EXHIBIT 4.2
WARRANT CERTIFICATE
No. _____________ 700,000 Warrants
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THESE
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO
THE ISSUER, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER
THE ACT, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE ACT OR ANY APPLICABLE STATE LAWS, AND THE HOLDER
HAS, PRIOR TO SUCH SALE, FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OR OTHER
EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE ISSUER. THE
HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING
TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS PERMITTED BY THE ACT.
WARRANTS FOR THE
PURCHASE OF COMMON STOCK
THIS CERTIFIES THAT, FOR VALUE RECEIVED, PALA INVESTMENTS HOLDINGS LIMITED, (the
"Holder"), is the owner of warrants (the "Warrants") for the purchase of up to
an aggregate of 700,000 shares of validly-issued, fully-paid and non-assessable
Common Stock (as defined below) of ALDEROX, INC., a corporation organized and
existing under the laws of the State of Colorado (the "Corporation"). Such
purchase may be made at any time, and from time to time, prior to the Expiration
Date (as defined below) upon the presentation and surrender of this Warrant
Certificate with a written notice in the form of Attachment 1, attached hereto,
signed by the Holder stating the number of shares of Common Stock with respect
to which such exercise is being made, at the principal corporate address of the
Corporation, accompanied by payment of the Exercise Price (as defined below) for
each Warrant exercised in lawful money of the United States of America in cash
or by official bank or certified check made payable to ALDEROX, INC. The
Exercise Price is subject to modification or adjustment as set forth herein. The
Warrants represented by this Warrant Certificate have been issued by the
Corporation in connection with the Secured Convertible Debenture, dated as of
December 12, 2007, by and between the Corporation and the Holder, as amended to
date.
SECTION 1. DEFINITIONS. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean the common stock of the Corporation, which
has the right to participate in the distribution of earnings and assets of
the Corporation without limit as to amount or percentage.
(b) "Corporate Office" shall mean the office of the Corporation at which,
at any particular time, its principal business shall be administered,
which office is currently located at 940 Calle Amanecer, Suite E, San
Clemente, CA 92673.
(c) "Exercise Date" shall mean, as to any Warrant, the date on which the
Corporation shall have received both (i) this Warrant Certificate,
together with a written notice of exercise in accordance herewith, duly
executed by the Holder hereof, or his attorney duly authorized in writing,
and indicating that the Holder is thereby exercising such Warrant(s), and
(ii) payment by wire transfer, or by official bank or certified check made
payable to the Corporation, of an amount in lawful money of the United
States of America equal to the applicable Exercise Price for such
Warrant(s).
(d) "Exercise Period" shall mean the period commencing as of July 31, 2008
and expiring on the Expiration Date.
(e) "Exercise Price" shall mean, as to any Warrant, the price at which a
Warrant may be exercised for the purchase of Warrant Shares, which shall
be $0.42, subject to adjustment from time to time pursuant to the
provisions of Section 5 hereof.
(f) "Expiration Date" shall mean 5:00 P.M. (Pacific Time) on July 30,
2011. If such date shall be a holiday or a day on which banks are
authorized to be closed in the State of California, then the Expiration
Date shall mean 5:00 P.M. (Pacific Time) of the next consecutive day which
does not fall on a holiday or a day on which banks are authorized to be
closed in the State of California.
(g) "Securities Act" shall mean the Securities Act of 1933, and any
amendments or modifications, or successor legislation, thereto adopted,
and all regulations, rules or other laws enacted or adopted pursuant
thereto.
(h) "Warrant Certificate" shall mean this certificate.
(i) "Warrant Registry" means the official record maintained by the
Corporation in which are recorded, with respect to the Warrant Certificate
and any other certificate representing the Warrants issued by the
Corporation, the date of issuance, the name and address of the Holder, the
name and address of each subsequent transferee of the Holder, and the
identifying number, of such certificate.
(j) "Warrant Shares" shall have the meaning given to it in Section 2 of
this Warrant Certificate.
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SECTION 2. EXERCISE OF WARRANTS.
(a) Each Warrant evidenced hereby may be exercised by the Holder upon the
terms and subject to the conditions set forth herein prior the Expiration
Date. A Warrant shall be deemed to have been exercised immediately prior
to the close of business on the Exercise Date and the person entitled to
receive shares of Common Stock deliverable upon such exercise ("Warrant
Shares") shall be treated for all purposes as the holder of a Warrant
Share upon the exercise of the applicable Warrant as of the close of
business on the Exercise Date. Promptly following, and in any event within
ten (10) business days after, the date on which the Corporation first
receives clearance of all funds received in payment of the Exercise Price
pursuant to this Warrant Certificate, the Corporation shall cause to be
issued and delivered to the person or persons entitled to receive the
same, a certificate or certificates evidencing the issuance to the Holder
of the applicable number of Warrant Shares (plus a Warrant Certificate for
any remaining issued but unexercised Warrants of the Holder).
Notwithstanding the foregoing sentence, in the event that any registration
or qualification (or filing for exemption from any such requirements) is
required prior to the issuance of such Warrant Shares by the Corporation
in accordance with Section 3(b) below, then the obligation to deliver any
such certificates shall arise only upon completion of such requirements
and at such time as the Corporation may lawfully do so.
(b) Upon the exercise of the Warrants represented hereby, if the
Corporation so requests, the Holder shall certify to the Corporation that
it is not exercising such Warrants with a view to distribute the Warrant
Shares in violation of the Securities Act, and shall provide such other
investor representations as the Corporation may require to confirm the
ability of the Corporation to rely upon the exemption from registration
under the Securities Act which applies to the distribution of Warrant
Shares at the time of such distribution.
SECTION 3. RESERVATION OF SHARES; TAXES; ETC.
(a) The Corporation covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issue upon the valid exercise of Warrants, such number of Warrant Shares
as shall then be issuable upon the exercise of all Warrants then
outstanding. The Corporation covenants that all shares of Common Stock
which shall be issuable upon exercise of the Warrants shall, at the time
of delivery, be duly and validly issued, fully-paid, non-assessable and
free from all taxes, liens and charges with respect to the issuance
thereof (other than those which the Corporation shall promptly pay or
discharge, or any liens created thereon by the Holder and/or any
predecessor of the Holder).
(b) The Corporation shall not be obligated to deliver any Warrant Shares
pursuant to the exercise of the Warrants represented hereby unless and
until a registration statement under the Securities Act and/or under any
applicable state securities laws and regulations, with respect to such
securities is effective, or an exemption from such registration is
available to the Corporation at the time of such exercise. The Corporation
covenants that if any Warrant Shares reserved for the purpose of exercise
of Warrants hereunder require registration with, or approval of, any
governmental authority under any federal or state securities law before
such securities may be validly issued or delivered upon such exercise,
then the Corporation will in good faith and as expeditiously as reasonably
possible, endeavor to secure such registration or approval. However, in
the event that this Warrant Certificate represents Warrants which have
been transferred by the Holder, the Warrants represented hereby may not be
exercised by, nor shares of Common Stock issued to, the holder hereof in
any state in which such exercise and issuance would be unlawful.
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(c) The Corporation shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the
issuance of the Warrants, or the issuance or delivery of any shares of
Common Stock upon exercise of the Warrants; provided, however, that if the
shares of Common Stock are to be delivered in a name other than the name
of the Holder, then no such delivery shall be made unless the person
requesting the same has paid to the Corporation the amount of transfer
taxes or charges incident thereto, if any.
SECTION 4. LOSS OR MUTILATION. Upon receipt by the Corporation of evidence
satisfactory to it of the ownership of, and loss, theft, destruction or
mutilation of, this Warrant Certificate and (in case of loss, theft or
destruction) of indemnity satisfactory to the Corporation, and (in the case of
mutilation) upon surrender and cancellation thereof, the Corporation shall
execute and deliver to the Holder in lieu thereof a new Warrant Certificate of
like tenor representing an equal aggregate number of Warrants as was indicated
to be outstanding on the prior lost or mutilated Warrant Certificate; provided,
however, that to the extent that any discrepancy may exist between the number of
Warrants purported to be outstanding in respect of the Holder as evidenced by a
Warrant Certificate that has been lost or mutilated and the number attributable
to the Holder in the Warrant Registry, then the Warrant Registry shall control
for all purposes, absent a showing of manifest error. If the Holder requests a
substitute Warrant Certificate due to loss, theft or destruction shall, prior to
receiving such substitute certificate, the Holder shall provide an affidavit to
the Corporation in the form prescribed thereby and signed by (and notarized on
behalf of) the Holder. Applicants for a substitute Warrant Certificate shall
comply with such other reasonable regulations and pay such other reasonable
charges as the Corporation may prescribe.
SECTION 5. ADJUSTMENT OF EXERCISE PRICE. Subject to the provisions of this
Warrant Certificate and applicable law, in the event the Corporation, at any
time or from time to time after the date hereof while the Warrants are
outstanding, (i) pays a stock dividend on its common stock, (ii) subdivides
outstanding shares of common stock into a larger number of shares, or (iii)
combines outstanding shares of common stock into a smaller number of shares,
then in each such case the Exercise Price shall be adjusted to be equal to $0.42
multiplied by a fraction of which the numerator shall be the number of shares of
common stock outstanding immediately before such event and of which the
denominator shall be the number of shares of common stock outstanding
immediately after such event.
SECTION 6. RESTRICTIVE LEGEND.
(a) Except as otherwise provided in this Section 6, each Warrant
Certificate and each certificate evidencing the issuance of Warrant Shares
(whether issued in the name of the Holder of this Warrant Certificate or
of any subsequent transferee thereof), shall be stamped or otherwise
imprinted with a legend in substantially the following form:
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"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER, (B) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE ACT, (C) IN
COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
UNDER THE ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (D) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE ACT OR ANY
APPLICABLE STATE LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE,
FURNISHED TO THE ISSUER AN OPINION OF COUNSEL OR OTHER EVIDENCE OF
EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE ISSUER. THE
HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY
HEDGING TRANSACTION WITH REGARD TO THIS SECURITY, EXCEPT AS
PERMITTED BY THE ACT."
(b) Each certificate evidencing the issuance of Warrant Shares and each
Warrant Certificate may also bear such other restrictive legends as may be
necessary to comply with applicable law in the Corporation's reasonable
discretion. The legend requirements of Section 6(a) above shall terminate
as to any particular Warrant or Warrant Share: (i) if and so long as such
security shall have been effectively registered under the Securities Act
and is disposed of pursuant thereto; or (ii) when the Corporation shall
have received an opinion of counsel reasonably satisfactory to it that
such shares may be sold to the public without registration thereof under
the Securities Act. Whenever the legend requirements imposed by this
Section 6 shall terminate as to any Warrant Share, as hereinabove
provided, the Holder hereof shall be entitled to receive from the
Corporation, at the Corporation's expense, a new certificate representing
such Warrant Shares and not bearing the restrictive legend set forth in
Section 6(a).
SECTION 7. RIGHTS OF ACTION. All rights of action with respect to the Warrants
are vested in the Holder of the Warrants, and the Holder of the Warrant, without
consent of the holder of any other warrants of the Corporation, may, in the
Holder's own behalf and for his own benefit, enforce against the Corporation the
Holder's right to exercise the Holder's Warrants for the purchase of Warrant
Shares in the manner provided in this Warrant Certificate.
SECTION 8. AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant, by his or
her acceptance thereof, consents and agrees with the Corporation and every other
holder of a Warrant that:
(a) the Warrant Registry shall be maintained by the Corporation's
Secretary, and shall be the official register of all Warrants issued to
any person in connection with the Convertible Debenture. The Warrant
Registry shall be dispositive as to the issuance, ownership, transfer and
other aspects of each Warrant issued by the Corporation which are recorded
therein and, absent manifest error, such records shall control for all
purposes;
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(b) the Warrants are transferable only on the Warrant Registry by the
Holder thereof in person or by his attorney duly authorized in writing and
only if the Warrant Certificates representing such Warrants are
surrendered at the Corporate Office of the Corporation, duly endorsed or
accompanied by a proper instrument of transfer satisfactory to the
Corporation in its sole discretion, together with payment of the amount of
any applicable transfer taxes; and
(c) the Corporation may deem and treat the person in whose name the
Warrant Certificate is registered on the Warrant Registry as the Holder
and as the absolute, true and lawful owner of the Warrants represented
thereby for all purposes, and the Corporation shall not be affected by any
notice or knowledge to the contrary, except as otherwise expressly
provided in this Warrant Certificate.
SECTION 9. MODIFICATION OF WARRANTS. Other than with respect to any adjustment
made by the Corporation in accordance with the provisions of Section 5 hereof,
this Warrant Certificate may only be modified, supplemented or altered by the
Corporation, and only with the consent in writing of the Holder.
SECTION 10. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed first class registered or certified mail, postage prepaid as
follows: if to the Holder of a Warrant Certificate, at the address of such
Holder as shown on the Warrant Registry maintained by the Corporation; and if to
the Corporation, addressed as set forth below, or at such other address as may
be designated by the Corporation from time to time in accordance with this
Section 10:
If to the Corporation: Alderox, Inc.
940 Calle Amanecer, Suite E
San Clemente, CA 92673
Attn: Mr. Gordon W. Davies
President
With a copy (which shall
not constitute notice) to: August Law Group, P.C.
19200 Von Karman, Suite 900
Irvine, California 92614
Attn: Kenneth S. August, Esquire
President
SECTION 11. GOVERNING LAW; VENUE. This Warrant Certificate shall be governed by
and construed in accordance with the internal laws of the State of California
applicable to the performance and enforcement of contracts made within such
State, without giving effect to the law of conflicts of laws applied thereby. In
the event that any dispute shall occur between the parties arising out of or
resulting from the construction, interpretation, enforcement or any other aspect
of this Warrant Certificate, the parties hereby agree to accept the exclusive
jurisdiction of the Courts of the State of California sitting in and for the
County of Orange.
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SECTION 12. ENTIRE UNDERSTANDING. This Warrant Certificate contains the entire
understanding among the Corporation and the Holder relating to the subject
matter covered herein, and merges all prior discussions, negotiations and
agreements, if any between them. Neither of the Holder nor the Corporation shall
be bound by any representations, warranties, covenants, or other understandings
relating to such subject matter, other than as expressly provided for or
referred to herein.
SECTION 13. CASHLESS EXERCISE. Notwithstanding the foregoing, in lieu of paying
the Exercise Price in connection with the exercise of this Warrant, the Holder
shall have the right to exercise this Warrant or any portion of this Warrant
into Warrant Shares by a cashless exercise by executing and delivering to the
Company at its principal office a written Notice of Exercise in the form
attached to this Warrant marked "CASHLESS EXERCISE". The number of Warrant
Shares to be issued to Holder upon such conversion shall be computed using the
following formula:
X = ((P)(Y)(A-B))/A
where
X = the number of Warrant Shares of Common Stock to be issued
to the Holder for the portion of the Warrant being
converted.
P = the portion of the Warrant being converted expressed as a
decimal fraction.
Y = the total number of Warrant Shares issuable upon exercise
of the Warrant in full.
A = the market price of a share of Common Stock for the date
of exercise (the market price determined, for any date, as
the average of the closing prices of the Common Stock on
the principal securities exchange or automated quotation
system upon which the Common Stock may then be listed for
public trading for the five immediately preceding trading
days on such exchange).
B = the then current Exercise Price (as adjusted to the date
of such calculation).
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IN WITNESS WHEREOF, the Corporation has caused this Warrant Certificate to
be duly executed, manually or in facsimile, by an officer thereunto duly
authorized, as of the date set forth below.
Date: July 31, 2008
ALDEROX, INC.,
a Colorado corporation
/s/ Michael Davies
- --------------------------------
By: Michael C. Davies
Its: Chief Executive Officer
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