Exhibit 10.20
THE SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (i) AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER SAID ACT, (ii) AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY, OR NO-ACTION LETTER ISSUED BY THE SECURITIES AND
EXCHANGE COMMISSION, THAT SUCH REGISTRATION IS NOT REQUIRED, OR (iii) UNLESS
SOLD PURSUANT TO, AND IN COMPLIANCE WITH THE REQUIREMENTS OF, RULE 144 OF SUCH
ACT.
CHAMPIONLYTES PRODUCTS, INC.
COMMON STOCK PURCHASE WARRANT
Void after 5:00 PM EST Right to Purchase 526,400
January 5,2008 shares of Common Stock
(subject to adjustment)
Championlyte Products, Inc. (the "Company"), hereby certifies that, for
value received, Holder (as hereinafter defined) is entitled, subject to the
terms set forth herein, to purchase from the Company at any time or from time to
time before 5:00 P.M. EST., an January 5, 2008, fully paid and non-assessable
shares of Common Stock, $.001 par value, of the Company, at the purchase price
per share of the lesser of $.07 per share or a price per share equal to Eighty
Percent (80%) of the Company's closing bid price as of the date of exercise by
the Holder as defined herein. (the "Purchase Price"). The number and character
of such shares of Common Stock and the Purchase Price are subject to adjustment
as provided herein.
This Warrant Certificate is the Common Stock Purchase Warrant (the
"Warrant"), evidencing the right to purchase shares of Common Stock of the
Company, issued pursuant to a certain Consulting Services Agreement (the
"Agreement"), dated as of January 6, 2003, between the Company and KNIGHSBRIDGE
HOLDINGS, LLC D/B/A KNIGHTSBRIDGE CAPITAL or its assigns (the "Holder"). This
Warrant evidences a right to purchase an aggregate of 526,400 shares of Common
Stock of the Company, subject to adjustment as provided herein. The right to
sell the shares issued under conversion of this Warrant is subject to the terms
and conditions as outlined in the Agreement.
As used herein the following terms, unless the context otherwise requires,
have the
(a) The term "Company" includes, in addition to the Company itself,
any Corporation that shall succeed to or assume the obligation of the
Company hereunder.
(b) The term "Common Stock" includes all stock of any class or classes
(however designated) of the Company, authorized on or after the date
hereof, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends
1
and distributions on any shares entitled to preference, and the holders of
which shall ordinarily, in the absence of contingencies, be entitled to
vote for the election of a majority of directors of the Company (even
though the right Lo vole has been suspended by the happening of such a
contingency).
(c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other Person (corporate
or otherwise) which the holder of the Warrant at any time shall be entitled
to receive, or shall have received, on the exercise of the Warrant, in lieu
of OT in addition to Common Stock, or which at any time shall be issuable
or shall have been issued in exchange for or in replacement of Common Stock
or Other Securities pursuant to Section 6 or otherwise.
(d) The term "Person" shall have that meaning ascribed in the
Securities Act of 1933, as amended.
(e)The term "Shares" means the Common Stock of the Company issued or
issuable upon exercise of the Warrant,
1. Exercise of Warrant.
This Warrant, or any part hereof, is exercisable at a price of $.10 per share,
subject to adjustment as hereinafter provided. Upon delivery of a Notice of
Intention to Exercise all or any part of this Warrant together with payment of
the Purchase Price for the Shares purchased at the Company's principal offices,
the Holder shall be entitled to receive a certificate or certificates for the
Shares so purchased in those denominations set forth in such notice by Holder.
Payment of the Purchase Price may be made, at the option of the Holder: (a) by
cash, money order. certified or bank cashier's check or wire transfer, (b) the
surrender to the Company of securities of the Company having a value equal to
the aggregate Purchase Price, as determined in good faith by the Company's board
of directors, or (c) the delivery of a notice to the Company that the Holder is
exercising this Warrant by authorizing the Company to reduce the number of
shares of Common Stock subject to this Warrant by the number of shares having an
aggregate value equal to the aggregate Exercise Price. In the event of the
exercise of less than all of the Shares purchasable under this Warrant, the
Company shall, at its expense, amend this Warrant so as only to reduce the
number of Shares to which it may thereafter be exercised.
2. Adjustment of Purchase Price and Number of Shares.
2.1 (a) In case the Company shall (i) pay a dividend on its Common Stock in
Common Stock, (ii) subdivide its outstanding shares of Common Stock, or (iii)
combine its outstanding shares of Common Stock into a small number of shares,
then, in such an event, the Purchase Price in effect immediately prior thereto
shall be adjusted proportionately so that the adjusted Purchase Price will bear
the same relation to the Purchase Price in effect immediately prior to any such
event as the total number of shares of Common Stock outstanding immediately
prior to any such event shall bear to the total number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
subdivision (a), (i) shall become effective retroactively immediately after the
record date in the case of a dividend and (ii) shall become effective
immediately after the effective date in the case of a subdivision or
combination. The Purchase Price, as so adjusted, shall be readjusted in the same
manner upon the happening of any successive events or events described herein.
(b) In case the Company shall distribute to holders of shares of
Common Stock,
2
<Page>
Other Securities. evidences of its indebtedness or assets (excluding cash
dividends or distributions) or purchase rights, options or warrants lo subscribe
for or purchase such Other Securities, evidences of indebtedness or assets. then
in each such case the Purchase Price in effect immediately prior thereto shall
be adjusted by a fraction, the numerator of which shall be the total number of
then outstanding shares of Common Stock multiplied by the current market price
per share of Common Stock on the record date mentioned below, less the fair
market value of the Other Securities, assets or evidences of indebtedness so
distributed or of such rights, options or warrants as determined by the then
current trading price of such Other Securities. assets or evidences of
indebtedness so distributed or of such rights, options or warrants or, if there
is no such active trading market, in the good faith determination of the Board
of Directors, and the denominator or which shall be the total number of
outstanding shares of Common Stock multiplied by such current market price per
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective retroactively immediately after
the record date for the determination of stockholders entitled to receive such
distribution.
2.2 Upon each adjustment of the Purchase Price pursuant to subdivision (a)
of Subsection 2.1, the number of shares of Common Stock purchasable upon
exercise of this Warrant Certificate shall be adjusted to the number of shares
of Common Stock, calculated to the nearest one hundredth of a share,' obtained
by multiplying the number of shares of Common Stock purchasable immediately
prior to such adjustment upon the exercise of this Warrant Certificate by the
Purchase Price in effect prior to such adjustment and dividing the product so
obtained by the new Purchase Price.
2.3 In case of any capital reorganization of the Company, or of any
reclassification of the Common Stock, this Warrant Certificate shall be
exercisable after such capital reorganization or reclassification upon the terms
and conditions specified in this Warrant Certificate, for the number of shares
of stock or other securities which the Common Stock issuable (at the time of
such capital reorganization or reclassification) upon exercise of this Warrant
Certificate would have been entitled to receive upon such capital reorganization
or reclassification if such exercise had taken place immediately prior to such
action. The subdivision or combination of shares of Common Stock at any time
outstanding into a greater or lesser number of shares of Common Stock shall not
be deemed to be a reclassification of the Common Stock of the Company for the
purposes of this Subsection
2.4 The form of this Warrant Certificate need not be changed because of any
change in the Purchase Price pursuant to this Section 2 and any Warrant
Certificate issued after such change may state the same Purchase Price and the
same number of shares of Common Stock as are stated in this Warrant Certificate
as initially issued.
3. Adjustment for Reorganization. Consolidation, Merger, Etc.
3.1 Merger, Etc. In case at any time or from time to time after the date of
this Warrant. the Company shall (a) effect a reorganization, (b) consolidate
with or merge into any other Person, or (c) transfer all or substantially all of
its properties or assets to any other Person under any plan or arrangement
contemplating the dissolution of the Company within 24 months from the date of
such transfer (any such transaction being hereinafter sometimes referred to as a
"Reorganization") then, in each such case, the Holder, upon the exercise hereof
as provided in Section 1 at any time after the consummation or effective date of
such Reorganization (the "Effective Date"), shall receive. in lieu of the Shares
issuable on such exercise prior to such consummation or such effective date, the
stock and other securities and property (including cash) to which such Holder
would have been entitled upon such consummation or in connection with
3
<page>
such dissolution, as (he case may be, if such holder had so exercised this
Warrant, immediately prior thereto (all subject to further adjustment thereafter
as provided in Section 2, provided that the successor corporation in any Such
Reorganization described in clause (b) or (c) above where the Company will not
be the surviving entity (the "Acquiring Company") has agreed prior to such
Reorganization in a writing satisfactory in form and substance to the Molder
that this Warrant shall continue in full force and effect and the terms hereof
shall be applicable to the shares of stock and other securities and property
receivable on exercise after t h e consummation of such Reorganization. and
shall be binding upon the issuer of any such stuck or other securities
(including, in the case of any transfer of properties or assets referred to
above, the Person acquiring all or substantially all of the properties or assets
of the Company).
3.2 Continuation of Terms. This Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and other
securities and property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the effective
dale of dissolution following any such transfer, as the case may be, and shall
be binding upon the issuer of any such stock or other securities, including, in
the case of any such transfer, the Person acquiring all or substantially all of
the properties or assets of the Company. whether or not such Person shall have
expressly assumed the terms of this Warrant as provided in Section 3.1.
4. Registration
(a) Unless registered under the Securities Act of 1933 and applicable state
laws, this Warrant and the Shares or other securities issued upon exercise of
this Warrant shall not be transferable unless, in the opinion of counsel to the
Company or other counsel reasonably satisfactory to t h e Company, an exemption
from registration under applicable securities laws is available. The Warrant,
Shares and other securities issued upon the exercise of this Warrant shall be
subject to as to transfer order and the certificate or certificates evidencing
any such Shares or securities shall bear the following legend and any other
legend which counsel for the Company may deem necessary or advisable:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. AS AMENDED, AND
MAY NOT BE SOLD. TRANSFERRED, PLEDGED, OR HYPOTHECATED
UNLESS SO REGISTERED OR UNLESS IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT IS AVAILABLE.
(b) This Warrant has been issued pursuant to exemptions under federal
and/or state securities laws available, in part. bemuse the initial Holder
hereof is an "accredited investor" as that term is defined in Regulation D under
the Securities Act of 1933, and the Holder so warrants to the Company. The
Company may require the Holder, upon exercise of this Warrant. to produce
evidence reasonably satisfactory to the Company that the Holder is then an
accredited investor.
(c) If the Company shall receive from Holder a written request that the
Company effect any registration with respect to all or a part of the shares
issued upon execution of this warrant, the Company shall use its reasonable
effect to effect such registration (including, without limitation, the execution
of an undertaking to file post-effective amendments, appropriate
4
<Page>
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under ,the Securities
Act of 1933, as amended) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such shares as
are specified in such request. The registration statement filed pursuant to the
request of Holder as aforesaid may include other securities of the Company which
are held by officers or directors of the Company or which are held by persons
who, by virtue of agreements with the Company, are entitled to include their
securities in any such registration and may include securities of the Company
being sold for the account of the Company. Holder shall bear all expenses
(including, without limitation, attorneys and accountants fees and printing
expenses) incurred in connection with any such registration, qualification or
compliance undertaken by the Company upon the request of Holder as aforesaid,
provided, however, that all underwriting discounts and selling commissions
applicable to the sale of the securities shall be borne by the holders,
including the Company, of the securities so registered pro rata on the basis of
the number of their shares so registered.
If the Company at any time proposes to register any of its securities under
the Securities Act of 1933, as amended ("Securities Act") for sale to the
public, whether for its own account or for the account of other security holders
or both (except with respect to registration statements on Form S4., S-8 or
another form not available for registering the, shares for sale to the public),
it will give prompt written notice lo Holder of its intention to do so and of
the proposed method of distribution of such securities. Upon the written request
of Holder received by the Company within ten (10) days after the giving of any
such notice by the Company to register any of the shares issuable upon execution
of this warrant and not yet sold or otherwise transferred by Holder, the Company
will use reasonable efforts to cause such shares to be covered by the
registration statement proposed to be filed by the Company, all to the extent
and under the conditions such registration is permitted under the Securities
Act, subject to the same "lock-up" and/or "dribble-out" provisions as all other
listed selling shareholders in such registration statement may be subject.
5. No Dilution or Impairment
The Company will not, by amendment of its certificate 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 of the Warrants,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holders of the Warrants against dilution or other
impairment,
6. Replacement of Warrants,
On receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction of any Warrant, on delivery of an indemnity agreement
or security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation. on surrender and cancellation of such Warrant, the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
7. Remedies.
The Company stipulates that the remedies at law of the Holder in the event of
any default or threatened default by the Company in the performance of or
compliance with any of the terms of
5
this Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against violation of any of the terms
hereof or otherwise.
8. Negotiability, Assignment, etc.
This Warrant may be transferred by written assignment to any third party assigns
provided however that any such assignment does not conflict with the
restrictions set forth in the legend appearing at the header hereof.
9. Notice, etc.
All notices and other communications from the Company to the Holder shall be
mailed by first class registered or certified mail, postage prepaid, at such
address as may have been furnished to the Company in writing by Holder or, until
any such holder furnishes to the Company an address, then to, and at the address
of, the Holder of this Warrant who has so furnished an address to the Company.
10. Miscellaneous.
This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Warrant shall be governed by the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in the City of New York, for the adjudication of any
dispute hereunder, 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. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
All nouns and pronouns used herein shall be deemed to refer to the masculine,
feminine or neuter, as the identity of the person or persons to whom reference
is made herein may require.
11. Expiration.
The right to exercise his Warrant shall expire at 5:00 P.M., EST, on January
5,2008.
Dated: CHAMPIONLYTES PRODUCTS, INC.
-------------------
By: /s/ Dave Goldberg
----------------------
Name: Dave Goldberg
Title: President
6
EXHIBIT A
NOTICE OF INTENTION TO EXERCISE
The Championlyte Products, Inc.:
The undersigned registered holder of this Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder ______________ shares of
Common Stock of Championlyte Products, Inc., all at the price and on the terms
and conditions specified in this Warrant, and requests that the certificates for
such shares be issued in the name of __________________ (social security of
other identifying number:__________________________) and delivered to the
following address:
________________________________________________________________________________
(Street) (City, State and Zip Code)
Dated:
------------------- --------------------------
(Signature of Holder)
(Street Address)
(City, State and Zip Code)
7