Exhibit 99.4
THE WARRANT EVIDENCED HEREBY, AND THE SECURITIES ISSUABLE HEREUNDER, HAVE BEEN
AND SHALL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE APPLICABLE STATE SECURITY LAWS. THE WARRANT AND SUCH SECURITIES
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE,
AND SHALL NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE PROPOSED
DISPOSITION IS THE SUBJECT OF A CURRENTLY EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT
AND SUCH STATE SECURITIES LAWS IN CONNECTION WITH SUCH DISPOSITION.
WATER CHEF, INC.
COMMON STOCK PURCHASE WARRANT
Original Issue Date: October 11, 2006
Void After: October 10, 2009
This Warrant is Issued to
SOUTHRIDGE PARTNERS LP
(hereinafter called the "HOLDER," which term shall include the Holder's legal
representatives, heirs, successors and assigns) by WATER CHEF, INC., a Delaware
corporation (hereinafter referred to as the "COMPANY"). This Warrant may be
transferred by the Holder only in accordance with the provisions of Section 12.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Loan Agreement and the Transaction
Documents of even date.
1. EXERCISE OF WARRANT. For value received and subject to the
terms and conditions hereinafter set forth, the Holder is entitled, upon
surrender of this Warrant at any time on or after October 11, 2006 and on or
prior to October 10, 2009 (the "EXERCISE DATE") (with the subscription form
annexed hereto (the "SUBSCRIPTION FORM") duly executed) at the office of the
Company at 1007 Glen Cove Avenue, Suite 1, Glen Head, New York 11545, or such
other office in the United States of which the Company shall notify the Holder
hereof in writing, to purchase from the Company, at the purchase price
hereinafter specified (as adjusted from time to time, the "EXERCISE PRICE"),
882,352 shares (the "WARRANT SHARES") (as adjusted from time to time) of the
Common Stock, no par value per share, of the Company (the "COMMON STOCK"). The
initial Exercise Price shall be $0.085 per share.
2. ISSUANCE OF STOCK CERTIFICATES. As promptly as practicable
after surrender of this Warrant and receipt of payment of the Exercise Price,
the Company shall issue and deliver to the Holder a certificate or certificates
for the shares purchased hereunder, in certificates of such denominations and in
such names as the Holder may specify.
3. PAYMENT OF EXERCISE PRICE. Payment of the Exercise Price shall
be made by check made payable to the order of the Company or wire transfer of
funds to a bank account designated by the Company.
4. CASHLESS EXERCISE. The Holder may notify the Company in a
Subscription Form of its election to utilize cashless exercise, in which event
the Company shall issue to the Holder the number of Warrant Shares determined as
follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued
to the Holder.
Y = the number of Warrant Shares with
respect to which this Warrant is being
exercised.
A = the average of the closing prices for
the five trading days immediately prior to
(but not including) the Exercise Date.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.
5. LIMITATION ON EXERCISE. Notwithstanding anything to the
contrary contained herein, the number of Warrant Shares that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its affiliates and any other persons whose
beneficial ownership of Common Stock would be aggregated with the Holder's for
purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
6. ADJUSTMENT FOR DIVIDENDS, DISTRIBUTIONS, SUBDIVISIONS,
COMBINATIONS, MERGERS, CONSOLIDATIONS OR SALE OF ASSETS.
6.1 MANNER OF ADJUSTMENT.
(a) STOCK DIVIDENDS, DISTRIBUTIONS OR
SUBDIVISIONS. In the event the Company shall issue shares of Common Stock in a
stock dividend, stock distribution or subdivision, the Exercise Price in effect
immediately before such stock dividend, stock distribution or subdivision shall,
concurrently with the effectiveness of such stock dividend, stock distribution
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or subdivision, be proportionately decreased and the number of shares of Common
Stock purchasable by exercise of this Warrant shall be proportionately
increased.
(b) COMBINATIONS OR CONSOLIDATIONS. In the event
the outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Exercise Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased and the number of shares of Common
Stock purchasable by exercise of this Warrant shall be proportionately
decreased.
(c) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE OR
SUBSTITUTION. In the event that the class of securities issuable upon the
exercise of this Warrant shall be changed into the same or a different number of
shares of any class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than any event addressed by Sections
6.1(a), 6.1(b) or 6.1(d)), then and in each such event the Holder shall have the
right thereafter to exercise this Warrant for the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of the
class of securities into which such Warrant might have been exercisable for
immediately prior to such reorganization, reclassification, or change, all
subject to further adjustment as provided herein.
(d) ADJUSTMENT FOR MERGER, CONSOLIDATION OR SALE
OF ASSETS. In the event that the Company shall merge or consolidate with or into
another entity or sell all or substantially all of its assets, this Warrant
shall thereafter be exercisable for the kind and amount of shares of stock or
other securities or property to which a holder of the number of shares of Common
Stock of the Company deliverable upon exercise of this Warrant would have been
entitled upon such consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions set forth in this Section 6
with respect to the rights and interest thereafter of the Holder of this
Warrant, to the end that the provisions set forth in this Section 6 shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other property thereafter deliverable upon the exercise of
this Warrant.
6.2 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Exercise Price pursuant to this Section
6, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to the Holder a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based.
6.3 CLOSING OF BOOKS. The Company shall at no time close
its transfer books against the transfer of any shares of Common Stock issued or
issuable upon the exercise of this Warrant in any manner which interferes with
the timely and proper issuance of such shares.
7. COVENANTS OF THE COMPANY. During the period within which the
rights represented by this Warrant may be exercised, the Company shall at all
times have authorized and reserved for the purpose of issue upon exercise of the
rights evidenced hereby, a sufficient number of shares of the class of
securities issuable upon exercise of this Warrant to provide for the exercise of
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such rights. All securities which may be issued upon the exercise of the rights
represented by this Warrant shall, upon issuance, be duly authorized, validly
issued, fully paid and non-assessable and free from all taxes, liens and charges
with respect to the issue thereof. Upon surrender for exercise, this Warrant
shall be canceled and shall not be reissued; PROVIDED, HOWEVER, that upon the
partial exercise hereof a substitute Warrant of like tenor and date representing
the rights to subscribe for and purchase any such unexercised portion hereof
shall be issued.
8. NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant shall
not entitle the Holder to any voting rights or any other rights as a stockholder
of the Company but upon presentation of this Warrant with the Subscription Form
duly executed and the tender of payment of the Exercise Price at the office of
the Company pursuant to the provisions of this Warrant, the Holder shall
forthwith be deemed a stockholder of the Company in respect of the securities
for which the Holder has so subscribed and paid.
9. NO CHANGE NECESSARY. The form of this Warrant need not be
changed because of any adjustment in the Exercise Price or in the number of
shares issuable upon its exercise. A Warrant issued after any adjustment or any
partial exercise or upon replacement may continue to express the same Exercise
Price and the same number of shares (appropriately reduced in the case of
partial exercise) as are stated on this Warrant as initially issued, and that
Exercise Price and that number of shares shall be considered to have been so
changed as of the close of business on the date of adjustment.
10. ADDRESSES FOR NOTICES. All notices, requests, consents and
other communications hereunder shall be in writing, either delivered in hand or
mailed by registered or certified mail, return receipt requested, or sent by
facsimile, and shall be deemed to have been duly made when delivered:
(a) If to the Holder, to the Holder's address as shown on
the books of the Company; or
(b) If to the Company, to the address set forth on the
first page of this Warrant.
11. SUBSTITUTION. In the case this Warrant shall be mutilated,
lost, stolen or destroyed, the Company shall issue a new Warrant of like tenor
and denomination and deliver the same (a) in exchange and substitution for and
upon surrender and cancellation of any mutilated Warrant, or (b) in lieu of any
Warrant lost, stolen or destroyed, upon receipt of evidence satisfactory to the
Company of the loss, theft, or destruction of such Warrant (including, without
limitation, a reasonably detailed affidavit with respect to the circumstances of
any loss, theft or destruction), and of indemnity (or, in the case of the
initial Holder or any other institutional holder, an indemnity agreement)
satisfactory to the Company.
12. TRANSFER RESTRICTIONS. This Warrant shall not be transferable
by the Holder and shall be exercisable only by the Holder. Without the prior
written consent of the Company, the Warrant shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar process. Any attempted transfer,
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assignment, pledge, hypothecation or other disposition of the Warrant or of any
rights granted hereunder contrary to the provisions of this Section 12, or the
levy of any attachment or similar process upon the Warrant or such rights, shall
be null and void.
13. TAXES. The Company makes no representation about tax treatment
to the Holder with respect to receipt or exercise of the Warrant or acquiring,
holding or disposing of the Common Stock, and the Holder represents that the
Holder has had the opportunity to discuss such treatment with the Holder's tax
advisers.
14. REMEDIES. Each party stipulates that the remedies at law in
the event of any default or threatened default by the other party in the
performance or compliance with any of the terms of this Warrant are and shall
not be adequate, and that such terms may be specifically enforced by a decree
for that specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
15. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of New York without
regard to its principles of conflicts of laws.
16. MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the Holder and the Company.
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COMMON STOCK PURCHASE WARRANT
* * *
IN WITNESS WHEREOF, the parties have caused this Warrant to be executed
this 11th day of October, 2006.
WATER CHEF, INC.
By: /s/ David A. Conway
----------------------------------------
Name: David A. Conway
--------------------------------------
Title: President & CEO
-------------------------------------
SUBSCRIPTION FORM
(TO BE EXECUTED BY THE HOLDER
IN ORDER TO EXERCISE THE WARRANT)
Date:
---------------------
To: WATER CHEF, INC.
The undersigned, pursuant to the provisions set forth in the attached
Warrant hereby irrevocably elects to purchase _____ shares of the Common Stock
(the "COMMON STOCK") covered by such Warrant and herewith makes payment of
$_________, representing the [full/partial] purchase price for such shares at
the price per share provided for in such Warrant.
The undersigned hereby agrees to take such other action and execute and
deliver such other documents as American Pallet Leasing, Inc. may require, in
connection with the issue of shares of Common Stock to the undersigned as
aforesaid, in order to comply with the provisions of such Warrant.
The undersigned is aware that the Common Stock has not been registered
under the Securities Act of 1933, as amended (the "ACT") or any state securities
laws. The undersigned understands that the reliance by the Company on exemptions
under the Act is predicated in part upon the truth and accuracy of the
statements of the undersigned in this Subscription Form.
The undersigned represents and warrants that (1) it has been furnished
with all information which it deems necessary to evaluate the merits and risks
of the purchase of the Common Stock; (2) it has had the opportunity to ask
questions concerning the Common Stock and the Company and all questions posed
have been answered to its satisfaction; (3) it has been given the opportunity to
obtain any additional information it deems necessary to verify the accuracy of
any information obtained concerning the Common Stock and the Company; and (4) it
has such knowledge and experience in financial and business matters that it is
able to evaluate the merits and risks of purchasing the Common Stock and to make
an informed investment decision relating thereto.
The undersigned hereby represents and warrants that it is purchasing
the Common Stock for its own account and not with a view to the sale or
distribution of all or any part of the Common Stock.
The undersigned understands that because the Common Stock has not been
registered under the Act, it must continue to bear the economic risk of the
investment for an indefinite time and the Common Stock cannot be sold unless the
Common Stock is subsequently registered under applicable federal and state
securities laws or an exemption from such registration is available.
The undersigned agrees that it shall in no event sell or distribute or
otherwise dispose of all or any part of the Common Stock unless (1) there is an
effective registration statement under the Act and applicable state securities
laws covering any such transaction involving the Common Stock or (2) the Company
receives an opinion of legal counsel to the undersigned (concurred in by legal
counsel for the Company) stating that such transaction is exempt from
registration or the Company otherwise satisfies itself that such transaction is
exempt from registration.
The undersigned consents to the placing of a legend on its certificate
for the Common Stock stating that the Common Stock 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 Common Stock until the Common Stock 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 Common Stock.
Signature
Print name:
------------------------
Date:
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