Contract
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO RONCO CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Right
to
Purchase up to 1,750,000 Shares of Common Stock of
RONCO
CORPORATION
(subject
to adjustment as provided herein)
COMMON
STOCK PURCHASE WARRANT
| No. _________________ |
Issue Date:
October 18,
2006
|
RONCO
CORPORATION , a corporation organized under the laws of the State of Delaware
(the “Company”), hereby certifies that, for value received, LAURUS MASTER FUND,
LTD., or assigns (the “Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company (as defined herein) from and after the
Issue
Date of this Warrant and at any time or from time to time after the date hereof
until October 18, 2036, up to 1,750,000 fully paid and nonassessable shares
of
Common Stock (as hereinafter defined), $0.00001 par value per share, at the
applicable Exercise Price per share (as defined below). The number of such
shares of Common Stock and the applicable Exercise Price per share 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
“Company” shall include RONCO CORPORATION and any person or entity which shall
succeed, or assume the obligations of, RONCO CORPORATION hereunder.
(b) The
term
“Common Stock” includes (i) the Company’s Common Stock, par value $0.00001 per
share; and (ii) any other securities into which or for which any of the
securities described in the preceding clause (i) 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.
(d) The
“Exercise Price” applicable under this Warrant shall be $0.00001.
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
shall be entitled to receive, upon exercise of this Warrant in whole or in
part,
by delivery of an original or fax copy of an exercise notice in the form
attached hereto as Exhibit A (the “Exercise Notice”), shares of Common Stock of
the Company, subject to adjustment pursuant to Section 4.
1.2 Fair
Market Value.
For
purposes hereof, the “Fair Market Value” of a share of Common Stock as of a
particular date (the “Determination Date”) shall mean:
(a) If
the
Company’s Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or Capital Market of The Nasdaq
Stock Market, Inc. (“Nasdaq”), 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 the American Stock Exchange or another
national exchange or on the Nasdaq but is traded on the OTC Bulletin Board,
then
the mean of the average 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 in effect 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 the Warrant are outstanding at the Determination
Date.
1.3 Company
Acknowledgment.
The
Company will, at the time of the exercise of this 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.
2
1.4 Trustee
for Warrant Holders.
In the
event that a bank or trust company shall have been appointed as trustee for
the
holders of this Warrant 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. Procedure
for Exercise.
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 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 in accordance herewith. As
soon as practicable after the exercise of this Warrant in full or in part,
and
in any event within three (3) business 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, 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 Exercise.
(a) Payment
may be made either (i) in cash or by certified or official bank check payable
to
the order of the Company equal to the applicable aggregate Exercise Price,
(ii)
by delivery of this Warrant, or shares of Common Stock and/or Common Stock
receivable upon exercise of this Warrant in accordance with the formula set
forth in subsection (b) below, or (iii) by a combination of any of the foregoing
methods, for the number of Common Shares specified in such Exercise Notice
(as
such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the Holder per the terms of this
Warrant) and the Holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully-paid and non-assessable shares of Common
Stock (or Other Securities) determined as provided herein.
(b) Notwithstanding
any provisions herein to the contrary, if the Fair Market Value of one share
of
Common Stock is greater than the Exercise Price (at the date of calculation
as
set forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being exercised) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Exercise
Notice in which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:
3
X= _Y(A-B)_
A
Where
X =
the
number of shares of Common Stock to be issued to the Holder
Y
=
the
number of shares of Common Stock purchasable under this Warrant or, if only
a
portion of this Warrant is
being exercised, the
portion of this Warrant being exercised (at the date of such
calculation)
A
= the
Fair
Market Value of one share of the Company’s Common Stock (at the date of such
calculation)
B
= the
Exercise Price per share (as adjusted to the date of such
calculation)
3. Effect
of Reorganization, Etc.; Adjustment of Exercise Price.
3.1 Consolidation,
Merger, or Dissolution for Cash or Property.
In case
at any time or from time to time, the Company shall (a) consolidate with or
merge into any other person where the consideration to be received by the
Company’s stockholders is something other than Other Securities, or (b) 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 or where
the consideration to be received by the Company is something other than Other
Securities, then, in each such case, as a condition to the consummation of
such
a transaction, this Warrant shall be deemed to have been exercised just prior
to
the consummation of such transaction, and the Holder shall receive, in lieu
of
the Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the cash and other property to which such
Holder would be entitled upon such consummation or in connection with such
dissolution, as the case may be, as a stockholder of the Company, 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, concurrently with
any distributions made to holders of its Common Stock, shall at its expense
deliver or cause to be delivered to the Holder the stock and other securities
and property (including cash, where applicable) receivable by the Holder
pursuant to Section 3.1, or, if the Holder shall so instruct the Company, to
a
bank or trust company specified by the Holder and having its principal office
in
New York, NY as trustee for the Holder.
3.3 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 where the consideration
to
be received by the Company’s stockholders is Other Securities, or (c) transfer
all or substantially all of its properties or assets to any other person under
any plan or arrangement not contemplating the dissolution of the Company or
where the
4
consideration
to be received by the Company is Other Securities, 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, on the exercise
hereof as provided in Section 1 at any time after the consummation of such
reorganization, consolidation or merger, 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 Other Securities to which
such
Holder would have been entitled upon such consummation, if such Holder had
so
exercised this Warrant, immediately prior thereo, all subject to further
adjustment thereafter as provided in Section 4. Upon any reorganization,
consolidation, merger or transfer (not followed by dissolution) referred to
in
this Section 3.3, this Warrant shall continue in full force and effect and
the
terms hereof shall be applicable to the Other Securities receivable on the
exercise of this Warrant after the consummation of such reorganization,
consolidation or merger, as the case may be, and shall be binding upon the
issuer of any such Other Securities.
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, (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 Exercise Price shall, simultaneously with the happening of
such
event, be adjusted by multiplying the then Exercise 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 Exercise Price then in effect.
The
Exercise 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 shall thereafter, on the
exercise hereof as provided in Section 1, be entitled to receive shall be
adjusted to a number determined by multiplying the number of shares of Common
Stock that would have been issuable on such exercise immediately prior to such
event by a fraction of which (a) the numerator is the Exercise Price that was
in
effect prior to such event, and (b) the denominator is the Exercise Price after
such event (taking into account the provisions of this Section 4).
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 this Warrant, 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 this
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 Exercise 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 and any Warrant agent of the Company (appointed pursuant to Section
11
hereof).
5
6. Reservation
of Stock, Etc., Issuable on Exercise of Warrant.
The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this
Warrant.
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”) in whole or in part. 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, which shall include, without limitation, a legal opinion from the
Transferor’s counsel (at the Transferor’s expense) that such transfer is exempt
from the registration requirements of 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 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.
The
Holder has been granted certain registration rights by the Company. These
registration rights are set forth in a Registration Rights Agreement entered
into by the Company and Holder dated as of the date hereof, as the same may
be
amended, modified and/or supplemented from time to time.
10. Maximum
Exercise.
Notwithstanding anything herein to the contrary, in no event shall the Holder
be
entitled to exercise any portion of this Warrant in excess of that portion
of
this Warrant upon exercise of which the sum of (1) the number of shares of
Common Stock beneficially owned by the Holder and its Affiliates (other than
shares of Common Stock which may be deemed beneficially owned through the
ownership of the unexercised portion of the Warrant or the unexercised or
unconverted portion of any other security of the Holder subject to a limitation
on conversion analogous to the limitations contained herein) and (2) the number
of shares of Common Stock issuable upon the exercise of the portion of this
Warrant with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its Affiliates of any
amount greater than 4.99% of the then outstanding shares of Common Stock
(whether or not, at the time of such exercise, the Holder and its Affiliates
beneficially own more than 4.99% of the then outstanding shares of Common
Stock). As used herein, the term “Affiliate” means any person or entity that,
directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a person or entity, as such terms
are used in and construed under Rule 144 under the Securities Act. For
purposes of the proviso to the second preceding sentence, beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulations 13D-G thereunder, except as otherwise
provided in clause (1) of such proviso.
6
11. Warrant
Agent.
The
Company may, by written notice to 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 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 who has so furnished an address to the Company. All notices
shall be effective upon receipt.
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 GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT
CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY
IN STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF
NEW
YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION
AND
BRING AN ACTION OUTSIDE THE STATE OF NEW YORK. The individuals executing this
Warrant on behalf of the Company agree to submit to the jurisdiction of such
courts and waive trial by jury. The prevailing party shall be entitled to
recover from the other party its reasonable attorneys’ fees and costs. In the
event that any provision of this Warrant is invalid or unenforceable under
any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Warrant. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The Company acknowledges that legal counsel
participated in the preparation of this Warrant and, therefore, stipulates
that
the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Warrant to
favor any party against the other party.
7
[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE
PAGE FOLLOWS]
8
IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
|
RONCO
CORPORATION
|
||||
|
WITNESS:
|
||||
|
By:
/s/
Xxxx
Xxxxxxxxx
|
||||
|
Name:
Xxxx
Xxxxxxxxx
|
||||
|
unintelligible
|
Title:
Interim
President
|
|||
9
EXHIBIT
A
FORM
OF SUBSCRIPTION
(To
Be
Signed Only On Exercise of Warrant)
Attention: Chief
Financial Officer
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
maximum number of shares of common stock covered by such warrant pursuant to
the
cashless exercise procedure
set forth in Section 2.
The
undersigned herewith makes payment of the full Exercise 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); and/or
________
the
cancellation of such number of shares of Common Stock as is necessary, in
accordance with the formula set forth
in Section 2.2, to exercise this Warrant with respect to the maximum number
of
shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in Section 2.
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:
|
_____________________________ | ||
| _____________________________ | |||
10
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 RONCO CORPORATION into 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 RONCO CORPORATION with full power
of substitution in the premises.
|
Transferees
|
Address
|
Percentage
Transferred
|
Number
Transferred
|
||||
|
Dated:
|
_______________________ | ________________________________ | |||||
|
(Signature
must conform to name of holder as
specified
on the face of the Warrant)
|
|||||||
|
Address:
_____________________
|
|||||||
| _____________________ | |||||||
|
SIGNED
IN THE PRESENCE OF:
|
|||||||
| ________________________________ | |||||||
|
(Name)
|
|||||||
ACCEPTED
AND AGREED:
[TRANSFEREE]
___________________________________
(Name)
11
