THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ANY EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD
OR OTHERWISE TRANSFERRED TO ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1) EITHER
(A) A REGISTRATION STATEMENT WITH RESPECT THERETO SHALL BE EFFECTIVE UNDER THE
SECURITIES ACT, OR (B) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
IS AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
Void after 5:00 p.m. New York Time on the Expiration Date (as defined below)
Warrant to Purchase 2,777,778 Shares of Common Stock
Warrant No. ____
WARRANT TO PURCHASE COMMON STOCK
OF
ASTRALIS LTD
This is to Certify that, FOR VALUE RECEIVED, Blue Cedar Limited, or its
permitted assigns ("Holder"), is entitled to purchase, subject to the provisions
of this Warrant, from Astralis Ltd. a Delaware corporation (the "Company"),
2,777,778 fully paid, validly issued and nonassessable shares of common stock,
$0.0001 par value per share, of the Company ("Common Stock") at a price of
$0.135 per share at any time or from time to time during the period from March
31, 2006 to five years from the date of issuance (the "Expiration Date"), but
not later than 5:00 p.m. New York City Time on the Expiration Date. The number
of shares of Common Stock to be received upon the exercise of this Warrant and
the price to be paid for each share of Common Stock may be adjusted from time to
time as hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter referred to as
"Warrant Shares" and the exercise price for each share of Common Stock, as in
effect at any time and as adjusted from time to time is hereinafter referred to
as the "Exercise Price". All capitalized terms in this Warrant unless otherwise
defined herein shall have the respective meanings ascribed to them in the
Subscription Agreement Agreement, dated March 31, 2006 between Holder and the
Company.
(a) EXERCISE OF WARRANT
(1) This Warrant may be exercised in whole or in part at any time or
from time to time on or after March 31, 2006 until the Expiration Date (the
"Exercise Period"), provided, however, that if such day is a day on which
banking institutions in the State of New York are authorized by law to close,
then on the next succeeding day which shall not be such a day. This Warrant may
be exercised by presentation and surrender hereof to the Company at its
principal office, or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto as Exhibit A, duly executed and accompanied by
payment of the Exercise Price for the number of Warrant Shares specified in such
form. As soon as practicable after each such exercise of the warrants, but not
later than ten (10) business days from the date of such exercise, the Company
shall issue and deliver to the Holder a certificate or certificate for the
Warrant Shares issuable upon such exercise, registered in the name of the Holder
or its designee. If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of the Holder thereof to purchase the balance
of the Warrant Shares purchasable thereunder. Upon receipt by the Company of
this Warrant at its office, or by the stock transfer agent of the Company at its
office, in proper form for exercise, the Holder shall be deemed to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be physically delivered to the Holder.
(2) At any time during the Exercise Period, the Holder may, at its
option, exchange this Warrant, in whole or in part (a "Warrant Exchange"), into
the number of Warrant Shares determined in accordance with this Section (a)(2),
by surrendering this Warrant at the principal office of the Company or at the
office of its stock transfer agent, accompanied by a notice stating such
Holder's intent to effect such exchange, the number of Warrant Shares to be
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "Notice of Exchange"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
shares issuable upon such Warrant Exchange and, if applicable, a new warrant of
like tenor evidencing the balance of the shares remaining subject to this
Warrant, shall be issued as of the Exchange Date and delivered to the Holder
within ten (10) business days following the Exchange Date. In connection with
any Warrant Exchange, this Warrant shall represent the right to subscribe for
and acquire the number of Warrant Shares (rounded to the next smallest whole
number of Warrant Shares, together with any cash payment required pursuant to
Section (c) below) equal to (i) the number of Warrant Shares specified by the
Holder in its Notice of Exchange (the "Total Number") less (ii) the number of
Warrant Shares equal to the quotient obtained by dividing (A) the product of the
Total Number and the existing Exercise Price by (B) the current market value of
a share of Common Stock. Current market value shall have the meaning set forth
in Section (c) below, except that for purposes hereof, the date of exercise, as
used in such Section (c), shall mean the Exchange Date.
(b) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants.
(c) FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. In lieu of
such fractional shares the Company shall make a cash payment therefor on the
basis of the Exercise Price then in effect.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
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Stock purchasable hereunder. Upon surrender of this Warrant to the Company at
its principal office or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto as Exhibit B, duly executed and funds
sufficient to pay any transfer tax, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee or assignees named in such
instrument of assignment and this Warrant shall promptly be canceled. This
Warrant may be divided or combined with other warrants which carry the same
rights upon presentation hereof at the principal office of the Company or at the
office of it stock transfer agent, if any, together with a written notice
specifying the names and denominations in which new Warrants are to be issued
and signed by the Holder hereof. The term "Warrant" as used herein includes any
Warrants into which this Warrant may be divided or exchanged. 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) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time and
the number and kind of securities purchasable upon the exercise of the Warrants
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
(1) In case the Company shall (i) declare a dividend or make a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock
into a greater number of shares, or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for such dividend
or distribution or of the effective date of such subdivision, combination
or reclassification shall be adjusted so that it shall equal the price
determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such action, and the numerator of which
shall be the number of shares of Common Stock outstanding immediately
prior to such action. Such adjustment shall be made successively whenever
any event listed above shall occur.
(2) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Section (f)(1) above, the number of
Warrant Shares purchasable upon exercise of this Warrant shall
simultaneously be adjusted by multiplying the number of Warrant Shares
initially issuable upon exercise of this Warrant by the Exercise Price in
effect on the date hereof and dividing the product so obtained by the
Exercise Price, as adjusted.
3
(3) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly but no later than 10 days after any request for
such an adjustment by the Holder, cause a notice setting forth the
adjusted Exercise Price and adjusted number of Warrant Shares issuable
upon exercise of each Warrant, and, if requested, information describing
the transactions giving rise to such adjustments, to be mailed to the
Holders at their last addresses appearing in the Company's books and
records, and shall notify its transfer agent, if any, of such adjustment.
The Company may retain a firm of independent certified public accountants
selected by the Board of Directors (who may be the regular accountants
selected by the Board of Directors (who may be the regular accountants
employed by the Company) to make any computation required by this Section
(f)(3), and a certificate signed by such firm shall be conclusive evidence
of the correctness of such adjustment.
(4) In the event that at any time, as a result of an adjustment made
pursuant to Section (f)(1) above, the Holder of this Warrant thereafter
shall become entitled to receive any shares of the Company, other than
Common Stock, thereafter the number of such shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections (f)(1)
to (f)(3), inclusive above.
(5) Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon exercise of this Warrant,
Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the similar Warrants
initially issuable pursuant to this Agreement.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted
as required by the provisions of the foregoing Section, the Company shall
forthwith file in the custody of its Secretary or an Assistant Secretary at its
principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Each such officer's certificate shall be
made available at all reasonable times for inspection by the holder or any
holder of a Warrant executed and delivered pursuant to Section (a) and the
Company shall, forthwith after each such adjustment, mail a copy by certified
mail of such certificate to the Holder or any such holder.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock, or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any share of any class or any
other rights, or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
4
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen business days
prior the date specified in (x) or (y) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such dividend, distribution
or rights, or (y) such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up is to take place and
the date, if any is to be fixed, as of which the holders of Common Stock or
other securities shall receive cash or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in the case of any consolidation or merger of
the Company with or into another corporation (other than a merger with a
subsidiary in which merger the Company is the continuing corporation and which
does not result in any reclassification, capital reorganization or other change
of outstanding shares of Common Stock of the class issuable upon exercise of
this Warrant) or in the case of any sale, lease or conveyance to another
corporation of all or substantially all of the assets of the Company, the
Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that the Holder shall have the right thereafter by
exercising this Warrant at any time prior to the expiration of the Warrant, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, capital reorganization and other
change, consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock which might have been purchased upon exercise of this
Warrant immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Any such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section (i) shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances. In the event that in connection
with any such capital reorganization or reclassification, consolidation, merger,
sale or conveyance, additional shares of Preferred Stock or Common Stock shall
be issued in exchange, conversion, substitution or payment, in whole or in part,
for security of the Company other than Common Stock, any such issue shall be
treated as an issue of Common Stock covered by the provisions of Subsection (1)
of Section (f) hereof.
(j) COMPLIANCE WITH SECURITIES ACT.
(1) Unregistered Securities. The Holder acknowledges that neither
this Warrant, nor the Warrant Shares, have been registered under the
Securities Act and agrees not to sell, pledge, distribute, offer for sale,
transfer or otherwise dispose of this Warrant or any Warrant Shares in the
absence of (i) an effective registration statement under the Securities
Act covering this Warrant or such Warrant Shares and registration or
qualification of this Warrant or such Warrant Shares under any applicable
"blue sky" or state securities law then in effect, or (ii) the
availability of an exemption from any such registration and qualification.
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(2) Legend. Any certificates delivered to the Holder representing
Warrant Shares shall bear the following legend or a legend in
substantially similar form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN FOR
INVESTMENT AND THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED BY ANY
PERSON, INCLUDING A PLEDGEE, IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR IF AN EXEMPTION FROM REGISTRATION IS THEN
AVAILABLE."
(k) GOVERNING LAW. This Warrant will be governed by and construed in
accordance with and governed by the laws of Delaware, without giving effect to
the conflict of law principles thereof.
(l) NOTICES. All notices, requests and other communications hereunder
shall be in writing, shall be either (i) delivered by hand, (ii) made by
facsimile transmission, (iii) sent by overnight courier, or (iv) sent by
registered mail, postage prepaid, return receipt requested. In the case of
notices from the Company to the Holder, they shall be sent to the address
furnished to the Company in writing by the last Holder who shall have furnished
an address to the Company in writing. All notices from the Holder to the Company
shall be delivered to the Company at its offices at 00 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000, facsimile (000) 000-0000 or such other address or
facsimile number as the Company shall so notify the Holder. All notices,
requests and other communications hereunder shall be deemed to have been given
(i) by hand, at the time of the delivery thereof to the receiving party at the
address of such party described above, (ii) if made by facsimile transmission,
at the time that receipt thereof has been acknowledged by electronic
confirmation or otherwise, (iii) if sent by overnight courier, on the next
business day following the day such notices is delivered to the courier service,
or (iv) if sent by registered mail, on the fifth (5th) business day following
the day such mailing is made.
ASTRALIS LTD.
By:
-------------------------------
Title:
Printed Name:
[SEAL]
Dated As Of: _______, 200_
Attest:
---------------------------------
Printed Name:
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Exhibit A
PURCHASE FORM
To: Astralis Ltd.
The undersigned pursuant to the provisions set forth in the attached Warrant
(No.______), (the "Warrant") hereby irrevocably elects to (check one):
_____ (A) purchase ___ shares of the Common Stock, par value $0.0001
per share, of Astralis Ltd. (the "Common Stock"), covered by
such Warrant and herewith makes payment of $_____________,
representing the full purchase price for such shares at the
price per share provided for in such Warrant; or
_____ (B) convert ___ Warrant Shares (as defined below) into that
number of shares of fully paid and nonassessable shares of
Common Stock, determined pursuant to the provisions of Section
2 of the Warrant.
The Common Stock for which the Warrant may be exercised or converted shall
be known herein as the "Warrant Shares." All capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Warrant.
The undersigned is aware that the Warrant Shares have not been and,
subject to certain registration rights which the undersigned may otherwise
posses, will not be registered under the Securities Act of 1933, as amended (the
"Securities Act") or any state securities laws. The undersigned understands that
reliance by the Company on exemptions under the Securities Act is predicated in
part upon the truth and accuracy of the statements of the undersigned in this
Purchase Form.
The undersigned agrees that it will in no event sell or distribute or
otherwise dispose of all or any part of the Warrant Shares unless (1) there is
an effective registration statement under the Securities Act and applicable
state securities laws covering any such transaction involving the Warrant
Shares, or (2) such transaction is exempt from registration. The undersigned
consents to the placing of a legend on its certificate for the Warrant Shares
stating that the sale of the Warrant Shares has not been registered and setting
forth the restriction on transfer contemplated hereby and to the placing of a
stop transfer order on the books of the Company and with any transfer agents
against the Warrant Shares until the Warrant Shares may be legally resold or
distributed without restriction.
The undersigned has considered the federal and state income tax
implications of the exercise of the Warrant and the purchase and subsequent sale
of the Warrant Shares.
--------------------------------
Dated:
--------------------------
Exhibit B
ASSIGNMENT FORM
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ______________________ hereby sells, assigns and
transfers unto ______________________ (i) __________________________
(______________) the right to purchase _____________ shares of Common Stock, par
value $0.0001 per share, of Astralis Ltd. (the "Company") pursuant to the
warrant No. ______ (the "Warrant") delivered herewith and standing in the name
of the undersigned on the books of the Company, and does hereby irrevocably
constitute and appoint the Company its attorney to transfer the said Warrant on
the books of the Company with full power of substitution in the premises.
Dated: ____________, 200__
IN PRESENCE OF
____________________________ By:_________________________________
Witness Name: Print Name:
Title:
