Exhibit 99.6
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL
OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
No. 07-A-2
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WATER CHEF, INC.
COMMON STOCK PURCHASE WARRANT
CLASS 2007-A
1. ISSUANCE. In consideration of good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by WATER CHEF, INC.,
a Delaware corporation (the "Company"), SOUTHSHORE CAPITAL FUND, LTD or
registered assigns (the "Holder") is hereby granted the right to purchase at any
time, on or after the Issue Date (as defined below) until 5:00 P.M., New York
City time, on the Expiration Date (as defined below), Two Hundred Seventy-Six
Thousand Nine Hundred Fifty-Seven (276,957) fully paid and nonassessable shares
of the Company's Common Stock, $0.001 par value per share (the "Common Stock"),
at an initial exercise price per share (the "Exercise Price") of $0.096 per
share, subject to further adjustment as set forth herein. This Warrant is being
issued pursuant to the terms of that certain Securities Purchase Agreement,
dated as of August 27, 2007 (the "Securities Purchase Agreement"), to which the
Company and Holder (or Holder's predecessor in interest) are parties.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Securities Purchase Agreement. This Warrant was originally issued
to the Holder or the Holder's predecessor in interest on September 7, 2007 (the
"Issue Date").
2. EXERCISE OF WARRANTS.
2.1 GENERAL.
(a) This Warrant is exercisable in whole or in part at any
time and from time to time commencing on the Issue Date. Such exercise shall be
effectuated by submitting to the Company (either by delivery to the Company or
by facsimile transmission as provided in Section 8 hereof) a completed and duly
executed Notice of Exercise (substantially in the form attached to this Warrant
Certificate) as provided in the Notice of Exercise (or revised by notice given
by the Company as contemplated by the Section headed "NOTICES" in the Securities
Purchase Agreement). The date such Notice of Exercise is faxed to the Company
shall be the "Exercise Date," provided that, if such exercise represents the
full exercise of the outstanding balance of the Warrant, the Holder of this
Warrant tenders this Warrant Certificate to the Company within five (5) Trading
Days thereafter. The Notice of Exercise shall be executed by the Holder of this
Warrant and shall indicate (i) the number of shares then being purchased
pursuant to such exercise and (ii) if applicable (as pro vided below), whether
the exercise is a cashless exercise.
(b) If the Notice of Exercise form elects a "cashless"
exercise, the Holder shall thereby be entitled to receive a number of shares of
Common Stock equal to (w) the excess of the Current Market Value (as defined
below) over the total cash exercise price of the portion of the Warrant then
being exercised, divided by (x) the Market Price of the Common Stock. For the
purposes of this Warrant, the terms (y) "Current Market Value" shall mean an
amount equal to the Market Price of the Common Stock, multiplied by the number
of shares of Common Stock specified in the applicable Notice of Exercise, and
(z) "Market Price of the Common Stock" shall mean the average Closing Price of
the Common Stock for the three (3) Trading Days ending on the Trading Day
immediately prior to the Exercise Date.
(c) If the Holder provides on the Notice of Exercise form that
the Holder has elected a "cash" exercise (or if the cashless exercise referred
to in the immediately preceding paragraph (b) is not available in accordance
with its terms), the Exercise Price per share of Common Stock for the shares
then being exercised shall be payable, at the election of the Holder, in cash or
by certified or official bank check or by wire transfer in accordance with
instructions provided by the Company at the request of the Holder.
(d) Upon the appropriate payment, if any, of the Exercise
Price for the shares of Common Stock purchased, together with the surrender of
this Warrant Certificate (if required), the Holder shall be entitled to receive
a certificate or certificates for the shares of Common Stock so purchased.
(e) The Company shall deliver such certificates representing
the Warrant Shares in accordance with the instructions of the Holder as provided
in the Notice of Exercise (the certificates delivered in such manner, the
"Warrant Share Certificates") within three (3) Trading Days (such third Trading
Day, a "Delivery Date") of (i) with respect to a "cashless exercise," the
Exercise Date or the Automatic Exercise Date, as the case may be, or, (ii) with
respect to a "cash" exercise, the later of the Exercise Date or the date the
payment of the Exercise Price for the relevant Warrant Shares is received by the
Company.
(f) The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section 2.1 on the
Exercise Date.
2.2 LIMITATION ON EXERCISE. Notwithstanding the provisions
of this Warrant, the Securities Purchase Agreement or of the other Transaction
Agreements, in no event (except (i) as specifically provided in this Warrant as
an exception to this provision, (ii) during the forty-five (45) day period prior
to the Expiration Date, or (iii) while there is outstanding a tender offer for
any or all of the shares of the Company's Common Stock) shall the Holder be
entitled to exercise this Warrant, or shall the Company have the obligation to
issue shares upon such exercise of all or any portion of this Warrant to the
extent that, after such exercise the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unexercised portion of the Warrants or other rights to purchase Common Stock or
through the ownership of the unconverted portion of convertible securities), and
(2) the number of shares of Common Stock issuable upon the exercise of the
Warrants with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its affiliates of more
than 4.99% of the outstanding shares of Common Stock (after taking into account
the shares to be issued to the Holder upon such exercise). For purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), except as otherwise provided in clause (1) of
such sentence. Nothing herein shall preclude the Holder from disposing of a
sufficient number of other shares of Common Stock beneficially owned by the
Holder so as to thereafter permit the continued exercise of this Warrant.
2.3 AUTOMATIC EXERCISE. If any portion of this Warrant
remains unexercised as of the Expiration Date and the Market Price of the Common
Stock as of the Expiration Date is greater than the applicable Exercise Price as
of the Expiration Date, then, without further action by the Holder, this Warrant
shall be deemed to have been exercised automatically on the date (the "Automatic
Exercise Date") which is the day immediately prior to the close of business on
the Expiration Date (or, in the event that the Expiration Date is not a Business
Day, the immediately preceding Business Day) as if the Holder had duly given a
Notice of Exercise for a "cashless" exercise as contemplated by Section 2.1(b)
hereof, and the Holder (or such other person or persons as directed by the
Holder) shall be treated for all purposes as the holder of record of such
Warrant Shares as of the close of business on such Automatic Exercise Date. This
Warrant shall be deemed to be surrendered to the Company on the Automatic
Exercise Date by virtue of this Section 2.3 without any action by the Holder.
2.4 CERTAIN DEFINITIONS. As used herein, the term
"Expiration Date" means the date which is the last calendar day of the month in
which the third anniversary of the Effective Date occurs.
3. RESERVATION OF SHARES. The Company hereby agrees that, at all
times during the term of this Warrant, there shall be reserved for issuance upon
exercise of this Warrant, one hundred percent (100%) of the number of shares of
its Common Stock as shall be required for issuance of the Warrant Shares for the
then unexercised portion of this Warrant. For the purposes of such calculations,
the Company should assume that the outstanding portion of this Warrants was
exercisable in full at any time, without regard to any restrictions which might
limit the Holder's right to exercise all or any portion of this Warrant held by
the Holder.
4. MUTILATION OR LOSS OF WARRANT. 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) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof,
be entitled to any rights of a stockholder in the Company, either at law or
equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
6. PROTECTION AGAINST DILUTION AND OTHER ADJUSTMENTS.
6.1 ADJUSTMENT MECHANISM. If an adjustment of the Exercise
Price is required pursuant to this Section 6, the Holder shall be entitled to
purchase such number of shares of Common Stock as will cause (i) (x) the total
number of shares of Common Stock Holder is entitled to purchase pursuant to this
Warrant following such adjustment, multiplied by (y) the adjusted Exercise Price
per share, to equal the result of (ii) (x) the dollar amount of the total number
of shares of Common Stock Holder is entitled to purchase before adjustment,
multiplied by (y) the total Exercise Price before adjustment.
6.2 CAPITAL ADJUSTMENTS. In case of any stock split or
reverse stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation (where the Company is not the
surviving entity), the provisions of this Section 6 shall be applied as if such
capital adjustment event had occurred immediately prior to the date of this
Warrant and the original Exercise Price had been fairly allocated to the stock
resulting from such capital adjustment; and in other respects the provisions of
this Section shall be applied in a fair, equitable and reasonable manner so as
to give effect, as nearly as may be, to the purposes hereof. A rights offering
to stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights. The Company will not effect any consolidation or
merger, unless prior to the consummation thereof, the successor or acquiring
entity (if other than the Company) and, if an entity different from the
successor or acquiring entity, the entity whose capital stock or assets the
holders of the Common Stock of the Company are entitled to receive as a result
of such consolidation or merger assumes by written instrument the obligations
under this Warrant (including under this Section 6) and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.
6.3 ADJUSTMENT FOR SPIN OFF. If, for any reason, prior to
the exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the "Spin Off") in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then the Company shall cause (i) to be reserved
Spin Off Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder's unexercised Warrants outstanding on the
record date (the "Record Date") for determining the amount and number of Spin
Off Securities to be issued to security holders of the Company (the "Outstanding
Warrants") been exercised as of the close of business on the Trading Day
immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to
be issued to the Holder on the exercise of all or any of the Outstanding
Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved
Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the
amount of the Outstanding Warrants then being exercised, and (II) the
denominator is the amount of the Outstanding Warrants.
7. TRANSFER TO COMPLY WITH THE SECURITIES ACT; REGISTRATION RIGHTS.
7.1 TRANSFER. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2 REGISTRATION RIGHTS. (a) Reference is made to the
Registration Rights Agreement. The Company's obligations under the Registration
Rights Agreement and the other terms and conditions thereof with respect to the
Warrant Shares, including, but not necessarily limited to, the Company's
commitment to file a registration statement including the Warrant Shares, to
have the registration of the Warrant Shares completed and effective, and to
maintain such registration, are incorporated herein by reference.
(b) In addition to the registration rights referred to in the
preceding provisions of Section 7.2(a), effective after the expiration of the
effectiveness of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have piggy-back registration rights with
respect to the Warrant Shares then held by the Holder or then subject to
issuance upon exercise of this Warrant (collectively, the "Remaining Warrant
Shares"), subject to the conditions set forth below. If, at any time after the
Registration Statement has ceased to be effective, the Company participates
(whether voluntarily or by reason of an obligation to a third party) in the
registration of any shares of the Company's stock (other than a registration on
Form S-8 or on Form S-4), the Company shall give written notice thereof to the
Holder and the Holder shall have the right, exercisable within ten (10) Trading
Days after receipt of such notice, to demand inclusion of all or a portion of
the Holder's Remaining Warrant Shares in such registration statement. If the
Holder exercises such election, the Remaining Warrant Shares so designated shall
be included in the registration statement at no cost or expense to the Holder
(other than any costs or commissions which would be borne by the Holder under
the terms of the Registration Rights Agreement). The Holder's rights under this
Section 7 shall expire at such time as the Holder can sell all of the Remaining
Warrant Shares under Rule 144 without volume or other restrictions or limit.
8. LATE DELIVERY OF WARRANT SHARES. Reference is made to Section
5(b) of the Securities Purchase Agreement, the terms of which are incorporated
herein by reference.
9. NOTICES. Any notice required or permitted hereunder shall be
given in manner provided in the Section headed "NOTICES" in the Securities
Purchase Agreement, the terms of which are incorporated herein by reference.
10. SUPPLEMENTS AND AMENDMENTS; WHOLE AGREEMENT. This Warrant may
be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant contains the full understanding of the parties
hereto with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
11. GOVERNING LAW. This Warrant shall be deemed to be a contract
made under the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the County of New
York or the state courts of the State of New York sitting in the County of New
York 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. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Holder in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
12. JURY TRIAL WAIVER. The Company and the Holder hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
Parties hereto against the other in respect of any matter arising out or in
connection with this Warrant.
13. REMEDIES. The Company stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. COUNTERPARTS. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
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15. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: September 7, 2007
WATER CHEF, INC.
By: /s/ Leslie J. Kessler
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Leslie J. Kessler
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(Print Name)
President and Chief Executive Officer
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(Title)
NOTICE OF EXERCISE OF WARRANT
TO: WATER CHEF, INC. VIA FAX: (631) 577-7918
68 South Service Road, Suite 100
Melville, NY 11747
Attn: President
FROM:
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("Holder")
DATE:
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(the "Exercise Date")
RE: Exercise _________________ shares (the "Exercise Warrant") of Common Stock
Purchase Warrant Class 2007-__, No. 07-_-_ (the "Warrant") of WATER CHEF,
INC. (the "Company") into ______________________ shares (the "Warrant
Shares") of Common Stock (defined below)
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CALCULATION OF SHARE BALANCE SUBJECT TO THIS WARRANT
AFTER GIVING EFFECT TO THIS NOTICE OF EXERCISE
Original Shares Subject to this Warrant
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Cumulative Amount of Shares Exercised under this
Warrant Prior to this Notice of Exercise
---------------
Balance of Shares Subject to this Warrant Prior to
this Notice of Exercise
---------------
Shares Being Exercised by this Notice of Exercise
---------------
Adjusted Shares Subject to this Warrant after
Giving Effect to this Notice of Exercise
---------------
IF THIS NOTICE OF EXERCISE REPRESENTS THE FULL EXERCISE OF THE OUTSTANDING
BALANCE OF THE WARRANT, THE HOLDER EITHER (1) HAS PREVIOUSLY SURRENDERED THE
WARRANT TO THE COMPANY OR (2) WILL SURRENDER (OR CAUSE TO BE SURRENDERED) THE
WARRANT TO THE COMPANY AT THE ADDRESS INDICATED ABOVE BY EXPRESS COURIER WITHIN
FIVE (5) TRADING DAYS AFTER DELIVERY OR FACSIMILE TRANSMISSION OF THIS NOTICE OF
EXERCISE.
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The undersigned hereby irrevocably elects to exercise the right,
represented by the Common Stock Purchase Warrant Class 2007-___, No. 07-___-___,
dated as of _____________________, 20___, to purchase ___________ shares of the
Common Stock, $0.001 par value ("Common Stock"), of WATER CHEF, INC. and tenders
herewith payment in accordance with Section 2 of said Common Stock Purchase
Warrant, as follows:
/ / CASH: $______________________________ = (Exercise Price x Exercise Shares)
Payment is being made by:
/ / enclosed check
/ / wire transfer
/ / other
/ / CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]:
Net number of Warrant Shares to be issued to Holder : _________*
* based on: Current Market Value - (Exercise Price x Exercise Shares)
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Market Price of Common Stock
where:
Market Price of Common Stock ["MP"] = $_______________
Current Market Value [MP x Exercise Shares] = $_______________
It is the intention of the Holder to comply with the provisions of Section
2.2 of the Warrant regarding certain limits on the Holder's right to exercise
thereunder. Nonetheless, to the extent that, pursuant to the exercise effected
hereby, the Holder would have more shares than permitted under said Section,
this notice should be amended and revised, ab initio, to refer to the exercise
which would result in the issuance of shares consistent with such provision. Any
exercise above such amount is hereby deemed void and revoked.
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As contemplated by the Warrant, this Notice of Conversion is being sent by
facsimile to the telecopier number and officer indicated above.
The certificates representing the Warrant Shares should be transmitted by
the Company to the Holder
/ / via express courier, or
/ / by electronic transfer
after receipt of this Notice of Exercise (by facsimile transmission or
otherwise) to:
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Dated:
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[Name of Holder]
By:
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