issuance on conversion of
such Warrant Shares, including amending its constitutional documents from time
to time to increase its authorized share capital as necessary. All such shares
shall be duly authorized, and when issued by way of registration in the name of
the Holder in the Company's register of members upon such exercise in accordance
with the terms herein, shall be validly issued, fully paid and non-assessable,
free and clear of all liens, security interests, charges and other encumbrances
or restrictions on sale and free and clear of all preemptive and similar rights
("Encumbrances"), except such Encumbrances arising under law or such
Encumbrances that are in favor of the Holder or any affiliate of the Holder. For
purposes only of this Warrant, "reserve," "reservation" and similar words shall
mean that the Board of Directors of the Company have approved and authorized an
intent by the Company to refrain from issuing a number of Warrant Shares
sufficient to satisfy the exercise rights of the holder of this Warrant such
that such Warrant Shares (and the Common Stock issuable upon conversion thereof)
will remain in the authorized but unissued capital of the Company until, as
applicable, this Warrant is exercised in accordance with its terms or the
Warrant Shares are converted into Common Stock in accordance with the terms
thereof.
6. Transfer and Exchange. Subject to the terms and conditions of this
Warrant and compliance with all applicable securities laws, this Warrant and all
rights hereunder may be transferred to any person, in whole or in part, on the
books of the Company maintained for such purpose by the Holder hereof in person,
or by duly authorized attorney, upon surrender of this Warrant properly endorsed
and upon payment of any necessary transfer tax or other governmental charge
imposed upon such transfer. Upon any partial transfer, the Company will issue
and deliver to the Holder a new Warrant or Warrants with respect to the Warrant
Shares not so transferred. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that when this Warrant shall have been so
endorsed, the person in possession of this Warrant may be treated by the
Company, and all other persons dealing with this Warrant, as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented hereby, any notice to the contrary notwithstanding; provided,
however, that until a transfer of this Warrant is duly registered on the books
of the Company, the Company may treat the Holder hereof as the owner for all
purposes.
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7. Representations and Warranties. The Company covenants that the
representations and warranties set forth in Schedule A hereto shall be true and
correct in all respects as of the date of exercise of this Warrant.
8. Registration Rights.
The Company shall prepare and file with the Securities and Exchange
Commission a registration statement under the Securities Act of 1933, as amended
(the "1933 Act") registering the Common Stock issuable upon exercise of the
Warrants for unrestricted public resale by the Holder. The Company shall cause
such registration statement to be declared effective within one hundred and
eighty (180) days after the Issue Date.
9. Common Stock Legend. The Holder acknowledges and agrees that the shares
of Common Stock of the Company, and, until such time as the Common Stock has
been registered under the 1933 Act and sold in accordance with an effective
registration statement, or exemption from registration, certificates and other
instruments representing any of the Common Stock shall bear a restrictive legend
in substantially the following form and a stop-transfer order may be placed
against transfer of any such securities:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION NOR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. THESE SHARES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SHARES.
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10. Warrant Agent. The Company may, by written notice to the Holder of the
Warrant, appoint an agent (a "Warrant Agent") for the purpose of issuing Common
Stock issuable on the exercise of this Warrant.
11. 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.
12. Notices. Except as may be otherwise provided herein, all notices,
requests, waivers and other communications made hereunder shall be in writing
and shall be conclusively deemed to have been duly given (a) when hand delivered
to the other party; (b) when sent by facsimile at the number set forth below,
upon a successful transmission report being generated by the sender's machine;
or (c) three (3) business days after deposit with an internationally- recognized
overnight delivery service, postage prepaid, addressed to the parties as set
forth below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery service
provider.
To the Company: To the Holder:
China Biopharmaceuticals Holdings, Inc. RimAsia Capital Partners, LP.
Xx. 000 Xxx Xx Xxxx c/o RimAsia Capital Partners (Hong Kong) Ltd.
Suzhou, Jiangsu Province 215000 1808 Xxxxxxxxx House
The People's Republic of China 00 Xxxxxxxx Xxxx, Xxxxxxxxx
Xxxxxxxxx: Xxxxx Xxx Xxxx Xxxx
Telecopier No.: (00) 000-0000-0000 Attention: Xxxx Xxx
Xxxxxxxxxx No.: (000) 0000-0000
13. Governing Law. This Warrant and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of
the United States of America and State of Delaware, regardless of the laws that
might otherwise govern under applicable choice-of-law principles. The parties
hereby irrevocably submit to the non-exclusive jurisdiction of the state and
federal courts located in Wilmington, Delaware for purposes of all legal
proceedings arising out of or relating to this Common Stock Purchase Warrant or
the transactions contemplated hereby. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable law, the right to trial by jury, any
objection which they may now or hereafter have to the laying of venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
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14. No Impairment. The Company will not cooperate with or facilitate any
amendment of its constitutional documents, or any reorganization, consolidation,
merger, dissolution, issue or sale of shares, sale of assets or any other
voluntary action, so as to 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 of
this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will take or procure the taking of all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable Warrant Shares upon exercise of this Warrant
and fully paid and non-assessable Common Stock upon conversion of such Warrant
Shares.
15. No Inconsistent Agreements. The Company will not on or after the date
of this Warrant enter into any agreement with respect to its Common Stock or any
other class of shares which is inconsistent with the rights granted to the
Holder or otherwise conflicts with the provisions hereof. The rights granted to
Holder hereunder do not in any way conflict with and are not inconsistent with
the rights granted to holders of the Company's Common Stock under any other
agreements, except rights that have been waived.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.
China Biopharmaceuticals Holdings, Inc.
By: /s/ Xxxxx Xxxx Xxx
---------------------
Name: Xxxxx Xxxx Xxx
Title: CEO
[SIGNATURE PAGE TO ADDITIONAL WARRANT]
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Exhibit A
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
TO: CHINA BIOPHARMACEUTICALS HOLDINGS, INC.
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No. ___), hereby irrevocably elects to purchase:
____________ Shares of the Common Stock covered by such Warrant.
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:
$_________in lawful money of the United States.
The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to _______________________________ whose address is
By its delivery of this Subscription Form, the undersigned represents and
warrants to the Company that in giving effect to the exercise evidenced hereby
the Holder will not beneficially own in excess of the number of shares of Common
Stock (determined in . accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 3 of this Warrant to which this
notice relates.
Dated:
(Address)
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Schedule A
Except as disclosed in the Loan Conversion Agreement dated as of even date with
the Issue Date between the Company and the Holder:
Corporate Status. The Company is organized under the laws of the State of
Delaware and is duly incorporated, validly existing, and in good standing under
the laws of the State of Delaware.
Authorization. All corporate action on the part of the Company and its officers,
directors and stockholders necessary for the Company to execute and perform this
Warrant has been taken.
Validity of Warrant. This Warrant is a legally valid and binding obligation of
the Company. Upon issuance, the Warrant Shares will be duly authorized, validly
issued, fully paid and non-assessable, and free of any liens or encumbrances
except for restrictions on transfer under the securities laws and any agreement
to which the Holder becomes a party. The issuance of this Warrant and the
issuance of the Warrant Shares do not and will not violate any agreements to
which the Company is, or at the time of issuance will be, a party.
Governmental and Third Party Consents. All consents, approvals, orders,
authorizations, registrations, qualifications, designations, declarations or
filings with or from any governmental agency or authority or any other person or
entity required on the part of the Company in connection with the execution,
delivery or performance of this Warrant and the consummation of the transactions
contemplated herein have been obtained.
Compliance with Other Instruments. The Company is not in violation of any
provision of its constitutional documents; any mortgage, indenture, contract,
agreement, instrument, judgment, decree or order; or any statute, rule or
regulation applicable to the Company. The execution, delivery and performance of
and compliance with this Warrant pursuant to the terms hereof, will not result
in any violation or be in conflict with or constitute a default under any such
provision, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company pursuant to any
such provision.
Litigation. There is no action, suit, proceeding or investigation pending or
currently threatened against the Company which questions the validity of this
Warrant or the right of the Company to enter into it, or to consummate the
transactions contemplated hereby, or which might result, either individually or
in the aggregate, in any material adverse change in the assets, condition,
affairs or prospects of the Company, financially or otherwise, or any change in
the current equity ownership of the Company, nor is the Company aware of any
basis for the foregoing. The Company is not a party or subject to any order,
writ, injunction, judgment or decree of any court or government agency or
instrumentality the provisions of which may have a material adverse effect on
the Company's financial condition, business or properties. There is no action,
suit, proceeding or investigation by the Company currently pending or which the
Company intends to initiate. There is no action, suit, proceeding or
investigation pending or threatened (or any basis therefor) involving the prior
employment of any of the Company's officers, employees or consultants, their use
in connection with the Company's business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers.
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Title to Property and Assets. The Company has good and marketable title to all
of its assets, free and clear of all liens and encumbrances, except such liens
and encumbrances which arise in the ordinary course of business and do not
materially impair the Company's ownership or use of such property or assets. All
leases pursuant to which the Company leases real or personal property are valid
and effective in accordance with their respective terms and, to the best of the
Company's knowledge, there exists no default or other occurrence or condition
which could result in a default or termination of any such lease.
Taxes. The Company has timely filed, or caused to be timely filed, all
applicable tax returns for income taxes, franchise taxes, sales taxes,
withholding taxes, property taxes and, to the best of the Company's knowledge,
all other taxes of every kind whatsoever required by law to be filed, and all
such tax returns are complete and accurate and in accordance with all legal
requirements applicable thereto. The tax returns of the Company have never been
audited by appropriate governmental authorities and the Company does not know of
any additional tax liabilities, deficiencies or proposed adjustments for any
period for which any such returns have been filed.
No Adjustments. From and after August 14, 2007 through and including the Issue
Date, the Company has not (i) paid a stock dividend on its Common Stock or
otherwise made a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivided outstanding shares of Common Stock into
a larger number of shares, (iii) combined outstanding shares of Common Stock
into a smaller number of shares, (iv) engaged in any Fundamental Transaction,
or, (v) effected any other adjustments as contemplated in Section 2 of this
Warrant.
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