Exhibit 10-e
WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT.
GREEENSHIFT CORPORATION
Warrant To Purchase Common Stock
Warrant No.: CCP-001 Number of Shares: 11,550,000
Date of Issuance:
Greeenshift Corporation, a Delaware corporation (the "Company"), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Cornell Capital Partners, LP (the "Holder"),
the registered holder hereof or its permitted assigns, is entitled, subject to
the terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after the date hereof, but not after 11:59
P.M. Eastern Time on the Expiration Date (as defined herein) Eleven Million Five
Hundred Fifty Thousand (11,550,000) fully paid and nonassessable shares of
Common Stock (as defined herein) of the Company (the "Warrant Shares") at the
exercise price per share provided in Section 1(b) below or as subsequently
adjusted; provided, however, that in no event shall the holder be entitled to
exercise this Warrant for a number of Warrant Shares in excess of that number of
Warrant Shares which, upon giving effect to such exercise, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and
its affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such exercise, except within sixty (60) days of the Expiration Date
(however, such restriction may be waived by Holder (but only as to itself and
not to any other holder) upon not less than 65 days prior notice to the
Company). For purposes of the foregoing proviso, the aggregate number of shares
of Common Stock beneficially owned by the holder and its affiliates shall
include the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which the determination of such proviso is being made,
but shall exclude shares of Common Stock which would be issuable upon (i)
exercise of the remaining, unexercised Warrants beneficially owned by the holder
and its affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned by
the holder and its affiliates (including, without limitation, any convertible
notes or preferred stock) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock a holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its
transfer agent setting forth the number of shares of Common Stock outstanding.
Upon the written request of any holder, the Company shall promptly, but in no
event later than one (1) Business Day following the receipt of such notice,
confirm in writing to any such holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the exercise of Warrants (as defined below)
by such holder and its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported.
Section 1.
(a) This Warrant is the common stock purchase warrant (the "Warrant")
issued pursuant to the Securities Purchase Agreement ("Securities
Purchase Agreement") dated the date hereof between the Company and the
Buyers listed on Schedule I thereto.
(b) Definitions. The following words and terms as used in this Warrant
shall have the following meanings:
(i) "Approved Stock Plan" means any employee benefit plan which has
been approved by the Board of Directors of the Company, pursuant
to which the Company's securities may be issued to any employee,
officer or director for services provided to the Company.
(ii) "Business Day" means any day other than Saturday, Sunday or other
day on which commercial banks in the City of New York are
authorized or required by law to remain closed.
(iii) "Closing Bid Price" means the closing bid price of Common Stock
as quoted on the Principal Market (as reported by Bloomberg
Financial Markets ("Bloomberg") through its "Volume at Price"
function).
(iv) "Common Stock" means (i) the Company's common stock, par value
$0.001 per share, and (ii) any capital stock into which such
Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.
(v) "Event of Default" means an event of default under the Securities
Purchase Agreement, the Convertible Debentures issued in
connection therewith, or any Convertible Debentures previously
issued by the Company to Cornell prior to the date hereof, or the
Investor's Registration Rights Agreement dated the date hereof.
(vi) "Excluded Securities" means, provided such security is issued at
a price which is greater than or equal to the arithmetic average
of the Closing Bid Prices of the Common Stock for the ten (10)
consecutive trading days immediately preceding the date of
issuance, any of the following: (a) any issuance by the Company
of securities in connection with a strategic partnership or a
joint venture (the primary purpose of which is not to raise
equity capital), (b) any issuance by the Company of securities as
consideration for a merger or consolidation or the acquisition of
a business, product, license, or other assets of another person
or entity and (c) options to purchase shares of Common Stock,
provided (I) such options are issued after the date of this
Warrant to employees of the Company within thirty (30) days of
such employee's starting his employment with the Company, and
(II) the exercise price of such options is not less than the
Closing Bid Price of the Common Stock on the date of issuance of
such option.
(vii) "Expiration Date" means the date five (5) years from the
Issuance Date of this Warrant or, if such date falls on a
Saturday, Sunday or other day on which banks are required or
authorized to be closed in the City of New York or the State of
New York or on which trading does not take place on the Principal
Exchange or automated quotation system on which the Common Stock
is traded (a "Holiday"), the next date that is not a Holiday.
(viii) "Issuance Date" means the date hereof.
(ix) "Options" means any rights, warrants or options to subscribe for
or purchase Common Stock or Convertible Securities.
(x) "Other Securities" means (i) those options and warrants of the
Company issued prior to, and outstanding on, the Issuance Date of
this Warrant, (ii) the shares of Common Stock issuable on
exercise of such options and warrants, provided such options and
warrants are not amended after the Issuance Date of this Warrant
and (iii) the shares of Common Stock issuable upon exercise of
this Warrant.
(xi) "Person" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or
agency thereof.
(xii) "Principal Market" means the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, whichever is at the time the principal trading
exchange or market for such security, or the over-the-counter
market on the electronic bulletin board for such security as
reported by Bloomberg or, if no bid or sale information is
reported for such security by Bloomberg, then the average of the
bid prices of each of the market makers for such security as
reported in the "pink sheets" by the National Quotation Bureau,
Inc.
(xiii) "Securities Act" means the Securities Act of 1933, as amended.
(xiv) "Warrant" means this Warrant and all Warrants issued in
exchange, transfer or replacement thereof.
(xv) "Warrant Exercise Price" shall be $0.15 per share or as
subsequently adjusted as provided in Section 8 hereof.
(xvi) "Warrant Shares" means the shares of Common Stock issuable at
any time upon exercise of this Warrant.
(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A)
to the Company shall be deemed to include the Company's
successors and (B) to any applicable law defined or referred to
herein shall be deemed references to such applicable law as the
same may have been or may be amended or supplemented from time to
time.
(ii) When used in this Warrant, the words "herein", "hereof", and
"hereunder" and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and
the words "Section", "Schedule", and "Exhibit" shall refer to
Sections of, and Schedules and Exhibits to, this Warrant unless
otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the
plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the holder hereof then registered on the books of the
Company, pro rata as hereinafter provided, at any time on any Business
Day on or after the opening of business on such Business Day,
commencing with the first day after the date hereof, and prior to
11:59 P.M. Eastern Time on the Expiration Date (i) by delivery of a
written notice, in the form of the subscription notice attached as
Exhibit A hereto (the "Exercise Notice"), of such holder's election to
exercise this Warrant, which notice shall specify the number of
Warrant Shares to be purchased, payment to the Company of an amount
equal to the Warrant Exercise Price(s) applicable to the Warrant
Shares being purchased, multiplied by the number of Warrant Shares (at
the applicable Warrant Exercise Price) as to which this Warrant is
being exercised (plus any applicable issue or transfer taxes) (the
"Aggregate Exercise Price") in cash or wire transfer of immediately
available funds and the surrender of this Warrant (or an
indemnification undertaking with respect to this Warrant in the case
of its loss, theft or destruction) to a common carrier for overnight
delivery to the Company as soon as practicable following such date
("Cash Basis") or (ii) if at the time of exercise, the Warrant Shares
are not subject to an effective registration statement or if an Event
of Default has occurred, by delivering an Exercise Notice and in lieu
of making payment of the Aggregate Exercise Price in cash or wire
transfer, elect instead to receive upon such exercise the "Net Number"
of shares of Common Stock determined according to the following
formula (the "Cashless Exercise"):
Net Number = (A x B) - (A x C)
----------------
B
For purposes of the foregoing formula:
A = the total number of Warrant Shares with respect to which
this Warrant is then being exercised.
B = the Closing Bid Price of the Common Stock on the date of
exercise of the Warrant.
C = the Warrant Exercise Price then in effect for the
applicable Warrant Shares at the time of such exercise.
In the event of any exercise of the rights represented by this Warrant
in compliance with this Section 2, the Company shall on or before the
fifth (5th) Business Day following the date of receipt of the Exercise
Notice, the Aggregate Exercise Price and this Warrant (or an
indemnification undertaking with respect to this Warrant in the case
of its loss, theft or destruction) and the receipt of the
representations of the holder specified in Section 6 hereof, if
requested by the Company (the "Exercise Delivery Documents"), and if
the Common Stock is DTC eligible, credit such aggregate number of
shares of Common Stock to which the holder shall be entitled to the
holder's or its designee's balance account with The Depository Trust
Company; provided, however, if the holder who submitted the Exercise
Notice requested physical delivery of any or all of the Warrant
Shares, or, if the Common Stock is not DTC eligible then the Company
shall, on or before the fifth (5th) Business Day following receipt of
the Exercise Delivery Documents, issue and surrender to a common
carrier for overnight delivery to the address specified in the
Exercise Notice, a certificate, registered in the name of the holder,
for the number of shares of Common Stock to which the holder shall be
entitled pursuant to such request. Upon delivery of the Exercise
Notice and Aggregate Exercise Price referred to in clause (i) or (ii)
above the holder of this Warrant shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised. In the case of
a dispute as to the determination of the Warrant Exercise Price, the
Closing Bid Price or the arithmetic calculation of the Warrant Shares,
the Company shall promptly issue to the holder the number of Warrant
Shares that is not disputed and shall submit the disputed
determinations or arithmetic calculations to the holder via facsimile
within one (1) Business Day of receipt of the holder's Exercise
Notice.
(b) If the holder and the Company are unable to agree upon the
determination of the Warrant Exercise Price or arithmetic calculation
of the Warrant Shares within one (1) day of such disputed
determination or arithmetic calculation being submitted to the holder,
then the Company shall immediately submit via facsimile (i) the
disputed determination of the Warrant Exercise Price or the Closing
Bid Price to an independent, reputable investment banking firm or (ii)
the disputed arithmetic calculation of the Warrant Shares to its
independent, outside accountant. The Company shall cause the
investment banking firm or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and
the holder of the results no later than forty-eight (48) hours from
the time it receives the disputed determinations or calculations. Such
investment banking firm's or accountant's determination or
calculation, as the case may be, shall be deemed conclusive absent
manifest error.
(c) Unless the rights represented by this Warrant shall have expired or
shall have been fully exercised, the Company shall, as soon as
practicable and in no event later than five (5) Business Days after
any exercise and at its own expense, issue a new Warrant identical in
all respects to this Warrant exercised except it shall represent
rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less
the number of Warrant Shares with respect to which such Warrant is
exercised.
(d) No fractional Warrant Shares are to be issued upon any pro rata
exercise of this Warrant, but rather the number of Warrant Shares
issued upon such exercise of this Warrant shall be rounded up or down
to the nearest whole number.
(e) If the Company or its Transfer Agent shall fail for any reason or for
no reason to issue to the holder within ten (10) days of receipt of
the Exercise Delivery Documents, a certificate for the number of
Warrant Shares to which the holder is entitled or to credit the
holder's balance account with The Depository Trust Company for such
number of Warrant Shares to which the holder is entitled upon the
holder's exercise of this Warrant, the Company shall, in addition to
any other remedies under this Warrant or the Placement Agent Agreement
or otherwise available to such holder, pay as additional damages in
cash to such holder on each day the issuance of such certificate for
Warrant Shares is not timely effected an amount equal to 0.025% of the
product of (A) the sum of the number of Warrant Shares not issued to
the holder on a timely basis and to which the holder is entitled, and
(B) the Closing Bid Price of the Common Stock for the trading day
immediately preceding the last possible date which the Company could
have issued such Common Stock to the holder without violating this
Section 2.
(f) If within ten (10) days after the Company's receipt of the Exercise
Delivery Documents, the Company fails to deliver a new Warrant to the
holder for the number of Warrant Shares to which such holder is
entitled pursuant to Section 2 hereof, then, in addition to any other
available remedies under this Warrant, or otherwise available to such
holder, the Company shall pay as additional damages in cash to such
holder on each day after such tenth (10th) day that such delivery of
such new Warrant is not timely effected in an amount equal to 0.25% of
the product of (A) the number of Warrant Shares represented by the
portion of this Warrant which is not being exercised and (B) the
Closing Bid Price of the Common Stock for the trading day immediately
preceding the last possible date which the Company could have issued
such Warrant to the holder without violating this Section 2.
Section 3. Covenants as to Common Stock.
The Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution for or
replacement of this Warrant will upon issuance be, duly authorized and
validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof.
(c) During the period within which the rights represented by this Warrant
may be exercised, the Company will at all times have authorized and
reserved at least one hundred percent (100%) of the number of shares
of Common Stock needed to provide for the exercise of the rights then
represented by this Warrant and the par value of said shares will at
all times be less than or equal to the applicable Warrant Exercise
Price. If at any time the Company does not have a sufficient number of
shares of Common Stock authorized and available, then the Company
shall call and hold a special meeting of its stockholders within sixty
(60) days of that time for the sole purpose of increasing the number
of authorized shares of Common Stock.
(d) If at any time after the date hereof the Company shall file a
registration statement, the Company shall include the Warrant Shares
issuable to the holder, pursuant to the terms of this Warrant and
shall maintain, so long as any other shares of Common Stock shall be
so listed, such listing of all Warrant Shares from time to time
issuable upon the exercise of this Warrant; and the Company shall so
list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the
exercise of this Warrant if and so long as any shares of the same
class shall be listed on such national securities exchange or
automated quotation system.
(e) The Company will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder, but will at all
times in good faith assist in the carrying out of all the provisions
of this Warrant and in the taking of all such action as may reasonably
be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution or
other impairment, consistent with the tenor and purpose of this
Warrant. The Company will not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the
Warrant Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
(f) This Warrant will be binding upon any entity succeeding to the Company
by merger, consolidation or acquisition of all or substantially all of
the Company's assets.
Section 4. Taxes.
The Company shall pay any and all taxes, except any applicable withholding,
which may be payable with respect to the issuance and delivery of Warrant Shares
upon exercise of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder.
Except as otherwise specifically provided herein, no holder, as such, of this
Warrant shall be entitled to vote or receive dividends or be deemed the holder
of shares of capital stock of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the holder of this Warrant of the
Warrant Shares which he or she is then entitled to receive upon the due exercise
of this Warrant. In addition, nothing contained in this Warrant shall be
construed as imposing any liabilities on such holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. Representations of Holder.
The holder of this Warrant, by the acceptance hereof, represents that it is
acquiring this Warrant and the Warrant Shares for its own account for investment
only and not with a view towards, or for resale in connection with, the public
sale or distribution of this Warrant or the Warrant Shares, except pursuant to
sales registered or exempted under the Securities Act; provided, however, that
by making the representations herein, the holder does not agree to hold this
Warrant or any of the Warrant Shares for any minimum or other specific term and
reserves the right to dispose of this Warrant and the Warrant Shares at any time
in accordance with or pursuant to a registration statement or an exemption under
the Securities Act. The holder of this Warrant further represents, by acceptance
hereof, that, as of this date, such holder is an "accredited investor" as such
term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities
and Exchange Commission under the Securities Act (an "Accredited Investor").
Upon exercise of this Warrant the holder shall, if requested by the Company,
confirm in writing, in a form satisfactory to the Company, that the Warrant
Shares so purchased are being acquired solely for the holder's own account and
not as a nominee for any other party, for investment, and not with a view toward
distribution or resale and that such holder is an Accredited Investor. If such
holder cannot make such representations because they would be factually
incorrect, it shall be a condition to such holder's exercise of this Warrant
that the Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its securities
upon exercise of this Warrant shall not violate any United States or state
securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to
the holder hereof), a register for this Warrant, in which the Company
shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each
transferee. The Company may treat the person in whose name any Warrant
is registered on the register as the owner and holder thereof for all
purposes, notwithstanding any notice to the contrary, but in all
events recognizing any transfers made in accordance with the terms of
this Warrant.
Section 8. Adjustment of Warrant Exercise Price and Number of Shares.
The Warrant Exercise Price and the number of shares of Common Stock issuable
upon exercise of this Warrant shall be adjusted from time to time as follows:
(a) Adjustment of Warrant Exercise Price and Number of Shares upon
Issuance of Common Stock. If and whenever on or after the Issuance
Date of this Warrant, the Company issues or sells, or is deemed to
have issued or sold, any shares of Common Stock (other than (i)
Excluded Securities, (ii) shares of Common Stock which are issued or
deemed to have been issued by the Company in connection with an
Approved Stock Plan, or (iii) the Other Securities) for a
consideration per share less than a price (the "Applicable Price")
equal to the Warrant Exercise Price in effect immediately prior to
such issuance or sale, then immediately after such issue or sale the
Warrant Exercise Price then in effect shall be reduced to an amount
equal to such consideration per share. Upon each such adjustment of
the Warrant Exercise Price hereunder, the number of Warrant Shares
issuable upon exercise of this Warrant shall be adjusted to the number
of shares determined by multiplying the Warrant Exercise Price in
effect immediately prior to such adjustment by the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product thereof by the Warrant
Exercise Price resulting from such adjustment.
(b) Effect on Warrant Exercise Price of Certain Events. For purposes of
determining the adjusted Warrant Exercise Price under Section 8(a)
above, the following shall be applicable:
(i) Issuance of Options. If after the date hereof, the Company in any
manner grants any Options and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of
any such Option or upon conversion or exchange of any convertible
securities issuable upon exercise of any such Option is less than
the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for
such price per share. For purposes of this Section 8(b)(i), the
lowest price per share for which one share of Common Stock is
issuable upon exercise of such Options or upon conversion or
exchange of such Convertible Securities shall be equal to the sum
of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common
Stock upon the granting or sale of the Option, upon exercise of
the Option or upon conversion or exchange of any convertible
security issuable upon exercise of such Option. No further
adjustment of the Warrant Exercise Price shall be made upon the
actual issuance of such Common Stock or of such convertible
securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange of such
convertible securities.
(ii) Issuance of Convertible Securities. If the Company in any manner
issues or sells any convertible securities and the lowest price
per share for which one share of Common Stock is issuable upon
the conversion or exchange thereof is less than the Applicable
Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at
the time of the issuance or sale of such convertible securities
for such price per share. For the purposes of this Section
8(b)(ii), the lowest price per share for which one share of
Common Stock is issuable upon such conversion or exchange shall
be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to one
share of Common Stock upon the issuance or sale of the
convertible security and upon conversion or exchange of such
convertible security. No further adjustment of the Warrant
Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such convertible
securities, and if any such issue or sale of such convertible
securities is made upon exercise of any Options for which
adjustment of the Warrant Exercise Price had been or are to be
made pursuant to other provisions of this Section 8(b), no
further adjustment of the Warrant Exercise Price shall be made by
reason of such issue or sale.
(iii) Change in Option Price or Rate of Conversion. If the purchase
price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion or exchange of any
convertible securities, or the rate at which any convertible
securities are convertible into or exchangeable for Common Stock
changes at any time, the Warrant Exercise Price in effect at the
time of such change shall be adjusted to the Warrant Exercise
Price which would have been in effect at such time had such
Options or convertible securities provided for such changed
purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued
or sold and the number of Warrant Shares issuable upon exercise
of this Warrant shall be correspondingly readjusted. For purposes
of this Section 8(b)(iii), if the terms of any Option or
convertible security that was outstanding as of the Issuance Date
of this Warrant are changed in the manner described in the
immediately preceding sentence, then such Option or convertible
security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been
issued as of the date of such change. No adjustment pursuant to
this Section 8(b) shall be made if such adjustment would result
in an increase of the Warrant Exercise Price then in effect.
(c) Effect on Warrant Exercise Price of Certain Events. For purposes of
determining the adjusted Warrant Exercise Price under Sections 8(a)
and 8(b), the following shall be applicable:
(i) Calculation of Consideration Received. If any Common Stock,
Options or convertible securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received
therefore will be deemed to be the net amount received by the
Company therefore. If any Common Stock, Options or convertible
securities are issued or sold for a consideration other than
cash, the amount of such consideration received by the Company
will be the fair value of such consideration, except where such
consideration consists of marketable securities, in which case
the amount of consideration received by the Company will be the
market price of such securities on the date of receipt of such
securities. If any Common Stock, Options or convertible
securities are issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefore will be
deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such
Common Stock, Options or convertible securities, as the case may
be. The fair value of any consideration other than cash or
securities will be determined jointly by the Company and the
holders of Warrants representing at least two-thirds (b) of the
Warrant Shares issuable upon exercise of the Warrants then
outstanding. If such parties are unable to reach agreement within
ten (10) days after the occurrence of an event requiring
valuation (the "Valuation Event"), the fair value of such
consideration will be determined within five (5) Business Days
after the tenth (10th) day following the Valuation Event by an
independent, reputable appraiser jointly selected by the Company
and the holders of Warrants representing at least two-thirds (b)
of the Warrant Shares issuable upon exercise of the Warrants then
outstanding. The determination of such appraiser shall be final
and binding upon all parties and the fees and expenses of such
appraiser shall be borne jointly by the Company and the holders
of Warrants.
(ii) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which
no specific consideration is allocated to such Options by the
parties thereto, the Options will be deemed to have been issued
for a consideration of $.01.
(iii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or
held by or for the account of the Company, and the disposition of
any shares so owned or held will be considered an issue or sale
of Common Stock.
(iv) Record Date. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (1) to receive a
dividend or other distribution payable in Common Stock, Options
or in convertible securities or (2) to subscribe for or purchase
Common Stock, Options or convertible securities, then such record
date will be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(d) Adjustment of Warrant Exercise Price upon Subdivision or Combination
of Common Stock. If the Company at any time after the date of issuance
of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, any Warrant
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced and the number of shares of Common Stock
obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time after the date of issuance of
this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, any Warrant Exercise Price in
effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares issuable upon exercise of
this Warrant will be proportionately decreased. Any adjustment under
this Section 8(d) shall become effective at the close of business on
the date the subdivision or combination becomes effective.
(e) Distribution of Assets. If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its
assets) to holders of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash,
stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement or other similar
transaction) (a "Distribution"), at any time after the issuance of
this Warrant, then, in each such case:
(i) any Warrant Exercise Price in effect immediately prior to the
close of business on the record date fixed for the determination
of holders of Common Stock entitled to receive the Distribution
shall be reduced, effective as of the close of business on such
record date, to a price determined by multiplying such Warrant
Exercise Price by a fraction of which (A) the numerator shall be
the Closing Sale Price of the Common Stock on the trading day
immediately preceding such record date minus the value of the
Distribution (as determined in good faith by the Company's Board
of Directors) applicable to one share of Common Stock, and (B)
the denominator shall be the Closing Sale Price of the Common
Stock on the trading day immediately preceding such record date;
and
(ii) either (A) the number of Warrant Shares obtainable upon exercise
of this Warrant shall be increased to a number of shares equal to
the number of shares of Common Stock obtainable immediately prior
to the close of business on the record date fixed for the
determination of holders of Common Stock entitled to receive the
Distribution multiplied by the reciprocal of the fraction set
forth in the immediately preceding clause (i), or (B) in the
event that the Distribution is of common stock of a company whose
common stock is traded on a national securities exchange or a
national automated quotation system, then the holder of this
Warrant shall receive an additional warrant to purchase Common
Stock, the terms of which shall be identical to those of this
Warrant, except that such warrant shall be exercisable into the
amount of the assets that would have been payable to the holder
of this Warrant pursuant to the Distribution had the holder
exercised this Warrant immediately prior to such record date and
with an exercise price equal to the amount by which the exercise
price of this Warrant was decreased with respect to the
Distribution pursuant to the terms of the immediately preceding
clause (i).
(f) Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 8 but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity
features), then the Company's Board of Directors will make an
appropriate adjustment in the Warrant Exercise Price and the number of
shares of Common Stock obtainable upon exercise of this Warrant so as
to protect the rights of the holders of the Warrants; provided, except
as set forth in section 8(d),that no such adjustment pursuant to this
Section 8(f) will increase the Warrant Exercise Price or decrease the
number of shares of Common Stock obtainable as otherwise determined
pursuant to this Section 8.
(g) Notices.
(i) Immediately upon any adjustment of the Warrant Exercise Price,
the Company will give written notice thereof to the holder of
this Warrant, setting forth in reasonable detail, and certifying,
the calculation of such adjustment.
(ii) The Company will give written notice to the holder of this
Warrant at least ten (10) days prior to the date on which the
Company closes its books or takes a record (A) with respect to
any dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common
Stock or (C) for determining rights to vote with respect to any
Organic Change (as defined below), dissolution or liquidation,
provided that such information shall be made known to the public
prior to or in conjunction with such notice being provided to
such holder.
(iii) The Company will also give written notice to the holder of this
Warrant at least ten (10) days prior to the date on which any
Organic Change, dissolution or liquidation will take place,
provided that such information shall be made known to the public
prior to or in conjunction with such notice being provided to
such holder.
Section 9. Purchase Rights; Reorganization, Reclassification, Consolidation,
Merger or Sale.
(a) In addition to any adjustments pursuant to Section 8 above, if at
any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of
any class of Common Stock (the "Purchase Rights"), then the
holder of this Warrant will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase
Rights which such holder could have acquired if such holder had
held the number of shares of Common Stock acquirable upon
complete exercise of this Warrant immediately before the date on
which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.
(b) Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the
Company's assets to another Person or other transaction in each
case which is effected in such a way that holders of Common Stock
are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic
Change." Prior to the consummation of any (i) sale of all or
substantially all of the Company's assets to an acquiring Person
or (ii) other Organic Change following which the Company is not a
surviving entity, the Company will secure from the Person
purchasing such assets or the successor resulting from such
Organic Change (in each case, the "Acquiring Entity") a written
agreement (in form and substance satisfactory to the holders of
Warrants representing at least two-thirds (iii) of the Warrant
Shares issuable upon exercise of the Warrants then outstanding)
to deliver to each holder of Warrants in exchange for such
Warrants, a security of the Acquiring Entity evidenced by a
written instrument substantially similar in form and substance to
this Warrant and satisfactory to the holders of the Warrants
(including an adjusted warrant exercise price equal to the value
for the Common Stock reflected by the terms of such
consolidation, merger or sale, and exercisable for a
corresponding number of shares of Common Stock acquirable and
receivable upon exercise of the Warrants without regard to any
limitations on exercise, if the value so reflected is less than
any Applicable Warrant Exercise Price immediately prior to such
consolidation, merger or sale). Prior to the consummation of any
other Organic Change, the Company shall make appropriate
provision (in form and substance satisfactory to the holders of
Warrants representing a majority of the Warrant Shares issuable
upon exercise of the Warrants then outstanding) to insure that
each of the holders of the Warrants will thereafter have the
right to acquire and receive in lieu of or in addition to (as the
case may be) the Warrant Shares immediately theretofore issuable
and receivable upon the exercise of such holder's Warrants
(without regard to any limitations on exercise), such shares of
stock, securities or assets that would have been issued or
payable in such Organic Change with respect to or in exchange for
the number of Warrant Shares which would have been issuable and
receivable upon the exercise of such holder's Warrant as of the
date of such Organic Change (without taking into account any
limitations or restrictions on the exercisability of this
Warrant).
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant.
If this Warrant is lost, stolen, mutilated or destroyed, the Company shall
promptly, on receipt of an indemnification undertaking (or, in the case of a
mutilated Warrant, the Warrant), issue a new Warrant of like denomination and
tenor as this Warrant so lost, stolen, mutilated or destroyed.
Section 11. Notice.
Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Warrant must be in writing and will be deemed
to have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of receipt is received by
the sending party transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to Holder: Cornell Capital Partners, LP
101 Hudson Street - Suite 3700
Jersey City, NJ 07302
Attention: Mark A. Angelo
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
With Copy to: David Gonzalez, Esq.
101 Hudson Street - Suite 3700
Jersey City, NJ 07302
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
If to the Company, to: Greenshift Corporation
111 Howard Street, Suite 108
Mount Arlington, New Jersey 07856
Attention: Kevin Kreisler
Telephone: (973)-398-8183
Facsimile: (973)-398-8037
With a copy to: Sonageri & Fallon
411 Hackensack Ave
Hackensack, New Jersey
Attention: James Sonageri, Esq.
Telephone: 201-646-1000
Facsimile: 201-646-1084
If to a holder of this Warrant, to it at the address and facsimile number set
forth on Exhibit C hereto, with copies to such holder's representatives as set
forth on Exhibit C, or at such other address and facsimile as shall be delivered
to the Company upon the issuance or transfer of this Warrant. Each party shall
provide five days' prior written notice to the other party of any change in
address or facsimile number. Written confirmation of receipt (A) given by the
recipient of such notice, consent, facsimile, waiver or other communication, (or
(B) provided by a nationally recognized overnight delivery service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.
Section 12. Date.
The date of this Warrant is set forth on page 1 hereof. This Warrant, in all
events, shall be wholly void and of no effect after the close of business on the
Expiration Date, except that notwithstanding any other provisions hereof, the
provisions of Section 8(b) shall continue in full force and effect after such
date as to any Warrant Shares or other securities issued upon the exercise of
this Warrant.
Section 13.
Amendment and Waiver. Except as otherwise provided herein, the provisions of the
Warrants may be amended and the Company may take any action herein prohibited,
or omit to perform any act herein required to be performed by it, only if the
Company has obtained the written consent of the holders of Warrants representing
at least two-thirds of the Warrant Shares issuable upon exercise of the Warrants
then outstanding; provided that, except for Section 8(d), no such action may
increase the Warrant Exercise Price or decrease the number of shares or class of
stock obtainable upon exercise of any Warrant without the written consent of the
holder of such Warrant.
Section 14. Descriptive Headings; Governing Law.
The descriptive headings of the several sections and paragraphs of this Warrant
are inserted for convenience only and do not constitute a part of this Warrant.
The corporate laws of the State of Delaware shall govern all issues concerning
the relative rights of the Company and its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New Jersey,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New Jersey or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
Jersey. Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in Hudson County and the United States
District Court for the District of New Jersey, for the adjudication of any
dispute hereunder or in connection herewith or therewith, or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
Section 15. Waiver of Jury Trial.
AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED WITH THIS TRANSACTION.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as
of the date first set forth above.
GREEENSHIFT CORPORATION
By:
--------------------------------
Name: Kevin Kreisler
Title: Chairman and Chief Executive Officer
EXHIBIT A TO WARRANT
EXERCISE NOTICE
TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
GREEENSHIFT CORPORATION
The undersigned holder hereby exercises the right to purchase
______________ of the shares of Common Stock ("Warrant Shares") of Greeenshift
Corporation (the "Company"), evidenced by the attached Warrant (the "Warrant").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
Specify Method of exercise by check mark:
1. ___ Cash Exercise
(a) Payment of Warrant Exercise Price. The holder shall pay the
Aggregate Exercise Price of $______________ to the Company in
accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares. The Company shall deliver to the
holder _________ Warrant Shares in accordance with the terms of
the Warrant.
2. ___ Cashless Exercise
(a) Payment of Warrant Exercise Price. In lieu of making payment of
the Aggregate Exercise Price, the holder elects to receive upon
such exercise the Net Number of shares of Common Stock determined
in accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares. The Company shall deliver to the
holder _________ Warrant Shares in accordance with the terms of
the Warrant.
Date: _______________ __, ______
Name of Registered Holder
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
EXHIBIT B TO WARRANT
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Greeenshift Corporation represented
by warrant certificate no. _____, standing in the name of the undersigned on the
books of said corporation. The undersigned does hereby irrevocably constitute
and appoint ______________, attorney to transfer the warrants of said
corporation, with full power of substitution in the premises.
Dated:
-------------------------
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Exhibit 10-e
WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT.
GREEENSHIFT CORPORATION
Warrant To Purchase Common Stock
Warrant No.: HHF-001 Number of Shares: 3,450,000
Date of Issuance:
Greeenshift Corporation, a Delaware corporation (the "Company"), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Highgate House Funds, Ltd. (the "Holder"), the
registered holder hereof or its permitted assigns, is entitled, subject to the
terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after the date hereof, but not after 11:59
P.M. Eastern Time on the Expiration Date (as defined herein) Three Million Four
Hundred Fifty Thousand (3,450,000) fully paid and nonassessable shares of Common
Stock (as defined herein) of the Company (the "Warrant Shares") at the exercise
price per share provided in Section 1(b) below or as subsequently adjusted;
provided, however, that in no event shall the holder be entitled to exercise
this Warrant for a number of Warrant Shares in excess of that number of Warrant
Shares which, upon giving effect to such exercise, would cause the aggregate
number of shares of Common Stock beneficially owned by the holder and its
affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such exercise, except within sixty (60) days of the Expiration Date
(however, such restriction may be waived by Holder (but only as to itself and
not to any other holder) upon not less than 65 days prior notice to the
Company). For purposes of the foregoing proviso, the aggregate number of shares
of Common Stock beneficially owned by the holder and its affiliates shall
include the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which the determination of such proviso is being made,
but shall exclude shares of Common Stock which would be issuable upon (i)
exercise of the remaining, unexercised Warrants beneficially owned by the holder
and its affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned by
the holder and its affiliates (including, without limitation, any convertible
notes or preferred stock) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock a holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company's most recent
Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its
transfer agent setting forth the number of shares of Common Stock outstanding.
Upon the written request of any holder, the Company shall promptly, but in no
event later than one (1) Business Day following the receipt of such notice,
confirm in writing to any such holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the exercise of Warrants (as defined below)
by such holder and its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported.
Section 1.
(a) This Warrant is the common stock purchase warrant (the "Warrant")
issued pursuant to the Securities Purchase Agreement ("Securities
Purchase Agreement") dated the date hereof between the Company and the
Buyers listed on Schedule I thereto.
(b) Definitions. The following words and terms as used in this Warrant
shall have the following meanings:
(i) "Approved Stock Plan" means any employee benefit plan which has
been approved by the Board of Directors of the Company, pursuant
to which the Company's securities may be issued to any employee,
officer or director for services provided to the Company.
(ii) "Business Day" means any day other than Saturday, Sunday or other
day on which commercial banks in the City of New York are
authorized or required by law to remain closed.
(iii) "Closing Bid Price" means the closing bid price of Common Stock
as quoted on the Principal Market (as reported by Bloomberg
Financial Markets ("Bloomberg") through its "Volume at Price"
function).
(iv) "Common Stock" means (i) the Company's common stock, par value
$0.001 per share, and (ii) any capital stock into which such
Common Stock shall have been changed or any capital stock
resulting from a reclassification of such Common Stock.
(v) "Event of Default" means an event of default under the Securities
Purchase Agreement, the Convertible Debentures issued in
connection therewith, or any Convertible Debentures previously
issued by the Company to Cornell prior to the date hereof, or the
Investor's Registration Rights Agreement dated the date hereof.
(vi) "Excluded Securities" means, provided such security is issued at
a price which is greater than or equal to the arithmetic average
of the Closing Bid Prices of the Common Stock for the ten (10)
consecutive trading days immediately preceding the date of
issuance, any of the following: (a) any issuance by the Company
of securities in connection with a strategic partnership or a
joint venture (the primary purpose of which is not to raise
equity capital), (b) any issuance by the Company of securities as
consideration for a merger or consolidation or the acquisition of
a business, product, license, or other assets of another person
or entity and (c) options to purchase shares of Common Stock,
provided (I) such options are issued after the date of this
Warrant to employees of the Company within thirty (30) days of
such employee's starting his employment with the Company, and
(II) the exercise price of such options is not less than the
Closing Bid Price of the Common Stock on the date of issuance of
such option.
(vii) "Expiration Date" means the date five (5) years from the
Issuance Date of this Warrant or, if such date falls on a
Saturday, Sunday or other day on which banks are required or
authorized to be closed in the City of New York or the State of
New York or on which trading does not take place on the Principal
Exchange or automated quotation system on which the Common Stock
is traded (a "Holiday"), the next date that is not a Holiday.
(viii) "Issuance Date" means the date hereof.
(ix) "Options" means any rights, warrants or options to subscribe for
or purchase Common Stock or Convertible Securities.
(x) "Other Securities" means (i) those options and warrants of the
Company issued prior to, and outstanding on, the Issuance Date of
this Warrant, (ii) the shares of Common Stock issuable on
exercise of such options and warrants, provided such options and
warrants are not amended after the Issuance Date of this Warrant
and (iii) the shares of Common Stock issuable upon exercise of
this Warrant.
(xi) "Person" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or
agency thereof.
(xii) "Principal Market" means the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, whichever is at the time the principal trading
exchange or market for such security, or the over-the-counter
market on the electronic bulletin board for such security as
reported by Bloomberg or, if no bid or sale information is
reported for such security by Bloomberg, then the average of the
bid prices of each of the market makers for such security as
reported in the "pink sheets" by the National Quotation Bureau,
Inc.
(xiii) "Securities Act" means the Securities Act of 1933, as amended.
(xiv) "Warrant" means this Warrant and all Warrants issued in
exchange, transfer or replacement thereof.
(xv) "Warrant Exercise Price" shall be equal to $0.15 per share or as
subsequently adjusted as provided in Section 8 hereof.
(xvi) "Warrant Shares" means the shares of Common Stock issuable at
any time upon exercise of this Warrant.
(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references herein (A)
to the Company shall be deemed to include the Company's
successors and (B) to any applicable law defined or referred to
herein shall be deemed references to such applicable law as the
same may have been or may be amended or supplemented from time to
time.
(ii) When used in this Warrant, the words "herein", "hereof", and
"hereunder" and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and
the words "Section", "Schedule", and "Exhibit" shall refer to
Sections of, and Schedules and Exhibits to, this Warrant unless
otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the
plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the holder hereof then registered on the books of the
Company, pro rata as hereinafter provided, at any time on any Business
Day on or after the opening of business on such Business Day,
commencing with the first day after the date hereof, and prior to
11:59 P.M. Eastern Time on the Expiration Date (i) by delivery of a
written notice, in the form of the subscription notice attached as
Exhibit A hereto (the "Exercise Notice"), of such holder's election to
exercise this Warrant, which notice shall specify the number of
Warrant Shares to be purchased, payment to the Company of an amount
equal to the Warrant Exercise Price(s) applicable to the Warrant
Shares being purchased, multiplied by the number of Warrant Shares (at
the applicable Warrant Exercise Price) as to which this Warrant is
being exercised (plus any applicable issue or transfer taxes) (the
"Aggregate Exercise Price") in cash or wire transfer of immediately
available funds and the surrender of this Warrant (or an
indemnification undertaking with respect to this Warrant in the case
of its loss, theft or destruction) to a common carrier for overnight
delivery to the Company as soon as practicable following such date
("Cash Basis") or (ii) if at the time of exercise, the Warrant Shares
are not subject to an effective registration statement or if an Event
of Default has occurred, by delivering an Exercise Notice and in lieu
of making payment of the Aggregate Exercise Price in cash or wire
transfer, elect instead to receive upon such exercise the "Net Number"
of shares of Common Stock determined according to the following
formula (the "Cashless Exercise"):
Net Number = (A x B) - (A x C)
-----------------
B
For purposes of the foregoing formula:
A = the total number of Warrant Shares with respect to which
this Warrant is then being exercised.
B = the Closing Bid Price of the Common Stock on the date of
exercise of the Warrant.
C = the Warrant Exercise Price then in effect for the
applicable Warrant Shares at the time of such exercise.
In the event of any exercise of the rights represented by this Warrant
in compliance with this Section 2, the Company shall on or before the
fifth (5th) Business Day following the date of receipt of the Exercise
Notice, the Aggregate Exercise Price and this Warrant (or an
indemnification undertaking with respect to this Warrant in the case
of its loss, theft or destruction) and the receipt of the
representations of the holder specified in Section 6 hereof, if
requested by the Company (the "Exercise Delivery Documents"), and if
the Common Stock is DTC eligible, credit such aggregate number of
shares of Common Stock to which the holder shall be entitled to the
holder's or its designee's balance account with The Depository Trust
Company; provided, however, if the holder who submitted the Exercise
Notice requested physical delivery of any or all of the Warrant
Shares, or, if the Common Stock is not DTC eligible then the Company
shall, on or before the fifth (5th) Business Day following receipt of
the Exercise Delivery Documents, issue and surrender to a common
carrier for overnight delivery to the address specified in the
Exercise Notice, a certificate, registered in the name of the holder,
for the number of shares of Common Stock to which the holder shall be
entitled pursuant to such request. Upon delivery of the Exercise
Notice and Aggregate Exercise Price referred to in clause (i) or (ii)
above the holder of this Warrant shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised. In the case of
a dispute as to the determination of the Warrant Exercise Price, the
Closing Bid Price or the arithmetic calculation of the Warrant Shares,
the Company shall promptly issue to the holder the number of Warrant
Shares that is not disputed and shall submit the disputed
determinations or arithmetic calculations to the holder via facsimile
within one (1) Business Day of receipt of the holder's Exercise
Notice.
(b) If the holder and the Company are unable to agree upon the
determination of the Warrant Exercise Price or arithmetic calculation
of the Warrant Shares within one (1) day of such disputed
determination or arithmetic calculation being submitted to the holder,
then the Company shall immediately submit via facsimile (i) the
disputed determination of the Warrant Exercise Price or the Closing
Bid Price to an independent, reputable investment banking firm or (ii)
the disputed arithmetic calculation of the Warrant Shares to its
independent, outside accountant. The Company shall cause the
investment banking firm or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and
the holder of the results no later than forty-eight (48) hours from
the time it receives the disputed determinations or calculations. Such
investment banking firm's or accountant's determination or
calculation, as the case may be, shall be deemed conclusive absent
manifest error.
(c) Unless the rights represented by this Warrant shall have expired or
shall have been fully exercised, the Company shall, as soon as
practicable and in no event later than five (5) Business Days after
any exercise and at its own expense, issue a new Warrant identical in
all respects to this Warrant exercised except it shall represent
rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less
the number of Warrant Shares with respect to which such Warrant is
exercised.
(d) No fractional Warrant Shares are to be issued upon any pro rata
exercise of this Warrant, but rather the number of Warrant Shares
issued upon such exercise of this Warrant shall be rounded up or down
to the nearest whole number.
(e) If the Company or its Transfer Agent shall fail for any reason or for
no reason to issue to the holder within ten (10) days of receipt of
the Exercise Delivery Documents, a certificate for the number of
Warrant Shares to which the holder is entitled or to credit the
holder's balance account with The Depository Trust Company for such
number of Warrant Shares to which the holder is entitled upon the
holder's exercise of this Warrant, the Company shall, in addition to
any other remedies under this Warrant or the Placement Agent Agreement
or otherwise available to such holder, pay as additional damages in
cash to such holder on each day the issuance of such certificate for
Warrant Shares is not timely effected an amount equal to 0.025% of the
product of (A) the sum of the number of Warrant Shares not issued to
the holder on a timely basis and to which the holder is entitled, and
(B) the Closing Bid Price of the Common Stock for the trading day
immediately preceding the last possible date which the Company could
have issued such Common Stock to the holder without violating this
Section 2.
(f) If within ten (10) days after the Company's receipt of the Exercise
Delivery Documents, the Company fails to deliver a new Warrant to the
holder for the number of Warrant Shares to which such holder is
entitled pursuant to Section 2 hereof, then, in addition to any other
available remedies under this Warrant, or otherwise available to such
holder, the Company shall pay as additional damages in cash to such
holder on each day after such tenth (10th) day that such delivery of
such new Warrant is not timely effected in an amount equal to 0.25% of
the product of (A) the number of Warrant Shares represented by the
portion of this Warrant which is not being exercised and (B) the
Closing Bid Price of the Common Stock for the trading day immediately
preceding the last possible date which the Company could have issued
such Warrant to the holder without violating this Section 2.
Section 3. Covenants as to Common Stock.
The Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution for or
replacement of this Warrant will upon issuance be, duly authorized and
validly issued.
(b) All Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof.
(c) During the period within which the rights represented by this Warrant
may be exercised, the Company will at all times have authorized and
reserved at least one hundred percent (100%) of the number of shares
of Common Stock needed to provide for the exercise of the rights then
represented by this Warrant and the par value of said shares will at
all times be less than or equal to the applicable Warrant Exercise
Price. If at any time the Company does not have a sufficient number of
shares of Common Stock authorized and available, then the Company
shall call and hold a special meeting of its stockholders within sixty
(60) days of that time for the sole purpose of increasing the number
of authorized shares of Common Stock.
(d) If at any time after the date hereof the Company shall file a
registration statement, the Company shall include the Warrant Shares
issuable to the holder, pursuant to the terms of this Warrant and
shall maintain, so long as any other shares of Common Stock shall be
so listed, such listing of all Warrant Shares from time to time
issuable upon the exercise of this Warrant; and the Company shall so
list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the
exercise of this Warrant if and so long as any shares of the same
class shall be listed on such national securities exchange or
automated quotation system.
(e) The Company will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder, but will at all
times in good faith assist in the carrying out of all the provisions
of this Warrant and in the taking of all such action as may reasonably
be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution or
other impairment, consistent with the tenor and purpose of this
Warrant. The Company will not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the
Warrant Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
(f) This Warrant will be binding upon any entity succeeding to the Company
by merger, consolidation or acquisition of all or substantially all of
the Company's assets.
Section 4. Taxes.
The Company shall pay any and all taxes, except any applicable withholding,
which may be payable with respect to the issuance and delivery of Warrant Shares
upon exercise of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder.
Except as otherwise specifically provided herein, no holder, as such, of this
Warrant shall be entitled to vote or receive dividends or be deemed the holder
of shares of capital stock of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the holder of this Warrant of the
Warrant Shares which he or she is then entitled to receive upon the due exercise
of this Warrant. In addition, nothing contained in this Warrant shall be
construed as imposing any liabilities on such holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
Section 6. Representations of Holder.
The holder of this Warrant, by the acceptance hereof, represents that it is
acquiring this Warrant and the Warrant Shares for its own account for investment
only and not with a view towards, or for resale in connection with, the public
sale or distribution of this Warrant or the Warrant Shares, except pursuant to
sales registered or exempted under the Securities Act; provided, however, that
by making the representations herein, the holder does not agree to hold this
Warrant or any of the Warrant Shares for any minimum or other specific term and
reserves the right to dispose of this Warrant and the Warrant Shares at any time
in accordance with or pursuant to a registration statement or an exemption under
the Securities Act. The holder of this Warrant further represents, by acceptance
hereof, that, as of this date, such holder is an "accredited investor" as such
term is defined in Rule 501(a)(1) of Regulation D promulgated by the Securities
and Exchange Commission under the Securities Act (an "Accredited Investor").
Upon exercise of this Warrant the holder shall, if requested by the Company,
confirm in writing, in a form satisfactory to the Company, that the Warrant
Shares so purchased are being acquired solely for the holder's own account and
not as a nominee for any other party, for investment, and not with a view toward
distribution or resale and that such holder is an Accredited Investor. If such
holder cannot make such representations because they would be factually
incorrect, it shall be a condition to such holder's exercise of this Warrant
that the Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its securities
upon exercise of this Warrant shall not violate any United States or state
securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to
the holder hereof), a register for this Warrant, in which the Company
shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each
transferee. The Company may treat the person in whose name any Warrant
is registered on the register as the owner and holder thereof for all
purposes, notwithstanding any notice to the contrary, but in all
events recognizing any transfers made in accordance with the terms of
this Warrant.
Section 8. Adjustment of Warrant Exercise Price and Number of Shares.
The Warrant Exercise Price and the number of shares of Common Stock issuable
upon exercise of this Warrant shall be adjusted from time to time as follows:
(a) Adjustment of Warrant Exercise Price and Number of Shares upon
Issuance of Common Stock. If and whenever on or after the Issuance
Date of this Warrant, the Company issues or sells, or is deemed to
have issued or sold, any shares of Common Stock (other than (i)
Excluded Securities, (ii) shares of Common Stock which are issued or
deemed to have been issued by the Company in connection with an
Approved Stock Plan, or (iii) the Other Securities) for a
consideration per share less than a price (the "Applicable Price")
equal to the Warrant Exercise Price in effect immediately prior to
such issuance or sale, then immediately after such issue or sale the
Warrant Exercise Price then in effect shall be reduced to an amount
equal to such consideration per share. Upon each such adjustment of
the Warrant Exercise Price hereunder, the number of Warrant Shares
issuable upon exercise of this Warrant shall be adjusted to the number
of shares determined by multiplying the Warrant Exercise Price in
effect immediately prior to such adjustment by the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product thereof by the Warrant
Exercise Price resulting from such adjustment.
(b) Effect on Warrant Exercise Price of Certain Events. For purposes of
determining the adjusted Warrant Exercise Price under Section 8(a)
above, the following shall be applicable:
(i) Issuance of Options. If after the date hereof, the Company in any
manner grants any Options and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of
any such Option or upon conversion or exchange of any convertible
securities issuable upon exercise of any such Option is less than
the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the
Company at the time of the granting or sale of such Option for
such price per share. For purposes of this Section 8(b)(i), the
lowest price per share for which one share of Common Stock is
issuable upon exercise of such Options or upon conversion or
exchange of such Convertible Securities shall be equal to the sum
of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common
Stock upon the granting or sale of the Option, upon exercise of
the Option or upon conversion or exchange of any convertible
security issuable upon exercise of such Option. No further
adjustment of the Warrant Exercise Price shall be made upon the
actual issuance of such Common Stock or of such convertible
securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange of such
convertible securities.
(ii) Issuance of Convertible Securities. If the Company in any manner
issues or sells any convertible securities and the lowest price
per share for which one share of Common Stock is issuable upon
the conversion or exchange thereof is less than the Applicable
Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at
the time of the issuance or sale of such convertible securities
for such price per share. For the purposes of this Section
8(b)(ii), the lowest price per share for which one share of
Common Stock is issuable upon such conversion or exchange shall
be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to one
share of Common Stock upon the issuance or sale of the
convertible security and upon conversion or exchange of such
convertible security. No further adjustment of the Warrant
Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such convertible
securities, and if any such issue or sale of such convertible
securities is made upon exercise of any Options for which
adjustment of the Warrant Exercise Price had been or are to be
made pursuant to other provisions of this Section 8(b), no
further adjustment of the Warrant Exercise Price shall be made by
reason of such issue or sale.
(iii) Change in Option Price or Rate of Conversion. If the purchase
price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion or exchange of any
convertible securities, or the rate at which any convertible
securities are convertible into or exchangeable for Common Stock
changes at any time, the Warrant Exercise Price in effect at the
time of such change shall be adjusted to the Warrant Exercise
Price which would have been in effect at such time had such
Options or convertible securities provided for such changed
purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued
or sold and the number of Warrant Shares issuable upon exercise
of this Warrant shall be correspondingly readjusted. For purposes
of this Section 8(b)(iii), if the terms of any Option or
convertible security that was outstanding as of the Issuance Date
of this Warrant are changed in the manner described in the
immediately preceding sentence, then such Option or convertible
security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been
issued as of the date of such change. No adjustment pursuant to
this Section 8(b) shall be made if such adjustment would result
in an increase of the Warrant Exercise Price then in effect.
(c) Effect on Warrant Exercise Price of Certain Events. For purposes of
determining the adjusted Warrant Exercise Price under Sections 8(a)
and 8(b), the following shall be applicable:
(i) Calculation of Consideration Received. If any Common Stock,
Options or convertible securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received
therefore will be deemed to be the net amount received by the
Company therefore. If any Common Stock, Options or convertible
securities are issued or sold for a consideration other than
cash, the amount of such consideration received by the Company
will be the fair value of such consideration, except where such
consideration consists of marketable securities, in which case
the amount of consideration received by the Company will be the
market price of such securities on the date of receipt of such
securities. If any Common Stock, Options or convertible
securities are issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefore will be
deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such
Common Stock, Options or convertible securities, as the case may
be. The fair value of any consideration other than cash or
securities will be determined jointly by the Company and the
holders of Warrants representing at least two-thirds (b) of the
Warrant Shares issuable upon exercise of the Warrants then
outstanding. If such parties are unable to reach agreement within
ten (10) days after the occurrence of an event requiring
valuation (the "Valuation Event"), the fair value of such
consideration will be determined within five (5) Business Days
after the tenth (10th) day following the Valuation Event by an
independent, reputable appraiser jointly selected by the Company
and the holders of Warrants representing at least two-thirds (b)
of the Warrant Shares issuable upon exercise of the Warrants then
outstanding. The determination of such appraiser shall be final
and binding upon all parties and the fees and expenses of such
appraiser shall be borne jointly by the Company and the holders
of Warrants.
(ii) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which
no specific consideration is allocated to such Options by the
parties thereto, the Options will be deemed to have been issued
for a consideration of $.01.
(iii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or
held by or for the account of the Company, and the disposition of
any shares so owned or held will be considered an issue or sale
of Common Stock.
(iv) Record Date. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (1) to receive a
dividend or other distribution payable in Common Stock, Options
or in convertible securities or (2) to subscribe for or purchase
Common Stock, Options or convertible securities, then such record
date will be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(d) Adjustment of Warrant Exercise Price upon Subdivision or Combination
of Common Stock. If the Company at any time after the date of issuance
of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding
shares of Common Stock into a greater number of shares, any Warrant
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced and the number of shares of Common Stock
obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time after the date of issuance of
this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, any Warrant Exercise Price in
effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares issuable upon exercise of
this Warrant will be proportionately decreased. Any adjustment under
this Section 8(d) shall become effective at the close of business on
the date the subdivision or combination becomes effective.
(e) Distribution of Assets. If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its
assets) to holders of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash,
stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement or other similar
transaction) (a "Distribution"), at any time after the issuance of
this Warrant, then, in each such case:
(i) any Warrant Exercise Price in effect immediately prior to the
close of business on the record date fixed for the determination
of holders of Common Stock entitled to receive the Distribution
shall be reduced, effective as of the close of business on such
record date, to a price determined by multiplying such Warrant
Exercise Price by a fraction of which (A) the numerator shall be
the Closing Sale Price of the Common Stock on the trading day
immediately preceding such record date minus the value of the
Distribution (as determined in good faith by the Company's Board
of Directors) applicable to one share of Common Stock, and (B)
the denominator shall be the Closing Sale Price of the Common
Stock on the trading day immediately preceding such record date;
and
(ii) either (A) the number of Warrant Shares obtainable upon exercise
of this Warrant shall be increased to a number of shares equal to
the number of shares of Common Stock obtainable immediately prior
to the close of business on the record date fixed for the
determination of holders of Common Stock entitled to receive the
Distribution multiplied by the reciprocal of the fraction set
forth in the immediately preceding clause (i), or (B) in the
event that the Distribution is of common stock of a company whose
common stock is traded on a national securities exchange or a
national automated quotation system, then the holder of this
Warrant shall receive an additional warrant to purchase Common
Stock, the terms of which shall be identical to those of this
Warrant, except that such warrant shall be exercisable into the
amount of the assets that would have been payable to the holder
of this Warrant pursuant to the Distribution had the holder
exercised this Warrant immediately prior to such record date and
with an exercise price equal to the amount by which the exercise
price of this Warrant was decreased with respect to the
Distribution pursuant to the terms of the immediately preceding
clause (i).
(f) Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 8 but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity
features), then the Company's Board of Directors will make an
appropriate adjustment in the Warrant Exercise Price and the number of
shares of Common Stock obtainable upon exercise of this Warrant so as
to protect the rights of the holders of the Warrants; provided, except
as set forth in section 8(d),that no such adjustment pursuant to this
Section 8(f) will increase the Warrant Exercise Price or decrease the
number of shares of Common Stock obtainable as otherwise determined
pursuant to this Section 8.
(g) Notices.
(i) Immediately upon any adjustment of the Warrant Exercise Price,
the Company will give written notice thereof to the holder of
this Warrant, setting forth in reasonable detail, and certifying,
the calculation of such adjustment.
(ii) The Company will give written notice to the holder of this
Warrant at least ten (10) days prior to the date on which the
Company closes its books or takes a record (A) with respect to
any dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common
Stock or (C) for determining rights to vote with respect to any
Organic Change (as defined below), dissolution or liquidation,
provided that such information shall be made known to the public
prior to or in conjunction with such notice being provided to
such holder.
(iii) The Company will also give written notice to the holder of this
Warrant at least ten (10) days prior to the date on which any
Organic Change, dissolution or liquidation will take place,
provided that such information shall be made known to the public
prior to or in conjunction with such notice being provided to
such holder.
Section 9. Purchase Rights; Reorganization, Reclassification,
Consolidation, Merger or Sale.
(a) In addition to any adjustments pursuant to Section 8 above, if at any
time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other
property pro rata to the record holders of any class of Common Stock
(the "Purchase Rights"), then the holder of this Warrant will be
entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant immediately before
the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights.
(b) Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets to
another Person or other transaction in each case which is effected in
such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or
assets with respect to or in exchange for Common Stock is referred to
herein as an "Organic Change." Prior to the consummation of any (i)
sale of all or substantially all of the Company's assets to an
acquiring Person or (ii) other Organic Change following which the
Company is not a surviving entity, the Company will secure from the
Person purchasing such assets or the successor resulting from such
Organic Change (in each case, the "Acquiring Entity") a written
agreement (in form and substance satisfactory to the holders of
Warrants representing at least two-thirds (iii) of the Warrant Shares
issuable upon exercise of the Warrants then outstanding) to deliver to
each holder of Warrants in exchange for such Warrants, a security of
the Acquiring Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant and satisfactory to the
holders of the Warrants (including an adjusted warrant exercise price
equal to the value for the Common Stock reflected by the terms of such
consolidation, merger or sale, and exercisable for a corresponding
number of shares of Common Stock acquirable and receivable upon
exercise of the Warrants without regard to any limitations on
exercise, if the value so reflected is less than any Applicable
Warrant Exercise Price immediately prior to such consolidation, merger
or sale). Prior to the consummation of any other Organic Change, the
Company shall make appropriate provision (in form and substance
satisfactory to the holders of Warrants representing a majority of the
Warrant Shares issuable upon exercise of the Warrants then
outstanding) to insure that each of the holders of the Warrants will
thereafter have the right to acquire and receive in lieu of or in
addition to (as the case may be) the Warrant Shares immediately
theretofore issuable and receivable upon the exercise of such holder's
Warrants (without regard to any limitations on exercise), such shares
of stock, securities or assets that would have been issued or payable
in such Organic Change with respect to or in exchange for the number
of Warrant Shares which would have been issuable and receivable upon
the exercise of such holder's Warrant as of the date of such Organic
Change (without taking into account any limitations or restrictions on
the exercisability of this Warrant).
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant.
If this Warrant is lost, stolen, mutilated or destroyed, the Company shall
promptly, on receipt of an indemnification undertaking (or, in the case of a
mutilated Warrant, the Warrant), issue a new Warrant of like denomination and
tenor as this Warrant so lost, stolen, mutilated or destroyed.
Section 11. Notice.
Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Warrant must be in writing and will be deemed
to have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of receipt is received by
the sending party transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to Holder: Highgate House Funds, Ltd.
101 Hudson Street - Suite 3700
Jersey City, NJ 07302
Attention: Mark A. Angelo
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
With Copy to: David Gonzalez, Esq.
101 Hudson Street - Suite 3700
Jersey City, NJ 07302
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
If to the Company, to: Greenshift Corporation
111 Howard Street, Suite 108
Mount Arlington, New Jersey 07856
Attention: Kevin Kreisler
Telephone: (973)-398-8183
Facsimile: (973)-398-8037
With a copy to: Sonageri & Fallon
411 Hackensack Ave
Hackensack, New Jersey
Attention: James Sonageri, Esq.
Telephone: 201-646-1000
Facsimile: 201-646-1084
If to a holder of this Warrant, to it at the address and facsimile number set
forth on Exhibit C hereto, with copies to such holder's representatives as set
forth on Exhibit C, or at such other address and facsimile as shall be delivered
to the Company upon the issuance or transfer of this Warrant. Each party shall
provide five days' prior written notice to the other party of any change in
address or facsimile number. Written confirmation of receipt (A) given by the
recipient of such notice, consent, facsimile, waiver or other communication, (or
(B) provided by a nationally recognized overnight delivery service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively.
Section 12. Date.
The date of this Warrant is set forth on page 1 hereof. This Warrant, in all
events, shall be wholly void and of no effect after the close of business on the
Expiration Date, except that notwithstanding any other provisions hereof, the
provisions of Section 8(b) shall continue in full force and effect after such
date as to any Warrant Shares or other securities issued upon the exercise of
this Warrant.
Section 13. Amendment and Waiver.
Except as otherwise provided herein, the provisions of the Warrants may be
amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the holders of Warrants representing at least
two-thirds of the Warrant Shares issuable upon exercise of the Warrants then
outstanding; provided that, except for Section 8(d), no such action may increase
the Warrant Exercise Price or decrease the number of shares or class of stock
obtainable upon exercise of any Warrant without the written consent of the
holder of such Warrant.
Section 14. Descriptive Headings; Governing Law.
The descriptive headings of the several sections and paragraphs of this Warrant
are inserted for convenience only and do not constitute a part of this Warrant.
The corporate laws of the State of Delaware shall govern all issues concerning
the relative rights of the Company and its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New Jersey,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New Jersey or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
Jersey. Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in Hudson County and the United States
District Court for the District of New Jersey, for the adjudication of any
dispute hereunder or in connection herewith or therewith, or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.
Section 15. Waiver of Jury Trial.
AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED WITH THIS TRANSACTION.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as
of the date first set forth above.
GREEENSHIFT CORPORATION
By:
---------------------------------
Name: Kevin Kreisler
Title: Chairman and Chief Executive Officer
EXHIBIT A TO WARRANT
EXERCISE NOTICE
TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
GREEENSHIFT CORPORATION
The undersigned holder hereby exercises the right to purchase
______________ of the shares of Common Stock ("Warrant Shares") of Greeenshift
Corporation (the "Company"), evidenced by the attached Warrant (the "Warrant").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
Specify Method of exercise by check mark:
1. ___ Cash Exercise
(a) Payment of Warrant Exercise Price. The holder shall pay the
Aggregate Exercise Price of $______________ to the Company in
accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares. The Company shall deliver to the
holder _________ Warrant Shares in accordance with the terms of
the Warrant.
2. ___ Cashless Exercise
(a) Payment of Warrant Exercise Price. In lieu of making payment of
the Aggregate Exercise Price, the holder elects to receive upon
such exercise the Net Number of shares of Common Stock determined
in accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares. The Company shall deliver to the
holder _________ Warrant Shares in accordance with the terms of
the Warrant.
Date: _______________ __, ______
Name of Registered Holder
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
EXHIBIT B TO WARRANT
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Greeenshift Corporation represented
by warrant certificate no. _____, standing in the name of the undersigned on the
books of said corporation. The undersigned does hereby irrevocably constitute
and appoint ______________, attorney to transfer the warrants of said
corporation, with full power of substitution in the premises.
Dated:
--------------------------
By:
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Name:
-------------------------------
Title:
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