EXHIBIT 10.4
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS
MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED.
Warrant to Purchase
44,500 shares
Warrant to Purchase Common Stock
of
COLLEGE BOUND STUDENT ALLIANCE, INC.
THIS CERTIFIES that Xxxxxx Private Equity, LLC or any subsequent holder
hereof pursuant to Section 8 hereof ("Holder"), has the right to purchase from
COLLEGE BOUND STUDENT ALLIANCE, INC., a Nevada corporation (the "Company"), up
to 44,500 fully paid and nonassessable shares of the Company's common stock,
$.001 par value per share ("Common Stock"), subject to adjustment as provided
herein, at a price equal to the Exercise Price as defined in Section 3 below,
at any time beginning on the Date of Issuance (defined below) and ending at
5:00 p.m., New York, New York time the date that is five (5) years after the
Date of Issuance (the "Exercise Period").
Holder agrees with the Company that this Warrant to Purchase Common Stock
of the Company (this "Warrant") is issued and all rights hereunder shall be
held subject to all of the conditions, limitations and provisions set forth
herein. This Warrant is issued in addition to, and not in the place of, the
warrant to purchase 445,000 shares of Common Stock that was issued to Xxxxxx
Private Equity, LLC on or about April 4, 2000.
1. Date of Issuance and Term.
This Warrant shall be deemed to be issued on July 11, 2001 ("Date of
Issuance"). The term of this Warrant is five (5) years from the Date of
Issuance. This Warrant is exercisable in whole or in part anytime during the
Exercise Period (as defined above).
2. Exercise.
(a) Manner of Exercise. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Common Stock
covered hereby (the "Warrant Shares") upon surrender of this Warrant, with the
Exercise Form attached hereto as Exhibit A (the "Exercise Form") duly
completed and executed, together with the full Exercise Price (as defined
below) for each share of Common Stock as to which this Warrant is exercised,
at the office of the Company, Attention: Xxxxxx X. Xxxxx, CEO, College Bound
Student Alliance, Inc., 000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000, XX 00000;
Telephone: (000) 000-0000, Facsimile: (000) 000-0000, or at such other office
or agency as the Company may designate in writing, by overnight mail, with an
advance copy of the Exercise Form sent to the Company and its Transfer Agent
by facsimile (such surrender and payment of the Exercise Price hereinafter
called the "Exercise of this Warrant").
(b) Date of Exercise. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the completed and executed
Exercise Form is sent by facsimile to the Company, provided that the original
Warrant and Exercise Form are received by the Company as soon as practicable
thereafter. Alternatively, the Date of Exercise shall be defined as the date
the original Exercise Form is received by the Company, if Holder has not sent
advance notice by facsimile.
(c) Cancellation of Warrant. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of
Exercise, Holder shall be entitled to receive Common Stock for the number of
shares purchased upon such Exercise of this Warrant, and if this Warrant is
not exercised in full, Holder shall be entitled to receive a new Warrant
(containing terms identical to this Warrant) representing any unexercised
portion of this Warrant in addition to such Common Stock.
(d) Holder of Record. Each person in whose name any Warrant for shares
of Common Stock is issued shall, for all purposes, be deemed to be the Holder
of record of such shares on the Date of Exercise of this Warrant, irrespective
of the date of delivery of the Common Stock purchased upon the Exercise of
this Warrant. Nothing in this Warrant shall be construed as conferring upon
Holder any rights as a stockholder of the Company.
3. Payment of Warrant Exercise Price.
The Exercise Price per share ("Exercise Price") shall initially equal
$0.50 (the "Initial Exercise Price"). If the Date of Exercise is more than
six (6) months after the Date of Issuance, the Exercise Price shall be reset
to equal the lesser of (i) the Exercise Price then in effect, or (ii) the
"Lowest Reset Price," as that term is defined below. The Company shall
calculate a "Reset Price" on each six-month anniversary date of the Date of
Issuance which shall equal one hundred percent (100%) of the lowest Closing
Bid Price of the Company's Common Stock for the five (5) trading days ending
on such six-month anniversary date of the Date of Issuance. The "Lowest Reset
Price" shall equal the lowest Reset Price determined on any six-month
anniversary date of the Date of Issuance preceding the Date of Exercise, in
each case taking into account, as appropriate, any adjustments made pursuant
to Section 5 hereof.
Payment of the Exercise Price may be made by either of the following, or
a combination thereof, at the election of Holder:
(i) Cash Exercise: cash, bank or cashiers check or wire transfer; or
(ii) Cashless Exercise: The Holder, at its option, may exercise this
Warrant in a cashless exercise transaction under this subsection (ii) if and
only if, on the Date of Exercise, there is not then in effect a current
registration statement that covers the resale of the shares of Common Stock to
be issued upon exercise of this Warrant. In order to effect a Cashless
Exercise, the Holder shall surrender this Warrant at the principal office of
the Company together with notice of cashless election, in which event the
Company shall issue Holder a number of shares of Common Stock computed using
the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder.
Y = the number of shares of Common Stock for which this Warrant is being
exercised.
A = the Market Price of one (1) share of Common Stock (for purposes of this
Section 3(ii), the "Market Price" shall be defined as the average Closing
Price of the Common Stock for the five (5) trading days prior to the Date of
Exercise of this Warrant (the "Average Closing Price"), as reported by the
O.T.C. Bulletin Board, National Association of Securities Dealers Automated
Quotation System ("Nasdaq") Small Cap Market, or if the Common Stock is not
traded on the Nasdaq Small Cap Market, the Average Closing Price in any other
over-the-counter market; provided, however, that if the Common Stock is listed
on a stock exchange, the Market Price shall be the Average Closing Price on
such exchange for the five (5) trading days prior to the date of exercise of
the Warrants. If the Common Stock is/was not traded during the five (5)
trading days prior to the Date of Exercise, then the closing price for the
last publicly traded day shall be deemed to be the closing price for any and
all (if applicable) days during such five (5) trading day period.
B = the Exercise Price.
For purposes hereof, the term "Closing Bid Price" shall mean the closing
bid price on the the Nasdaq Small Cap Market, the National Market System
("NMS"), the New York Stock Exchange, or the O.T.C. Bulletin Board, or if no
longer traded on the Nasdaq Small Cap Market, the National Market System
("NMS"), the New York Stock Exchange, or the O.T.C. Bulletin Board, the
"Closing Bid Price" shall equal the closing price on the principal national
securities exchange or the over-the-counter system on which the Common Stock
is so traded and, if not available, the mean of the high and low prices on the
principal national securities exchange on which the Common Stock is so traded.
For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is
intended, understood and acknowledged that the Common Stock issuable upon
exercise of this Warrant in a cashless exercise transaction shall be deemed to
have been acquired at the time this Warrant was issued. Moreover, it is
intended, understood and acknowledged that the holding period for the Common
Stock issuable upon exercise of this Warrant in a cashless exercise
transaction shall be deemed to have commenced on the date this Warrant was
issued.
4. Transfer and Registration.
(a) Transfer Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender
and, as soon as practicable thereafter, the person to whom such transfer is
made shall be entitled to receive a new Warrant or Warrants as to the portion
of this Warrant transferred, and Holder shall be entitled to receive a new
Warrant as to the portion hereof retained.
(b) Registrable Securities. In addition to any other registration rights
of the Holder, if the Common Stock issuable upon exercise of this Warrant is
not registered for resale at the time the Company proposes to register
(including for this purpose a registration effected by the Company for
stockholders other than the Holders) any of its Common Stock under the Act
(other than a registration relating solely for the sale of securities to
participants in a Company stock plan or a registration on Form S-4 promulgated
under the Act or any successor or similar form registering stock issuable upon
a reclassification, upon a business combination involving an exchange of
securities or upon an exchange offer for securities of the issuer or another
entity)(a "Piggyback Registration Statement"), the Company shall cause to be
included in such Piggyback Registration Statement ("Piggyback Registration")
all of the Common Stock issuable upon the exercise of this Warrant
("Registrable Securities") to the extent such inclusion does not violate the
registration rights of any other securityholder of the Company granted prior
to the date hereof. Nothing herein shall prevent the Company from withdrawing
or abandoning the Piggyback Registration Statement prior to its effectiveness.
(c) Limitation on Obligations to Register under a Piggyback Registration.
In the case of a Piggyback Registration pursuant to an underwritten public
offering by the Company, if the managing underwriter determines and advises in
writing that the inclusion in the registration statement of all Registrable
Securities proposed to be included would interfere with the successful
marketing of the securities proposed to be registered by the Company, then the
number of such Registrable Securities to be included in the Piggyback
Registration Statement, to the extent such Registrable Securities may be
included in such Piggyback Registration Statement, shall be allocated among
all Holders who had requested Piggyback Registration pursuant to the terms
hereof, in the proportion that the number of Registrable Securities which each
such Holder seeks to register bears to the total number of Registrable
Securities sought to be included by all Holders. If required by the managing
underwriter of such an underwritten public offering, the Holders shall enter
into a reasonable agreement limiting the number of Registrable Securities to
be included in such Piggyback Registration Statement and the terms, if any,
regarding the future sale of such Registrable Securities.
5. Anti-Dilution Adjustments.
(a) Stock Dividend. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then Holder, upon Exercise of this Warrant
after the record date for the determination of holders of Common Stock
entitled to receive such dividend, shall be entitled to receive upon Exercise
of this Warrant, in addition to the number of shares of Common Stock as to
which this Warrant is exercised, such additional shares of Common Stock as
such Holder would have received had this Warrant been exercised immediately
prior to such record date and the Exercise Price will be proportionately
adjusted.
(b) Recapitalization or Reclassification.
(i) Stock Split. If the Company shall at any time effect a
recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a larger number of shares (a "Stock Split"), then upon the
effective date thereof, the number of shares of Common Stock which Holder
shall be entitled to purchase upon Exercise of this Warrant shall be increased
in direct proportion to the increase in the number of shares of Common Stock
by reason of such recapitalization, reclassification or similar transaction,
and the Exercise Price shall be proportionally decreased.
(ii) Reverse Stock Split. If the Company shall at any time effect a
recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a smaller number of shares (a "Reverse Stock Split"), then
upon the effective date thereof, the number of shares of Common Stock which
Holder shall be entitled to purchase upon Exercise of this Warrant shall be
proportionately decreased and the Exercise Price shall be proportionally
increased. The Company shall give Holder the same notice it provides to
holders of Common Stock of any transaction described in this Section 5(b).
(c) Distributions. If the Company shall at any time distribute for
no consideration to holders of Common Stock cash, evidences of indebtedness or
other securities or assets (other than cash dividends or distributions payable
out of earned surplus or net profits for the current or preceding years) then,
in any such case, Holder shall be entitled to receive, upon Exercise of this
Warrant, with respect to each share of Common Stock issuable upon such
exercise, the amount of cash or evidences of indebtedness or other securities
or assets which Holder would have been entitled to receive with respect to
each such share of Common Stock as a result of the happening of such event had
this Warrant been exercised immediately prior to the record date or other date
fixing shareholders to be affected by such event (the "Determination Date")
or, in lieu thereof, if the Board of Directors of the Company should so
determine at the time of such distribution, a reduced Exercise Price
determined by multiplying the Exercise Price on the Determination Date by a
fraction, the numerator of which is the result of such Exercise Price reduced
by the value of such distribution applicable to one share of Common Stock
(such value to be determined by the Board of Directors of the Company in its
discretion) and the denominator of which is such Exercise Price.
(d) Notice of Consolidation or Merger. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock shall be changed
into the same or a different number of shares of the same or another class or
classes of stock or securities or other assets of the Company or another
entity or there is a sale of all or substantially all the Company's assets (a
"Corporate Change"), then this Warrant shall be exerciseable into such class
and type of securities or other assets as Holder would have received had
Holder exercised this Warrant immediately prior to such Corporate Change;
provided, however, that Company may not affect any Corporate Change unless it
first shall have given thirty (30) days notice to Holder hereof of any
Corporate Change.
(e) Exercise Price Adjusted. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in subsection (a), (b) or (c)
of this Section 5, and thereafter shall mean said price as adjusted from time
to time in accordance with the provisions of said subsection. No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $.01 or more.
(f) Adjustments: Additional Shares, Securities or Assets. In the event
that at any time, as a result of an adjustment made pursuant to this Section
5, Holder shall, upon Exercise of this Warrant, become entitled to receive
shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets
shall be subject to adjustment from time to time in a manner and upon terms as
nearly equivalent as practicable to the provisions of this Section 5.
6. Fractional Interests.
No fractional shares or scrip representing fractional shares shall
be issuable upon the Exercise of this Warrant, but on Exercise of this
Warrant, Holder may purchase only a whole number of shares of Common Stock.
If, on Exercise of this Warrant, Holder would be entitled to a fractional
share of Common Stock or a right to acquire a fractional share of Common
Stock, such fractional share shall be disregarded and the number of shares of
Common Stock issuable upon exercise shall be the next higher number of shares.
7. Reservation of Shares.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for the
Exercise of this Warrant and payment of the Exercise Price. The Company
covenants and agrees that upon the Exercise of this Warrant, all shares of
Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, nonassessable and not subject to preemptive rights, rights of
first refusal or similar rights of any person or entity.
8. Restrictions on Transfer.
(a) Registration or Exemption Required. This Warrant has been
issued in a transaction exempt from the registration requirements of the Act
by virtue of Regulation D and exempt from state registration under applicable
state laws. The Warrant and the Common Stock issuable upon the Exercise of
this Warrant may not be pledged, transferred, sold or assigned except pursuant
to an effective registration statement or unless the Company has received an
opinion from the Company's counsel to the effect that such registration is not
required, or the Holder has furnished to the Company an opinion of the
Holder's counsel, which counsel shall be reasonably satisfactory to the
Company, to the effect that such registration is not required; the transfer
complies with any applicable state securities laws; and, if no registration
covering the resale of the Warrant Shares is effective at the time the Warrant
Shares are issued, the Holder consents to a legend being placed on
certificates for the Warrant Shares stating that the securities have not been
registered under the Securities Act and referring to such restrictions on
transferability and sale.
(b) Assignment. If Holder can provide the Company with reasonably
satisfactory evidence that the conditions of (a) above regarding registration
or exemption have been satisfied, Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant, in whole or in part. Holder shall deliver a
written notice to Company, substantially in the form of the Assignment
attached hereto as Exhibit B, indicating the person or persons to whom the
Warrant shall be assigned and the respective number of warrants to be assigned
to each assignee. The Company shall effect the assignment within ten (10)
days, and shall deliver to the assignee(s) designated by Holder a Warrant or
Warrants of like tenor and terms for the appropriate number of shares.
9. Benefits of this Warrant.
Nothing in this Warrant shall be construed to confer upon any person
other than the Company and Holder any legal or equitable right, remedy or
claim under this Warrant and this Warrant shall be for the sole and exclusive
benefit of the Company and Holder.
10. Applicable Law; Arbitration.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Georgia applicable to agreements made in and wholly
to be performed in that jurisdiction, except for matters arising under the Act
or the Securities Exchange Act of 1934, which matters shall be construed and
interpreted in accordance with such laws. Any controversy or claim arising
out of or related to this Warrant or the breach thereof, shall be settled by
binding arbitration in Atlanta, Georgia in accordance with the Expedited
Procedures (Rules 53-57) of the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). A proceeding shall be commenced upon written
demand by Company or any Investor to the other. The arbitrator(s) shall enter
a judgment by default against any party, which fails or refuses to appear in
any properly noticed arbitration proceeding. The proceeding shall be
conducted by one (1) arbitrator, unless the amount alleged to be in dispute
exceeds two hundred fifty thousand dollars ($250,000), in which case three (3)
arbitrators shall preside. The arbitrator(s) will be chosen by the parties
from a list provided by the AAA, and if they are unable to agree within ten
(10) days, the AAA shall select the arbitrator(s). The arbitrators must be
experts in securities law and financial transactions. The arbitrators shall
assess costs and expenses of the arbitration, including all attorneys' and
experts' fees, as the arbitrators believe is appropriate in light of the
merits of the parties' respective positions in the issues in dispute. Each
party submits irrevocably to the jurisdiction of any state court sitting in
Atlanta, Georgia or to the United States District Court sitting in Georgia for
purposes of enforcement of any discovery order, judgment or award in
connection with such arbitration. The award of the arbitrator(s) shall be
final and binding upon the parties and may be enforced in any court having
jurisdiction. The arbitration shall be held in such place as set by the
arbitrator(s) in accordance with Rule 55.
Although the parties, as expressed above, agree that all claims,
including claims that are equitable in nature, for example specific
performance, shall initially be prosecuted in the binding arbitration
procedure outlined above, if the arbitration panel dismisses or otherwise
fails to entertain any or all of the equitable claims asserted by reason of
the fact that it lacks jurisdiction, power and/or authority to consider such
claims and/or direct the remedy requested, then, in only that event, will the
parties have the right to initiate litigation respecting such equitable claims
or remedies. The forum for such equitable relief shall be in either a state
or federal court sitting in Atlanta, Georgia. Each party waives any right to
a trial by jury, assuming such right exists in an equitable proceeding, and
irrevocably submits to the jurisdiction of said Georgia court.
11. Loss of Warrant.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
12. Notice or Demands.
Notices or demands pursuant to this Warrant to be given or made by
Holder to or on the Company shall be sufficiently given or made if sent by
certified or registered mail, return receipt requested, postage prepaid, and
addressed, until another address is designated in writing by the Company, to
the address set forth in Section 2(a) above. Notices or demands pursuant to
this Warrant to be given or made by the Company to or on Holder shall be
sufficiently given or made if sent by certified or registered mail, return
receipt requested, postage prepaid, and addressed, to the address of Holder
set forth in the Company's records, until another address is designated in
writing by Holder.
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
11th day of July, 2001.
COLLEGE BOUND STUDENT ALLIANCE, INC.
By: ____________________________________
Xxxxxx X. Xxxxx, Chief Executive Officer
EXHIBIT A
EXERCISE FORM FOR WARRANT
TO: COLLEGE BOUND STUDENT ALLIANCE, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock (the "Common Stock") of COLLEGE
BOUND STUDENT ALLIANCE, INC. a Nevada corporation (the "Company"), evidenced
by the attached warrant (the "Warrant"), and herewith makes payment of the
exercise price with respect to such shares in full, all in accordance with the
conditions and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of
the undersigned and delivered to the undersigned at the address set forth
below:
Dated: ___________________
________________________________________________________________________
Signature
_______________________________________________________________________
Print Name
________________________________________________________________________
Address
_______________________________________________________________________
NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
________________________________________________________________________
EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons
below named the right to purchase _______ shares of the Common Stock of
COLLEGE BOUND STUDENT ALLIANCE, INC., evidenced by the attached Warrant and
does hereby irrevocably constitute and appoint _______________________
attorney to transfer the said Warrant on the books of the Company, with full
power of substitution in the premises.
Dated: ______________________________
Signature
Fill in for new registration of Warrant:
_________________________________________
Name
_________________________________________
Address
_________________________________________
Please print name and address of assignee
(including zip code number)
_______________________________________________________________________
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
________________________________________________________________________
