THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") IN
RELIANCE UPON THE EXEMPTIONS CONTAINED IN THE ACT. THIS WARRANT AND ANY SHARES
ISSUED UPON EXERCISE OF THIS WARRANT MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i) REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS; (ii) PURSUANT TO RULE 144 UNDER
SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES); OR (iii) THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL
ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
U.S. HOME & GARDEN INC.
Warrant
263,160 Shares of RKW-1
Common Stock
THIS CERTIFIES that, for value received, Robert Kassel or his permitted
assigns (the "Holder"), is entitled to subscribe for and purchase from U.S. HOME
& GARDEN INC., a Delaware corporation (the "Corporation"), on the terms and
conditions set forth herein, 263,160 shares of fully paid and nonassessable
Common Stock, $.001 par value per share ("Common Stock"), of the Corporation.
This Warrant and any Warrant or Warrants subsequently issued upon exchange
hereof are hereinafter collectively referred to as the "Warrant."
Section 1. EXERCISE OF WARRANT. The price of the shares of Common Stock
purchasable pursuant to this Warrant shall be $2.28 per share, subject to
adjustment pursuant to Section 3 below (such price, as adjusted from time to
time, being hereinafter referred to as the "Exercise Price"). This Warrant shall
be immediately exercisable and shall expire at 5:00 p.m., New York time, on May
31, 2005. The rights represented by this Warrant may be exercised by the Holder,
in whole or in part, but not as to a fractional share of Common Stock, by the
surrender of this Warrant (properly endorsed) at the office of the Corporation
and by payment to the Corporation of the Exercise Price in cash or by certified
or official bank check, for each share being purchased. The Warrants will not be
subject to call or redemption by the Corporation. Upon the exercise of this
Warrant, a certificate or certificates for the shares of Common Stock so
purchased, registered in the name of the Holder, shall be delivered to the
Holder within a reasonable time, not exceeding three (3) business days, after
exercise and, unless this Warrant has expired, a new Warrant representing the
number of shares (except a remaining fractional share), if any, with respect to
which this Warrant shall not then have been exercised shall also be issued to
the Holder within such time. The Holder shall for all purposes be deemed to have
become the holder of record of the shares issued upon exercise of this Warrant
on the date on which the Warrant was surrendered and payment of the Exercise
Price and any applicable taxes was made, except that, if the date of such
surrender and payment is a date on which the stock transfer books of the
Corporation are closed, the Holder shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
Section 2. ADJUSTMENT OF NUMBER OF SHARES SUBJECT TO WARRANT. Upon any
adjustment of the Exercise Price pursuant to Section 3 hereof, the Holder shall
thereafter be entitled to purchase, at the adjusted Exercise Price, the number
of shares (calculated to the nearest tenth of a share) obtained by multiplying
the Exercise Price in effect immediately prior to such adjustment by the number
of shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
Section 3. ADJUSTMENT OF EXERCISE PRICE.
(a) If the Corporation shall split, subdivide or combine its
Common Stock, the Exercise Price shall be proportionately decreased in the case
of a split or subdivision or increased in the case of a combination.
(b) If the Corporation shall pay a dividend with respect to
the Common Stock or make any other distribution with respect to the Common
Stock, except any distribution specifically provided for in Section 4 below,
payable in shares of Common Stock, then the Exercise Price shall be adjusted,
from and after the date of determination of the shareholders entitled to receive
such dividend or distribution, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of Common
Stock outstanding immediately after such dividend or distribution.
Section 4. RECLASSIFICATION, MERGER, ETC. In the case of any
reclassification of the Common Stock or in the case of any consolidation or
merger of the Corporation with or into another corporation (other than a merger
with another corporation in which the Corporation is the surviving corporation
and which does not result in any reclassification of the Common Stock) or in the
case of any sale of all or substantially all of the assets of the Corporation,
then the Corporation, or such successor or purchasing corporation, as the case
may be, shall execute a new certificate, providing that the Holder shall have
the right to exercise such new Warrant and upon such exercise to receive, in
lieu of each share of Common Stock theretofore issuable upon exercise of this
Warrant, the number and kind of shares of stock, other securities, money or
property receivable upon such reclassification, change, consolidation or merger
by a holder of shares of the Common Stock with respect to one share of Common
Stock. Such new Warrant certificate shall provide for adjustments which shall be
identical to the adjustments provided for herein. The provisions of this Section
4 shall similarly apply to successive reclassifications, changes, consolidations
or mergers.
Section 5. STOCK TO BE RESERVED. The Corporation will at all times
reserve and keep available out of its authorized Common Stock or its treasury
shares, solely for the purpose of issue upon the exercise of this Warrant as
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herein provided, such number of shares of Common Stock as shall then be issuable
upon the exercise of this Warrant. The Corporation covenants that all shares of
Common Stock which shall be so issued shall be duly and validly issued and fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof
Section 6. NO STOCKHOLDER RIGHTS OR LIABILITIES. This Warrant shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Corporation. No provision hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the Exercise Price or as a stockholder of the Corporation, whether
such liability is asserted by the Corporation or by creditors of the
Corporation.
Section 7. INVESTMENT REPRESENTATION AND LEGEND. The Holder, by
acceptance of this Warrant, represents and warrants to the Corporation that the
Holder is receiving the Warrant and, unless at the time of exercise a
registration statement under the Act is effective with respect to such shares,
upon the exercise hereof will acquire the shares of Common Stock issuable upon
such exercise, for investment purposes only and not with a view towards the
resale or other distribution thereof except pursuant to an effective
registration statement under the Act or an applicable exemption from
registration under the Act. The Holder also hereby agrees that the Holder shall
not sell, transfer by any means or otherwise dispose of the Warrant or the
shares of Common Stock issuable upon exercise of the Warrant without
registration under the Act unless in the opinion of counsel reasonably
acceptable to the Corporation such proposed sale or transfer is exempt from the
registration provisions of the Act.
The Holder, by acceptance of this Warrant, agrees that the Corporation
may affix, unless the shares subject to this Warrant are registered at the time
of exercise, a legend to the certificates for shares of Common Stock issued upon
exercise of this Warrant in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SHARES MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS (i) REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS; (ii)
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES); OR (iii) THE CORPORATION HAS RECEIVED AN
OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Section 8. PIGGYBACK REGISTRATION RIGHTS. If, at any time prior to the
expiration of this Warrant the Corporation proposes to prepare and file one or
more registration statements covering equity securities of the Corporation, or
any such securities held by its shareholders (in either case, other than in
connection with a merger or acquisition or pursuant to Form S-8 or successor
form) (collectively, the "Registration Statement"), it will give written notice,
at least thirty (30) days prior to the filing of each such Registration
Statement, to the Holder of its intention to do so. If the Holder notifies the
Corporation within ten (10) days after receipt of any such notice of its desire
to include any shares issuable upon exercise of this Warrant (the "Warrant
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Shares") in such proposed Registration Statement, the Corporation shall afford
the Holder the opportunity to have any such Warrant Shares registered under such
Registration Statement at the Corporation's sole cost and expense and at no cost
or expense to the Holder except for the Holder's proportionate share of any
underwriting discounts or commissions and transfer taxes applicable to the
shares of Common Stock to be sold by the Holder and the fees of any counsel
retained by the Holder.
Notwithstanding the foregoing, if, in the written opinion of the
Corporation's managing underwriter, if any, for such offering, the inclusion of
all or a portion of the Warrant Shares requested to be registered, when added to
the securities being registered by the Corporation or any selling shareholders,
would materially adversely affect such underwritten offering, then the
Corporation may exclude from such offering all or a portion of the Warrant
Shares requested to be registered as the underwriter reasonably determines would
so materially adversely affect the offering.
Notwithstanding the provisions of this Section 8 the Corporation shall
have the right at any time after it shall have given written notice pursuant to
this Section 8 (irrespective of whether a written request for inclusion of any
of the Warrant Shares shall have been made) to elect not to file any such
proposed Registration Statement, or to withdraw the same after the filing but
prior to the effective date thereof.
Section 9. COVENANTS WITH RESPECT TO REGISTRATION.
9.1 In connection with any registration under Section 8
hereof, the Corporation covenants and agrees as follows:
(a) The Corporation shall pay all costs (excluding
fees and expenses of Holder(s) counsel and any underwriting or selling
commissions), fees and expenses in connection with all registration statements
filed pursuant to Sections 8 hereof including, without limitation, the
Corporation's legal and accounting fees, printing expenses, blue sky fees and
expenses.
(b) The Corporation will take all necessary action
which may be required in qualifying or registering the Warrant Shares included
in a registration statement for offering and sale under the securities or blue
sky laws of such states as reasonably are requested by the Holder(s), provided
that the Corporation shall not be obligated to execute or file any general
consent to service of process or to qualify as a foreign corporation to do
business under the laws of any such jurisdiction.
(c) The Holder(s) of the Warrant Shares to be sold
pursuant to a registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Corporation, its officers and
directors and each person, if any, who controls the Corporation within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, against all loss, claim, damage or expense or liability to which they
may become subject under the Act, the Exchange Act or otherwise, arising solely
from written information furnished by or on behalf of such Holders, or their
successors or assigns, for specific inclusion in such registration statement,
but only to the same extent and subject to the same terms and provisions as the
indemnity by the Holder of the Corporation contained in the Consulting
Agreement.
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(d) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
Section 10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated or destroyed, the Corporation may, on such
terms as to indemnity or otherwise as it may in its discretion reasonably impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed.
Section 11. SUCCESSORS. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the Corporation, the
Holders and their respective successors and assigns hereunder.
Section 12. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement
and each Warrant Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
construed in accordance with the laws of the said State without giving effect to
the rules of said State governing the conflicts of law.
Section 13. ENTIRE AGREEMENT; MODIFICATION. This Agreement supersedes
that certain Class B Warrant to purchase 263,160 shares of Common Stock
previously issued by the Corporation to the Holder (the "Prior Warrant"), which
Prior Warrant shall be void and of no further force or effect. This Agreement
contains the entire understanding between the parties hereto with respect to the
subject matter hereof and may not be modified or amended except by a writing
duly signed by the party against whom enforcement of the modification or
amendment is sought.
Section 14. BENEFITS OR THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Corporation and
the Holder and any other registered Holder(s) of the Warrant Certificates or
Warrant Shares any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Corporation and the Holder and any other Holder(s) of the Warrant Certificates
or Warrant Shares.
IN WITNESS WHEREOF, the Corporation has executed this Warrant by its
authorized signatory.
U.S. HOME & GARDEN INC.
By:/S/ DAVID HARPER
--------------------------------------
David Harper, Vice President
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[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ______ shares of the Common
Stock of U.S. Home & Garden Inc. and herewith tenders, in payment for such
shares, cash or a certified or official bank check payable in New York Clearing
House Funds to the order of __________________________________, in the amount of
$_________________, all in accordance with the terms hereof. The undersigned
requests that a certificate for such shares be registered in the name of
______________________ whose address is __________________________, and that
such certificate be delivered to _________________, whose address is
____________________________.
Dated: Signature:___________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
-------------------------------
-------------------------------
(Insert Social Security or other
Identifying number of Holder)
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