EXHIBIT 10.40
FORM OF WARRANT
THIS WARRANT AND ANY SHARES OF COMMON STOCK FOR WHICH THIS WARRANT MAY BE
EXERCISED HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR QUALIFIED FOR SALE UNDER ANY STATE SECURITIES LAWS (COLLECTIVELY, "SECURITIES
LAWS") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS REGISTERED
OR QUALIFIED FOR SALE UNDER ALL APPLICABLE SECURITIES LAWS OR UNLESS, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER, ANY SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT
FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF SUCH SECURITIES LAWS.
NO. XXX XXXXXXXXX,2006
SAVE THE WORLD AIR, INC.
WARRANT TO PURCHASE COMMON STOCK
VOID AFTER 5:00 P.M. California Time on xxxxxxxxx, 2008
THIS CERTIFIES that, for the value received, _xxxxxxxx_ (the "HOLDER")
is entitled, upon the terms and subject to the conditions hereinafter set forth,
at any time on or after the date of this Warrant and on or prior to 5:00 p.m.
California time on _xxxxxxxx_, 2008 (the "EXPIRATION TIME"), but not thereafter,
to subscribe for and purchase, from SAVE THE WORLD AIR, INC., a Nevada
corporation (the "COMPANY"), up to _xxxxxxxxx_ (_xxxxxx_) shares of the
Company's Common Stock (the "SHARES") at a purchase price per share equal to
$2.60 (the "EXERCISE PRICE").
1. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are exercisable
by the Holder, in whole or in part, at any time after the date hereof and before
the Expiration Time by the surrender of this Warrant and the Notice of Warrant
Exercise annexed hereto duly executed at the office of the Company, in North
Hollywood, California (or such other office or agency of the Company as it may
designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company), and upon payment of an amount equal to
the aggregate Exercise Price for the number of Shares thereby purchased (by cash
or by check or certified bank check payable to the order of the Company in an
amount equal to the purchase price of the shares thereby purchased); whereupon
the Holder shall be entitled to receive a stock certificate representing the
number of Shares so purchased. The Company agrees that if at the time of the
surrender of this Warrant and purchase of the Shares, the Holder shall be
entitled to exercise this Warrant, the Shares so purchased shall be and be
deemed to be issued to such holder as the record owner of such Shares as of the
close of business on the date on which this Warrant shall have been exercised as
aforesaid.
(b) Upon partial exercise of this Warrant, the Holder shall be
entitled to receive from the Company a new Warrant in substantially identical
form for the purchase of that number of Shares as to which this Warrant shall
not have been exercised. Certificates for Shares purchased hereunder shall be
delivered to the Holder within a reasonable time after the date on which this
Warrant shall have been exercised as aforesaid.
2. No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. If any adjustment to the Exercise
Price hereunder should result in an Exercise Price of less than $0.01, such
adjustment shall be rounded to the nearest $0.01.
3. Charges, Taxes and Expenses. The Holder shall pay all issue and
transfer taxes and other incidental expenses in respect of the issuance of
certificates for Shares upon the exercise of this Warrant, and such certificates
shall be issued in the name of the Holder of this Warrant.
4. No Rights as a Stockholder. This Warrant does not entitle the Holder
to any voting rights or other rights as a stockholder of the Company prior to
the exercise hereof.
5. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in case of loss, theft or
destruction of this Warrant, upon delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, upon surrender and cancellation of such Warrant, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, the
Company will make and deliver to the Holder, in lieu thereof, a new Warrant in
substantially identical form and dated as of such cancellation.
6. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday in the United
States or the State of California, then such action may be taken or such right
may be exercised on the next succeeding business day.
7. Merger, Reclassification, etc.
(a) If at any time the Company proposes (A) the acquisition of the
Company by another entity by means of any transaction or series of related
transactions (including, without limitation, any reorganization, merger,
consolidation or stock issuance) that results in the transfer of fifty percent
(50%) or more of the then outstanding voting power of the Company; or (B) a sale
of all or substantially all of the assets of the Company, then the Company shall
give the Holder ten (10) days notice of the proposed effective date of the
transaction. If this Warrant has not been exercised by the effective date of
such transaction, this Warrant shall be exercisable into the kind and number of
shares of stock or other securities or property of the Company or of the entity
resulting from such merger or acquisition to which such Holder would have been
entitled if immediately prior to such acquisition or merger, it had exercised
this Warrant. The provisions of this Section 7(a) shall similarly apply to
successive consolidations, mergers, sales or conveyances.
2
(b) If the Company at any time shall, by subdivision, combination or
reclassification of securities or otherwise, change any of the securities to
which purchase rights under this Warrant exist into the same or a different
number of securities of any class or classes, this Warrant shall thereafter be
to acquire such number and kind of securities as would have been issuable as the
result of such change with respect to the securities which were subject to the
purchase rights under this Warrant immediately prior to such subdivision,
combination, reclassification or other change. If the Shares are subdivided or
combined into a greater or smaller number of Shares, the Exercise Price under
this Warrant shall be proportionately reduced in case of subdivision of shares
or proportionately increased in the case of combination of shares, in both cases
by the ratio which the total number of Shares to be outstanding immediately
after such event bears to the total number of Shares outstanding immediately
prior to such event.
(c) No adjustment on account of cash dividends or interest on the
Shares or other securities purchasable hereunder will be made to the Exercise
Price under this Warrant.
8. Restrictions on Transfer.
(a) In no event will the Holder make a disposition of this Warrant or
the Shares unless and until, if requested by the Company, it shall have
furnished the Company with an opinion of counsel satisfactory to the Company and
its counsel to the effect that appropriate action necessary for compliance with
the Securities Act of 1933, as amended (the "Act") relating to sale of an
unregistered security has been taken. Notwithstanding the foregoing, the
restrictions imposed upon the transferability of the Shares shall terminate as
to any particular Share when (i) such security shall have been sold without
registration in compliance with Rule 144 under the Act, or (ii) a letter shall
have been issued to the Holder at its request by the staff of the Securities and
Exchange Commission or a ruling shall have been issued to the Holder at its
request by such Commission stating that no action shall be recommended by such
staff or taken by such Commission, as the case may be, if such security is
transferred without registration under the Act in accordance with the conditions
set forth in such letter or ruling and such letter or ruling specifies that no
subsequent restrictions on transfer are required, or (iii) such security shall
have been registered under the Act and sold by the Holder thereof in accordance
with such registration.
(b) Subject to the provisions of Section 8(a) hereof, this Warrant
and all rights hereunder are transferable, in whole or in part, upon surrender
of the Warrant with a properly executed assignment at the principal office of
the Company.
(c) The stock certificates representing the Shares and any securities
of the Company issued with respect thereto shall be imprinted with legends
restricting transfer except in compliance with the terms hereof and with
applicable federal and state securities laws.
9. Miscellaneous.
(a) Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts made
and to be performed wholly within such state.
3
(b) Restrictions. The Holder acknowledges that the Shares acquired
upon the exercise of this Warrant may have restrictions upon its resale imposed
by state and federal securities laws.
(c) Waivers Strictly Construed. With regard to any power, remedy or
right provided herein or otherwise available to any party hereunder (i) no
waiver or extension of time shall be effective unless expressly contained in a
writing signed by the waiving party; and (ii) no alteration, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
(d) Complete Agreement and Modifications. This Warrant constitutes
the Company's and Holder's entire agreement with respect to the subject matter
hereof and supersedes all agreements, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof. This Warrant may not be amended, altered or modified
except by a writing signed by the Company and the Holder of this Warrant.
IN WITNESS WHEREOF, SAVE THE WORLD AIR, INC. has caused this Warrant to
be executed by its duly authorized representative dated as of the date first set
forth above.
SAVE THE WORLD AIR, INC.
By
---------------------------------
Name: Eugene E. Eichler
Title: Chief Executive Officer
4
NOTICE OF WARRANT EXERCISE
TO: SAVE THE WORLD AIR, INC.
(1) The undersigned hereby elects to purchase ______________ shares of
Common Stock (the "Shares") of Save the World Air, Inc. pursuant to the terms of
the attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing the Shares
in the name of the undersigned or in such other name as is specified below:
----------------------------------------------
(Print Name)
Address:
----------------------------------------------
----------------------------------------------
----------------------------------------------
(3) The undersigned confirms that the Shares are being acquired for the
account of the undersigned for investment only and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or selling the Shares.
(4) The undersigned represents and warrants that he or she is either
(YOU MUST INITIAL ONE CHOICE AND FILL IN THE REQUESTED INFORMATION):
__________FOR U.S. INVESTORS ONLY: an "accredited investor" as defined
in Rule 501(a) of Regulation D, a copy of which definition the investor
acknowledges receiving and reviewing, and resident of the State of
_______________________; or
__________FOR NON-U.S. PERSONS ONLY: not a "U.S. person" as defined in
Rule 902 of Regulation S, a copy of which definition the investor
acknowledges receiving and reviewing, and a citizen of the country of
____________________ and a resident of the country of
______________________,
and, in either case, makes the following further representation:
I, THE UNDERSIGNED, REPRESENT THAT I HAVE A PRE-EXISTING PERSONAL OR
BUSINESS RELATIONSHIP WITH THE COMPANY, ANY OFFICER, DIRECTOR OR
CONTROLLING PERSON THEREOF OR HAVE, THROUGH MYSELF OR THROUGH MY
UNAFFILIATED PROFESSIONAL ADVISER, THE BUSINESS OR FINANCIAL EXPERIENCE
TO PROTECT MY INTERESTS IN CONNECTION WITH MY SUBSCRIPTION HERETO.
FURTHER, I AM PURCHASING THE SECURITIES OFFERED HEREBY FOR INVESTMENT
AND NOT WITH A VIEW TOWARD DISTRIBUTION THEREOF.
(5) The undersigned accepts such shares subject to the restrictions on
transfer set forth in the attached Warrant.
-------------------- --------------------------------
(Date) (Signature)
--------------------------------
(Print Name)