WARRANT TO PURCHASE COMMON STOCK
THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE BEEN ACQUIRED FOR INVESTMENT
AND
NOT FOR DISTRIBUTION, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED NEITHER THE WARRANT NOR THE SHARES MAY BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
THE
COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. THIS WARRANT
MUST BE SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT AS A CONDITION
PRECEDENT TO THE SALE, PLEDGE OR OTHER TRANSFER OF ANY INTEREST IN THIS WARRANT
OR THE SHARES ISSUABLE HEREUNDER.
Issuer: Platina
Energy Group, Inc.
Class
of
Stock: Common Stock
Issue
Date: August 30, 2007
Expiration
Date: August 30, 2010
THIS
WARRANT TO PURCHASE COMMON STOCK is being issued pursuant to that
certain Securities Purchase Agreement dated as of the date hereof (the “Purchase
Agreement”) by and between Platina Energy Group, Inc., a Delaware corporation
(the “Company”), to La Jolla Cove Investors, Inc. (“Holder”).
ARTICLE
1
DESCRIPTION
OF WARRANTS
1.1 Warrants. The
Company hereby grants to Holder the right to purchase 3,000,000 shares of the
Company’s Common Stock (the “Shares” or “Warrant Shares”) at a price per share
equal to the Exercise Price set forth in section 2.4 below. Subject
to the terms and limitations set forth in the Debenture, upon each conversion
of
any portion of the Principal Amount outstanding under the Debenture, Holder
will
simultaneously exercise a percentage of this Warrant that is equal to the
percentage of the Principal Amount of the Debenture being so converted by
Holder. For purposes of illustration only, if the Purchase Price of
the Debenture is equal to $300,000, and the Holder elects to convert $3,000
of
the Principal Amount of the Debenture, Holder would simultaneously with such
conversion purchase 3,000 Warrant Shares under the terms of this
Warrant. The date that the Holder issues a Conversion Notice under
the Debenture is hereafter referred to as the “Conversion
Date.” Capitalized terms not defined herein shall have the meanings
ascribed to them in the Debenture or the Purchase Agreement.
1.2 Expiration
of
Warrants. This
Warrant shall expire and Holder shall no longer be able to purchase the Warrant
Shares on the earlier to occur of (i) the Expiration Date, or (ii) redemption
by
the Company of all unpaid principal and accrued and unpaid interest on the
Debenture for an amount equal to the Prepayment Amount, as set forth in Section
2.5 of the Debenture, or an amount equal to the Redemption Amount, as set forth
in Section 3.1 of the Debenture, each subject to the applicable terms and
conditions set forth in the Debenture.
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ARTICLE
2
EXERCISE
2.1 Method
of Exercise. Holder may exercise this Warrant by delivering a
duly executed Warrant Notice of Exercise in substantially the form attached
as
Appendix 1 (the “Warrant Notice of Exercise”) to the principal office of
the Company.
2.2 Delivery
of Certificate and New Warrant. As promptly as practicable after
the receipt of the Warrant Notice of Exercise, but in any event not more than
three (3) Business Days after the Company’s receipt of the Warrant Notice of
Exercise, the Company shall issue the Shares and cause to be mailed for delivery
by overnight courier to Holder a certificate representing the Shares acquired
and, if this Warrant has not been fully exercised and has not expired, a new
Warrant substantially in the form of this Warrant representing the right to
acquire the portion of the Shares not so acquired.
2.3 Replacement
of Warrants. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, or surrender and cancellation of this Warrant, the Company at its
expense shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor.
2.4 Exercise
Price. The Exercise Price of this Warrant shall be $1.00 per
Share.
2.5 Certain
Exercise
Limits. The
Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, to the extent that
after
giving effect to the exercise, as set forth on the applicable Warrant Notice
of
Exercise, such Holder (together with such Holder’s Affiliates, and any other
person or entity acting as a group together with such Holder or any of such
Holder’s Affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned
by
such Holder and its Affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which such
determination is being made, but shall exclude the number of shares of Common
Stock which are issuable upon (A) exercise of the remaining, unexercised amount
of this Warrant beneficially owned by such Holder or any of its Affiliates
and
(B) exercise or conversion of the unexercised or unconverted portion
of any other securities of the Company subject to a limitation on conversion
or
exercise analogous to the limitation contained herein (including, without
limitation, any other debentures or warrants to purchase shares of the Company’s
Common Stock) beneficially owned by such Holder or any of its
Affiliates. Except as set forth in the preceding sentence, for
purposes of this Section 2.5, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. To the extent that the limitation contained
in this Section 2.5 applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by such Holder together
with
any Affiliates) and of which amount of this
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Warrant
is exercisable shall be in the sole discretion of such Holder, and the
submission of a Warrant Notice of Exercise shall be deemed to be such Holder’s
determination of whether this Warrant may be exercised (in relation to other
securities owned by such Holder together with any Affiliates) and which amount
of this Warrant is exercisable, in each case subject to such aggregate
percentage limitations. To ensure compliance with this restriction,
each Holder will be deemed to represent to the Company each time it delivers
a
Warrant Notice of Exercise that such Warrant Notice of Exercise has not violated
the restrictions set forth in this paragraph and the Company shall have no
obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of
the
Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2.5, in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number
of
outstanding shares of Common Stock provided to the Holder in writing by the
Company after Holder makes such request or in the event that the Company files,
any of the following with the Securities and Exchange Commission, the most
recent of the following: (A) the Company's most recent Form 10-QSB or Form
10-KSB, as the case may be, (B) a more recent public announcement by the
Company; or (C) a more recent notice by the Company or the Company’s transfer
agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, the
Company shall within two Trading Days confirm orally and in writing to such
Holder the number of shares of Common Stock then outstanding on the records
of
the Company as of the date of the request. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect
to
the conversion or exercise of securities of the Company, including this Warrant,
by such Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial Ownership Limitation” shall be 4.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to
the
issuance of shares of Common Stock issuable upon exercise of this Warrant held
by the Holder. The Beneficial Ownership Limitation provisions of this
Section 2.5 may be waived by such Holder, at the election of such Holder, upon
not less than 61 days’ prior notice to the Company, to, at the sole discretion
of the Holder, either change the Beneficial Ownership Limitation to (i) 9.99%
of
the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon exercise of the Warrant
held by the Holder and the provisions of this Section 2.5 shall continue to
apply, or (ii) remove any Beneficial Ownership Limitation under this
Warrant. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms
of
this Section 2.5 to correct this paragraph (or any portion hereof) which may
be
defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation. If any court of competent
jurisdiction shall determine that the foregoing limitation is ineffective to
prevent a Holder from being deemed the beneficial owner of more than 9.99%
of
the then outstanding shares of Common Stock, then the Holder shall not have
the
right to exercise such portion of this Warrant as shall cause such Holder not
to
be deemed the beneficial owner of more than 9.99% of the then outstanding shares
of Common Stock. Upon such determination by a court of competent
jurisdiction, the Holder shall have no interest in or rights under such portion
of the Warrant. The limitations contained in this
paragraph shall apply to a successor holder of this Warrant.
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ARTICLE
3
ADJUSTMENT
TO THE SHARES
The
number of Shares purchasable upon the exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time upon the occurrence
of
certain events, as follows:
3.1 Reclassification. In
case of any reclassification or change of outstanding securities of the class
issuable upon exercise of this Warrant then, and in any such case, the Holder,
upon the exercise hereof at any time after the consummation of such
reclassification or change, shall be entitled to receive in lieu of each Share
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and/or property received upon such
reclassification or change by a holder of one Share. The provisions
of this Section 3.1 shall similarly apply to successive reclassifications or
changes.
3.2 Subdivision
or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its Shares,
or declare a dividend to be paid in cash, the Exercise Price shall be
proportionately decreased in the case of a subdivision or payment of cash
dividend or increased in the case of a combination.
3.3 Stock
Dividends. If the Company, at any time while this Warrant is
outstanding shall pay a dividend with respect to its Shares payable in Shares,
or make any other distribution of Shares with respect to Shares (except any
distribution specifically provided for in Section 3.1 and Section 3.2 above),
then the Exercise Price shall be adjusted, effective from and after the date
of
determination of shareholders entitled to received such dividend or
distribution, to that price determined by multiplying the Exercise Price in
effect immediately prior to such date of determination by a fraction, (a) the
numerator of which shall be the total number of Shares outstanding immediately
prior to such dividend or distribution, and (b) the denominator of which shall
be the total number of Shares outstanding immediately after such dividend or
distribution.
3.4 Non-Cash
Dividends. If the Company at any time while this Warrant is
outstanding shall pay a dividend with respect to Shares payable in securities
other than Shares or other non-cash property, or make any other distribution
of
such securities or property with respect to Shares (except any distribution
specifically provided for in Section 3.1 and Section 3.2 above), then this
Warrant shall represent the right to acquire upon exercise of this Warrant
such
securities or property which a holder of Shares would have been entitled to
receive upon such dividend or distribution, without the payment by the Holder
of
any additional consideration for such securities or property.
3.5 Effect
of Reorganization and Asset Sales. If any (i) reorganization or
reclassification of the Common Stock (ii) consolidation or merger of the Company
with or into another corporation, or (iii) sale or all or substantially all
of
the Company’s operating assets to another corporation followed by a liquidation
of the Company (any such transaction shall be referred to herein as an “Event”),
is effected in such a way that holders of common Stock are
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entitled
to receive securities and/or assets as a result of their Common Stock ownership,
the Holder, upon exercise of this Warrant, shall be entitled to receive such
shares of stock securities or assets which the Holder would have received had
it
fully exercised this Warrant on or prior the record date for such
Event. The Company shall not merge into or consolidate with another
corporation or sell all of its assets to another corporation for a consideration
consisting primarily of securities of such corporation, unless the successor
or
acquiring corporation, as the case may be, shall expressly assume the due and
punctual observance and performance of each and every covenant and condition
of
this Warrant to be performed or observed by the Company and all of the
obligations and liabilities hereunder, subject to such modification as shall
be
necessary to provide for adjustments which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 3. The
foregoing provisions shall similarly apply to successive mergers, consolidations
or sales of assets.
3.6 Adjustment
of Number of Shares. Upon each adjustment in the Exercise Price,
the number of Shares shall be adjusted, to the nearest whole share, to the
product obtained by multiplying the number of Shares, purchasable immediately
prior to such adjustment by a fraction, the numerator of which shall be the
Exercise Price immediately prior to such adjustment and the denominator of
which
shall be the Exercise Price immediately thereafter.
3.7 No
Impairment. The Company shall not, by amendment of its articles
or certificate of incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out all of the provisions
of
this Warrant and in taking all such action as may be reasonably necessary or
appropriate to protect Holder’s rights hereunder against
impairment. If the Company takes any action affecting its Common
Stock other than as described above that adversely affects Holder’s rights under
this Warrant, the Exercise Price shall be adjusted downward and the number
of
Shares issuable upon exercise of this Warrant shall be adjusted upward in such
a
manner that the aggregate Exercise Price of this Warrant is
unchanged.
3.8 Fractional
Shares. No fractional Shares shall be issuable upon the exercise
of this Warrant, and the number of Shares to be issued shall be rounded down
to
the nearest whole Share.
3.9 Certificate
as to Adjustments. Upon any adjustment of the Exercise Price, the
Company, at its expense, shall compute such adjustment and furnish Holder with
a
certificate of its Chief Financial Officer setting forth such adjustment and
the
facts upon which such adjustment is based. The Company shall, upon
written request, furnish Holder a certificate setting forth the Exercise Price
in effect upon the date thereof and the series of adjustments leading to such
Exercise Price.
3.10 No
Rights of Shareholders. This Warrant does not entitle Holder to
any voting rights or any other rights as a shareholder of the Company prior
to
the exercise of Holder’s right to purchase Shares as provided
herein.
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ARTICLE
4
REPRESENTATIONS
AND COVENANTS OF THE COMPANY
4.1 Representations
and Warranties. The Company hereby represents and warrants to
Holder that all Shares which may be issued upon the exercise of the purchase
right represented by this Warrant, shall, upon issuance, be duly authorized,
validly issued, fully paid and nonasessable, and free of any liens and
encumbrances.
4.2 Notice
of Certain Events. If the Company proposes at any time
(a) to declare any dividend or distribution upon its Common Stock, whether
in cash, property, stock, or other securities and whether or not a regular
cash
dividend; (b) to offer for subscription pro rata to the holders of any class
or
series of its stock any additional shares of stock of any class or series or
other rights; (c) to effect any reclassification or recapitalization of Common
Stock; (d) to merge or consolidate with or into any other corporation, or sell,
lease, license, or convey all or substantially all of its assets, or to
liquidate, dissolve or wind up; or (e) offer holders of registration rights
the
opportunity to participate in an underwritten public offering of the Company’s
securities for cash, then, in connection with each such event, the Company
shall
give Holder (1) at least 20 days prior written notice of the date on which
a
record will be taken for such dividend, distribution, or subscription rights
(and specifying the date on which the holders of Common Stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; (2) in the case of the matters referred to
in
(c) and (d) above at least 20 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of Common
Stock will be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case
of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
4.3 Information
Rights. So long as Holder holds this Warrant and/or any of the
Shares, the Company shall deliver to Holder (a) promptly after mailing, copies
of all notices or other written communications to the shareholders of the
Company, (b) within ninety (90) days of their availability, the annual
audited financial statements of the Company certified by independent public
accountants of recognized standing, and (c) within forty-five (45) days
after the end of each fiscal quarter or each fiscal year, the Company’s
quarterly, unaudited financial statements.
4.4 Reservation
of Warrant Shares. The Company has reserved and will keep
available, out of the authorized and unissued shares of Common Stock, the full
number of shares sufficient to provide for the exercise of the rights of
purchase represented by this Warrant.
ARTICLE
5
REPRESENTATIONS
AND COVENANTS OF THE HOLDER
5.1 Private
Issue. Holder understands (i) that the Shares issuable upon
exercise of Holder’s rights contained in the Warrant are not registered under
the Act or qualified under applicable state securities laws on the ground that
the issuance contemplated by the
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Warrant
will be exempt from the registration and qualifications requirements thereof,
and (ii) that the Company’s reliance on such exemption is predicated on Holder’s
representations set forth in this Article 5.
5.2 Financial
Risk. Holder has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment and has the ability to bear the economic risks of its
investment.
5.3 Risk
of No Registration. Holder understands that if the Company does
not register with the Securities and Exchange Commission pursuant to Section
12
of the Act, or file reports pursuant to Section 15(d), of the Securities
Exchange Act of 1934 (the “1934 Act”), or if a registration statement covering
the securities under the Act is not in effect when it desires to sell (i) the
right to purchase Shares pursuant to the Warrant, or (ii) the Shares issuable
upon exercise of the right to purchase, it may be required to hold such
securities for an indefinite period.
5.4 Accredited
Investor. Holder is an “accredited investor,” as such term is
defined in Regulation D promulgated pursuant to the Act.
ARTICLE
6
MISCELLANEOUS
6.1 Term. This
Warrant is exercisable, in whole or in part, at any time and from time to time
on or after the Issue Date and on or before the Expiration Date set forth
above.
6.2 Compliance
with Securities Laws on Transfer. This Warrant may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide
an
opinion of counsel if the transfer is to an affiliate of Holder.
6.3 Transfer
Procedure. Holder shall have the right without the consent of the
Company to transfer or assign in whole or in part this Warrant and the Shares
issuable upon exercise of this Warrant. Holder agrees that unless there is
in
effect a registration statement under the Act covering the proposed transfer
of
all or part of this Warrant, prior to any such proposed transfer the Holder
shall give written notice thereof to the Company (a “Transfer
Notice”). Each Transfer Notice shall describe the manner and
circumstances of the proposed transfer in reasonable detail and, if the company
so requests, shall be accompanied by an opinion of legal counsel, in a form
reasonably satisfactory to the Company, to the effect that the proposed transfer
may be effected without registration under the Act; provided that the Company
will not require opinions of counsel for transactions involving transfers to
affiliates or pursuant to Rule 144 promulgated by the Securities and
Exchange Commission under the Act, except in unusual
circumstances.
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6.4 Notices,
etc. All notices and other communications required or permitted
hereunder shall be in writing and shall be delivered personally, or sent by
telecopier machine or by a nationally recognized overnight courier service,
and
shall be deemed given when so delivered personally, or by telecopier machine
or
overnight courier service as follows:
If
to the
Company, to:
0000 Xxxxxxx Xxxxxx, Xxxxx 000-X
Xxxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If
to
Holder, to:
La Jolla Cove Investors, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
or
at
such other address as the Company shall have furnished to the
Holder. Each such notice or other communication shall for all
purposes of this agreement be treated as effective or having been given when
delivered if delivered personally, or, if sent by mail, at the earlier of its
receipt or five days after the same has been deposited in a regularly maintained
receptacle for the deposit of the United States mail, addressed and mailed
as
aforesaid.
6.5 Counterparts. This
agreement may be executed in any number of counterparts, each of which shall
be
enforceable against the parties actually executing such counterparts, and all
of
which together shall constitute one instrument. Facsimile execution shall be
deemed originals.
6.6 Waiver. 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.
6.7 Attorneys
Fees. In the event of any dispute between the parties concerning
the terms and provisions of this Warrant, the party prevailing in such dispute
shall be entitled to collect from the other party all costs incurred in such
dispute, including reasonable attorneys fees.
6.8 Governing
Law; Jurisdiction. This Warrant shall be governed by and
construed in accordance with the laws of the State of California, without giving
effect to its principles regarding conflicts of law. Each of the parties hereto
consents to the jurisdiction of the federal courts whose districts encompass
any
part of the City of San Diego or the state courts of
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the
State
of California sitting in the City of San Diego 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.
6.9 Remedies. The
Company acknowledges that a breach by it of its obligations hereunder will
cause
irreparable harm to the Holder, by vitiating the intent and purpose of the
transactions hereby. Accordingly, the Company acknowledges that the remedy
at
law for a breach of its obligations under this Warrant will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Warrant, that the Holder shall be entitled, in addition
to
all other available remedies at law or in equity, and in addition to the
penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Warrant and to enforce specifically
the
terms and provisions hereof, without the necessity of showing economic loss
and
without any bond or other security being required.
IN
WITNESS WHEREOF, the parties hereto have duly caused this Warrant to Purchase
Common Stock to be executed and delivered on the date first above
written.
| Platina Energy Group, Inc. |
La Jolla Cove Investors, Inc. |
|
| By: |
By: |
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/s/
Xxxxx Xxxxxxx Xxxxx Xxxxxxx, CEO & President |
/s/
Xxxxxx X. Xxxx |
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APPENDIX
1
WARRANT
NOTICE OF EXERCISE
1. The
undersigned hereby elects to purchase _____ shares of the Common Stock of
Platina Energy Group, Inc. pursuant to the terms of the Warrant to Purchase
Common Stock issued to La Jolla Cove Investors, Inc. on August 30,
2007.
2. Please
issue a certificate or certificates representing said shares in the name of
the
undersigned or in such other name as is specified below:
La
Jolla
Cove Investors, Inc.
0000
Xxxxxxxx Xxx., Xxxxx 000
Xx
Xxxxx,
Xxxxxxxxxx 00000
3. The
undersigned makes the representations and covenants set forth in Article 5
of the Warrant to Purchase Common Stock.
________________________________
(Signature)
___________________________
(Date)
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