NEITHER THIS WARRANT NOR THE SHARES ISSUABLE ON THE EXERCISE HEREOF HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE AND IS BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE ON THE EXERCISE HEREOF MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM.
COMMON STOCK PURCHASE WARRANT
To Purchase 300,000 Shares Of Common Stock Of
SANGUINE CORPORATION
This is to certify, that FOR VALUE RECEIVED,
Chapman Spira and Carson LLC
(The "Holder")
is entitled to purchase, subject to the provisions of this Warrant from
Sanguine Corporation (The "Company"), a Nevada corporation, at any time up to
an including the expiration of three years after the effective date of the
registration statement referred to in Section 8 ("Expiration Date"), up to an
aggregate of three hundred thousand (300,000) shares of the Company's common
stock, ("Common Stock") at a purchase price per share of 1/8th of One Dollar
(US$0.125) in currency of the United States of America. The number of shares
of Common Stock to be received upon the exercise of this Warrant and the price
to be paid for a share of Common Stock may be adjusted from time to time as
hereinafter set forth. The shares of the Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter sometimes
referred to as "Warrant Shares," and the exercise price of a share of Common
Stock in effect at any time and as adjusted from time to time is hereinafter
sometimes referred to as the "Exercise Price." This Warrant represents the
Warrants referred to in the Purchaser Representation Letter (the "Purchaser
Representation Letter") entered into between the Company and Chapman Spira and
Carson LLC effective as of February 6, 2002.
1. Exercise of Warrant. This Warrant may be exercised in whole or in
part at any time and from time to time up to an including the Expiration Date.
If the date on which the Holder's right to purchase Common Stock expires
is a day on which national banks in the United States of America are
authorized by law to close, then that right shall expire on the next
succeeding day that is not such a day. The Holder shall exercise all rights to
purchase Common Stock by presenting and surrendering this Warrant to the
Company, at _________________________________, with the Purchase Form annexed
hereto duly executed and accompanied by payment of the Exercise Price for the
number of shares specified in such form. If this Warrant should be exercised
in part only, or if the Company should exercise any of its Redemption Rights,
the Company shall, upon surrender of this Warrant for cancellation, execute
and deliver a new Warrant evidencing the right of the Holder to purchase the
balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant, in proper form for exercise, with the Purchase Form annexed
hereto duly executed and accompanied by payment of the Exercise Price for the
number of shares specified in such form, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that certificates representing such shares of Common Stock
shall not then be actually delivered to the Holder. As soon as practicable
after each exercise of this Warrant, the Company will deliver the shares
issuable upon such exercise to the Holder.
2. Relinquishment of Options.
(a) The Warrant-holder in lieu of purchasing the entire number of
shares subject to purchase hereunder, shall have the right to relinquish
all or any part of the then unexercised portion of this Warrant (to the
extent then exercisable) for a number of shares of Common Stock to be
determined in accordance with the following provisions of this clause
(a):
(i) The number of shares of Common Stock, if any, issuable
pursuant to such relinquishment shall be the number of such shares,
rounded to the next greater number of full shares, as shall be equal
to the quotient obtained by dividing (A) the Appreciated Value by
(B) the purchase price per share of Common Stock specified in this
Warrant;
(ii) For the purpose of this clause (a), "Appreciated Value"
means the excess of (x) the aggregate current market value of the
shares of Common Stock covered by the option or the portion thereof
to be relinquished over (y) the aggregate purchase price for such
shares specified in this Warrant;
(b) Such right of relinquishment may be exercised only upon receipt
by the Company of a written notice of such relinquishment which shall be
dated the date of election to make such relinquishment; and that, for the
purposes of this Warrant, such date of election shall be deemed to be the
date when such notice is sent by registered or certified mail, or when
receipt is acknowledged by the Company, if mailed by other than
registered
or certified mail or if delivered by hand or by any telegraphic
communications equipment of the sender or otherwise delivered; provided,
that, in the event the method just described for determining such date of
election shall not be or remain consistent with the provisions of Section
16(b) of the Exchange Act or the rules and regulations adopted by the
Commission thereunder, as presently existing or as may be hereafter
amended, which regulations exempt from the operation of Section 16(b) of
the Exchange Act in whole or in part any such relinquishment transaction,
then such date of election shall be determined by such other method
consistent with Section 16(b) of the Exchange Act or the rules and
regulations thereunder as the Company shall in its discretion select and
apply;
(c) The "current market value" of a share of Common Stock on a
particular date shall be deemed to be its fair market value on that date
as determined in accordance with Paragraph 4; and
(d) The Warrant, or any portion thereof, may be relinquished only to
the extent that (A) it is exercisable on the date written notice of
relinquishment is received by the Company, (B) the Holder pays, or makes
provision satisfactory to the Company for the payment of, any taxes which
the Company is obligated to collect with respect to such relinquishment.
(e) If a Warrant is relinquished, such Warrant shall be deemed to
have been exercised to the extent of the number of shares of Common Stock
covered by the Warrant or part thereof which is relinquished, and no
further Warrants will be issued covering such shares of Common Stock.
3. Issuance and Delivery of Shares. The Company hereby represents,
warrants and agrees that at all times there shall be reserved for issuance and
delivered to the Holder the number of shares of Common Stock as shall be
required for issuance or delivery upon exercise of this Warrant.
4. Fractional Shares. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Option. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share, determined as
follows:
(a) If the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such exchange, the current
value shall be the last reported sales price of the Common Stock on such
exchange on the last business day prior to the date of exercise of this
Option or if no such sale is made on such day, the average of the closing
bid and asked prices for such day on such exchange; or
(b) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current value shall be the mean of the last
reported bid and asked prices reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), or if not so
quoted on NASDAQ then by the National Quotation Bureau, LLC, New York,
New York, on the last business day prior to the date of the exercise of
this Warrant; or
(c) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current value shall be an amount, not less than book value, determined in
such reasonable manner as may be prescribed by the Company's board of
directors, and supported by the written fairness opinion of an
independent, nationally-recognized stock valuation expert.
5. Transfer, Assignment or Loss of Warrant.
(a) The Holder may assign this Warrant, in whole or in part, or any
interest herein. This Warrant and the Warrant Shares have not been filed
or registered with the United States Securities and Exchange Commission
or
with the securities regulatory authority of any state. This Warrant and
the Warrant Shares are subject to restrictions imposed by federal and
state securities laws and regulations on transferability and resale, and
may not be transferred assigned or resold except as permitted under the
Securities Act of 1933, as amended (the "Act"), and the applicable state
securities laws, pursuant to registration thereunder or exemption
therefrom. Upon receipt by the Company of evidence satisfactory to it
that
this Warrant or any portion hereof, has been legally and validly
transferred or assigned, the Company will, at the request of the Holder,
upon presentation and surrender hereof to the Company or at the office of
its stock transfer agent, if any, exchange this Warrant for one or more
Warrants, in such denominations as the Holder shall specify, registered
in
such name or names as the Holder shall designate. If, at the time of such
transfer or assignment, this Warrant has not been registered under the
Act, then each such transferee and assignee shall furnish the Company
with
evidence satisfactory to it that such transferee or assignee is acquiring
such Warrant for his, her or its own account, for investment purposes,
and
not with a view towards a distribution thereof or of the Warrant Shares
issuable upon its exercise. The term "Warrant," as used herein, includes
any Warrants issued in substitution for or replacement of this Warrant,
or into which this Warrant may be divided or exchanged.
(b) 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 in
the case of mutilation, the Company will execute and deliver a new
Warrant of like tenor and date. Any such new Warrant executed and
delivered shall
constitute an additional contractual obligation on the part of the
Company, whether or not this Warrant so lost, stolen, destroyed or
mutilated shall be at any time enforceable by anyone.
(c) The Company may cause any legend required under the Act and
applicable state securities laws, or advisable in the opinion of its
legal counsel, to be set forth on each Warrant.
6. 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 as the Holder of this Warrant are limited
to those expressed in this Warrant and the Purchaser Representation Letter.
7. Anti-Dilution Provisions. So long as this Warrant is outstanding and
not fully exercised, the Company shall not, without the prior consent of the
Holder, issue or sell (i) any Common Stock without consideration or for a
consideration per share less than its fair market value determined immediately
prior to its issuance, or (ii) issue or sell any warrant, option, right,
contract, call, or other security or instrument granting the holder thereof
the right to acquire Common Stock without consideration or for a consideration
per share less than such Common Stock's fair market value determined
immediately prior to its issuance. For the purpose of this Paragraph 7, the
Common Stock's fair market value shall be determined as provided in Paragraph
4 hereof, on a fully diluted basis, assuming the exercise of all Options and
other outstanding rights to acquire Common Stock.
8. Adjustment to Exercise Price. Of even date herewith, the Company has
entered into a Registration Rights Agreement with the Holder whereby the
Company is obligated to file a registration statement with the Securities and
Exchange Commission under the Securities Act of 1933 covering, among other
things, the shares of Common Stock issuable upon exercise of this Warrant. In
the event the
registration statement is not declared effective by the Securities and
Exchange Commission prior to the expiration of 90 days after the date of this
Warrant, the Exercise Price will be reduced by $0.01 per month, or pro rata
portion thereof, until the registration statement is declared effective. If
the registration statement is not declared effective prior to the expiration
of 180 days after the date hereof, the Exercise Price of this Warrant shall be
reduced by $0.015 per month, or pro rata portion thereof, until the
registration statement is declared effective.
9. Officer's Certificate. Whenever the Company shall determine the fair
market value of the Common Stock pursuant to Paragraph 4 hereof, the Company
shall forthwith file in the custody of its secretary at its principal office,
with its stock transfer agent and with the Holder, an officer's certificate
showing the such fair market value and the date as of which it was determined,
and setting forth in reasonable detail the facts requiring such determination
and the facts, assumptions, methodology and calculations employed in
determining such value. The Company shall forthwith deliver a copy of each
such officer's certificate to the Holder, and the Company shall make all such
officer's certificates available at all reasonable times for inspection by and
copying by the Holder.
10. Notices to warrant holders. So long as this Warrant shall be
outstanding and any portion of it shall be unexercised, (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 shares of stock of any class or any other rights or (iii)
if any capital reorganization of the Company, reclassification of the
Company's capital stock, consolidation or merger of the Company with or into
another corporation, sale, lease or transfer of all or substantially all of
the Company's property and assets 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 delivered to
the Holder, at least ten days prior to 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 record of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
11. Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of an
issuance of Common Stock by way of dividend or other distribution or of a
subdivision or combination), or in 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 case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as
an entirety, the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and amount of shares of stock and other securities and
property receivable upon such classification, capital reorganization or other
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 Paragraph 10 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 any such capital reorganization or reclassification,
consolidation, merger, sale or conveyance, additional shares of Common Stock
shall be issued in exchange, conversion, substitution or payment,
in whole or in part, for or of a 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 6 hereof with the amount of the consideration received upon
the issue thereof being determined by the Company's board of directors, such
determination to be final and binding on the Holder.
12. Spin-Offs. In the event the Company spins-off a subsidiary by
distributing to the Company's stockholders as a dividend or otherwise the
stock of the subsidiary, the Company shall reserve for the life of the Warrant
shares of the subsidiary to be delivered to the holders of the Warrants upon
exercise to the same extent as if they were owners of record of the Warrant
Shares on the record date for payment of the shares of the subsidiary.
13. Miscellaneous. All notices given under this Warrant shall be in
writing, addressed to the parties as set forth below, and shall be effective
on the earliest of (i) the date received, or (ii) if given by facsimile
transmittal on the date given if transmitted before 5:00 p.m. the recipient's
time, otherwise it is effective the next day, or (iii) on the second business
day after delivery to a major international air delivery or air courier
service (such as Federal Express or Network Couriers):
If to the Holder:
Chapman Spira and Carson LLC
30 Broad Street, 34th Floor
New York, New York 10004.
Attention: Robert A. Spira, Chairman
Facsimile No. 212-425-6229
With a copy (that does not constitute
Notice) to:
Richard Stanton
30 Broad Street, 34th Floor
New York, New York 10004
Facsimile No. 212-425-6229
If to the Company:
Sanguine Corporation
_______________
_______________
_______________
Attention: _______________
Facsimile No. _______________
With a copy (that does not constitute
Notice) to:
_______________
_______________
_______________
_______________
Attention: _______________
Facsimile No. _______________
14. This Warrant is binding on and, except for the limitations
on transfer and assignment contained in Paragraph 4, shall inure to the
benefit of the successors in interest of the Company and the Holder,
respectively.
15. This Warrant shall be governed by and interpreted in accordance with
the laws of the State of New York and the national laws of the United States.
The parties agree that the courts of the State of New York, shall have
exclusive jurisdiction and venue for the adjudication of any civil action
between them arising out of relating to this Agreement, and hereby irrevocably
consent to such jurisdiction and venue.
PURCHASE FORM
Date: ____________________
TO: _____________________
c/o ______________________
The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing ___________ shares of Common Stock, and hereby makes
payment of US$_____________ in payment of the Exercise Price thereof.
_________________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: ___________________________________________________________
Address: _________________________________________________________
City, State, and Zip Code: ______________________________________________
Signature: ________________________________________________________