Exhibit 4.2
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED FOR RESALE UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY
STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF ANY EFFECTIVE REGISTRATION STATEMENT AS TO SUCH
SECURITIES FILED UNDER THE ACT, OR AN EXEMPTION FROM REGISTRATION, AND
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS. THE ISSUER MAY REQUIRE AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER HEREOF THAT SUCH REGISTRATION IS
NOT REQUIRED AND THAT SUCH LAWS ARE COMPLIED WITH. THIS WARRANT MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED PRIOR TO __________________________, 2006 AND THE
REGISTERED HOLDER OF THIS WARRANT, BY ITS/HIS/HER ACCEPTANCE HEREOF, AGREES THAT
IT WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT PRIOR TO THAT DATE.
VOID AFTER 5:00 P.M., SPOKANE, WASHINGTON TIME, ON _______________ , 2009
Warrant to subscribe for and purchase ________________ shares of Common Stock,
$.001par value, of
NEWTOWN LANE MARKETING, INCORPORATED
This is to Certify That,
FOR ONE HUNDRED DOLLARS ($100) AND OTHER VALUE RECEIVED, PUBLIC SECURITIES,
INC., a Washington Corporation, (the "Holder") is entitled to purchase, subject
to the provisions of this Warrant, from NEWTOWN LANE MARKETING, INCORPORATED, a
Delaware Corporation ("Company"), at any time on or after , 2006, and not later
than 5:00 p.m., Spokane, Washington Time, on _____________________, 2009, a
total of XXXXX shares of Common Stock of the Company ("Securities") exercisable
at a purchase price of $0.56 for the Securities . The number of Securities to be
received upon the exercise of this Warrant and the price to be paid for the
Securities may be adjusted from time to time as hereinafter set forth. The
purchase price of a Security in effect at any time and as adjusted from time to
time is hereinafter sometimes referred to as the "Exercise Price." This Warrant
is or may be one of a series of Warrants identical in form issued by the Company
to purchase an aggregate of ________ Shares of Common Stock. The Securities, as
adjusted from time to time, underlying the Warrants are hereinafter sometimes
referred to as "Warrant Securities".
(1.) Exercise of Warrant. Subject to the provisions of Section (7) hereof, this
Warrant may be exercised in whole or in part at anytime or from time to
time on or after , 2006, but not later than 5:00 p.m., Spokane, Washington
Time on ___________________________, 2009, or if _______________________,
2009 is a day on which banking institutions are authorized by law to
close, then on the next succeeding day which shall not be such a day, by
presentation and surrender hereof to the Company or at the office of its
stock transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Exercise Price for the number
of shares of Securities as specified in such Form, together with all
federal and state taxes applicable upon such exercise. During the term of
this Warrant, the Company agrees that the Holder shall be entitled to
participate in any tender offer being made for the Securities and to so
notify the Holder within a reasonable time of such tender offer no later
than the third business day after the day the Company becomes aware that
any tender offer is being made for the Securities. If this Warrant should
be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
right of the Holder to purchase the balance of the Securities purchasable
hereunder not purchased. Upon receipt by the Company of this Warrant at
the office of the Company or at the office of the Company's stock transfer
agent, in proper form for exercise and accompanied by the total Exercise
Price, the Holder shall be deemed to be the holder of record of the
Securities issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such Securities shall not then be actually delivered to the
Holder.
(2.) Reservation of Securities. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of shares of Securities as shall be required for
issuance or delivery upon exercise of this Warrant. The Company covenants
and agrees that, upon exercise of this Warrant and payment of the Exercise
Price therefor, all Securities issuable upon such exercise shall be duly
and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any stockholder.
(3.) Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to
any fraction of a share called for upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share,
determined as follows:
(a) If the Securities are listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange, the
current value shall be the last reported sale price of the Common
Stock on such exchange on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on such day, the
average of the closing bid and asked prices for such day on such
exchange; or,
(b) If the Securities are not so listed or admitted to unlisted trading
privileges, the current value shall be the mean of the last reported
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bid and asked prices reported by the National Association of
Securities Dealers Automated Quotation System (or, if not so quoted
on NASDAQ or quoted by the National Quotation Bureau, Inc.) on the
last business day prior to the date of the exercise of this Warrant;
or (c) If the Securities are not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the
current value shall be an amount, not less than book value,
determined in such reasonable manner as may be prescribed by the
Board of Directors of the Company, such determination to be final
and binding on the Holder.
(4.) Exchange, Assignment or Loss of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations entitling the
Holder thereof to purchase (under the same terms and conditions as
provided by this Warrant) in the aggregate the same number of Securities
purchasable hereunder. This Warrant may not be sold, transferred,
assigned, or hypothecated until after one year from the effective date of
the Registration Statementhereof except that it may be (i) assigned in
whole or in part to the officers of the "Underwriter(s)", and (ii)
transferred to any successor to the business of the "Underwriter(s)." Any
such assignment shall be made by surrender of this Warrant to the Company,
or at the office of its stock transfer agent, if any, with the Assignment
Form annexed hereto duly executed and with funds sufficient to pay any
transfer tax; whereupon the Company shall, without charge, execute and
deliver a new Warrant in the name of the assignee named insuch instrument
of assignment, and this Warrant shall promptly be canceled. This Warrant
may be divided or combined with other Warrants which carry the same rights
upon presentation hereof at the office of the Company or at the office of
its stock transfer agent, if any, together with a written notice
specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any Warrants issued in substitution for or replacement of this
Warrant, or into which this Warrant may be divided or exchanged. Until
this Warrant is duly transferred on the books of the Company, the Company
may treat the registered holder of this Warrant as absolute owner hereof
for all purposes without being affected by any notice to the contrary.
Each successive holder of this Warrant, or any portion of the rights
represented thereby, shall be bound by the terms and conditions set forth
herein. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Warrant, if mutilated, the
Company will execute and deliver a new Warrant of like tenor and date. Any
such new Warrant executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not the
Warrant so lost, stolen, destroyed, or mutilated shall be at any time
enforceable by anyone.
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(5.) Rights of the Holder. The Holder shall not, by virtue hereof, be entitled
to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in the Warrant
and are not enforceable against the Company except to the extent set forth
herein.
(6.) Notices to Warrant Holders. So long as this Warrant shall be outstanding
and unexercised (i) if the Company shall pay any dividend or make any
distribution upon the Common Stock, or (ii) if the Company shall offer to
the holders of Common Stock for subscription or purchase by them any
shares of stock of any class or any other rights, or (iii) if any capital
reorganization of the Company, reclassification of the capital stock of
the Company, consolidation or merger of the Company with or into another
corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Company to another corporation which is
effected in such a manner that the holders of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, or voluntary or involuntary dissolution,
liquidation or winding up of the Company shall be effected, then, in any
such case, the Company shall cause to be delivered to the Holder, at least
ten (10) days prior to the date specified in (x) or (y) below, as the case
may be, a notice containing a brief description of the proposed action and
stating the date on which (x) a record is to be taken for the purpose of
such dividend, distribution or rights, or (y) such reclassification,
reorganization, consolidation, merger, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any, is to be
fixed, as of which the holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for equivalent securities or
other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
(7.) Adjustment of Exercise Price and Number of Shares of Common Stock
Deliverable.
(A)
(i) Except as hereinafter provided, in the event the Company
shall, at any time or from time to time after the date hereof,
issue any shares of Common Stock as a stock dividend to the
holders of Common Stock, or subdivide or combine the
outstanding shares of Common Stock into a greater or lesser
number of shares (any such issuance, subdivision or
combination being herein call a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the Exercise
Price of the Common Stock issuable upon the exercise of the
Warrant in effect immediately prior to such Change of Shares
shall be changed to a price (including any applicable fraction
of a cent to the nearest cent) determined by dividing (i) the
sum of (a) the total number of shares of Common Stock
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outstanding immediately prior to such Change of Shares,
multiplied by the Exercise Price in effect immediately prior
to such Change of Shares, and (b) the consideration, if any,
received by the Company upon such issuance, subdivision or
combination by (ii) the total number of shares of Common Stock
outstanding immediately after such Change of Shares; provided,
however, that in no event shall the Exercise Price be adjusted
pursuant to this computation to an amount in excess of the
Exercise Price in effect immediately prior to such
computation, except in the case of a combination of
outstanding shares of Common Stock.
For the purposes of any adjustment to be made in accordance with
this Section (7) the following provisions shall be applicable:
(I) Shares of Common Stock issuable by way of dividend or
other distribution on any capital stock of the Company
shall be deemed to have been issued immediately after
the opening of business on the day following the record
date for the determination of shareholders entitled to
receive such dividend or other distribution and shall be
deemed to have been issued without consideration.
(II) The number of shares of Common Stock at any one time
outstanding shall not be deemed to include the number of
shares issuable (subject to readjustment upon the actual
issuance thereof) upon the exercise of options, rights
or warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(ii) Upon each adjustment of the Exercise Price pursuant to this
Section (7), the number of shares of Securities purchasable
upon the exercise of each Warrant shall be the number derived
by multiplying the number of shares of Securities purchasable
immediately prior to such adjustment by the Exercise Price in
effect prior to such adjustment and dividing the product so
obtained by the applicable adjusted Exercise Price.
(B) In case of any reclassification or change of outstanding Securities
issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into
another corporation other than a merger with a "Subsidiary" (which
shall mean any corporation or corporations, as the case may be, of
which capital stock having ordinary power to elect a majority of the
Board of Directors of such corporation (regardless of whether or not
at the time capital stock of any other class or classes of such
corporation shall have or may have voting power by reason of the
happening of any contingency) is at the time directly or indirectly
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owned by the Company or by one or more Subsidiaries) or by the
Company and one or more Subsidiaries in which merger the Company is
the continuing corporation and which does not result in any
reclassification or change of the then outstanding shares of Common
Stock or other capital stock issuable upon exercise of the Warrants
(other than a change in par value, or from par value to no par
value, or from no par value to par value or as a result of
subdivision or combination) or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, then, as a condition of such
reclassification, change, consolidation, merger, sale or conveyance,
the Company, or such successor or purchasing corporation, as the
case may be, shall make lawful and adequate provision whereby the
Holder of each Warrant then outstanding shall have the right
thereafter to receive on exercise of such Warrant the kind and
amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance
by a holder of the number of securities issuable upon exercise of
such Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance and shall forthwith file
at the principal office of the Company a statement signed on its
behalf by its President or a Vice President and by its Treasurer or
an Assistant Treasurer or its Secretary or an Assistant Secretary
evidencing such provision. Such provisions shall include provision
for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in Section (7)(A). The
above provisions of this Section (7)(B) shall similarly apply to
successive reclassifications and changes of shares of Common Stock
and to successive consolidations, mergers, sales or conveyances.
(C) Irrespective of any adjustments or changes in the Exercise Price or
the number of Securities purchasable upon exercise of the Warrants,
the Warrant Certificates theretofore and thereafter issued shall
(unless the Company shall exercise its option to issue new Warrant
Certificates pursuant hereto) continue to express the Exercise Price
per share and the number of shares purchasable thereunder as the
Exercise Price per share and the number of shares purchasable
thereunder as expressed in the Warrant Certificates when the same
were originally issued.
(D) After each adjustment of the Exercise Price pursuant to this Section
(7), the Company will promptly prepare a certificate signed on its
behalf by the President or Vice President, and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary,
of the Company setting forth: (i) the Exercise Price as so adjusted,
(ii) the number of Securities purchasable upon exercise of each
Warrant, after such adjustment, and (iii) a brief statement of the
facts accounting for such adjustment. The Company will promptly file
such certificate in the Company's minute books and cause a brief
summary thereof to be sent by ordinary first class mail to each
Holder at his last address as it shall appear on the registry books
of the Company. No failure to mail such notice nor any defect
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therein or in the mailing thereof shall affect the validity thereof
except as to the holder to whom the Company failed to mail such
notice, or except as to the holder whose notice was defective. The
affidavit of an officer or the Secretary or an Assistant Secretary
of the Company that such notice has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein.
(i) Intent of Provisions. Notwithstanding any provision to the contrary,
if any event occurs as to which, in the opinion of the Board of
Directors of the Company, the other provisions of this Section 7 are
not strictly applicable or if strictly applicable, would not fairly
protect the rights of the Holders' Warrant in accordance with the
essential intent and principles of such provisions, then such Board
of Directors shall appoint a firm of independent certified public
accountants (which may be the regular auditors of the Company) which
shall give its opinion upon the adjustment, if any, on a basis
consistent with such essential intent and principles, necessary to
preserve, without dilution, the rights of the Holders. Upon receipt
of such opinion by the Board of Directors of the Company, the
Company shall forthwith make the adjustments described therein
(E) No adjustment of the Exercise Price shall be made as a result of or
in connection with the issuance or sale of Securities if the amount
of said adjustment shall be less than $0.001, provided, however,
that in such case, any adjustment that would otherwise be required
then to be made shall be carried forward and shall be made at the
time of and together with the next subsequent adjustment that shall
amount, together with any adjustment so carried forward, to at least
$.001. In addition, Holders shall not be entitled to cash dividends
paid by the Company prior to the exercise of any Warrant or Warrants
held by them.
(F) In the event that the Company shall at any time prior to the
exercise of all Warrants declare a dividend consisting solely of
shares of Common Stock or otherwise distribute to its stockholders
any assets, property, rights, or evidences of indebtedness, the
Holders of the unexercised Warrants shall thereafter be entitled, in
addition to the Securities or other securities and property
receivable upon the exercise thereof, to receive, upon the exercise
of such Warrants, the same property, assets, rights, or evidences of
indebtedness, that they would have been entitled to receive at the
time of such dividend or distribution as if the Warrants had been
exercised immediately prior to such dividend or distribution. At the
time of any such dividend or distribution, the Company shall make
appropriate reserves to ensure the timely performance of the
provisions of this Section (7).
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(G)
(G.1) Right to Exercise on a Net Issuance Basis. In lieu of
exercising this Warrant for cash, the Holder shall have the
right to exercise this Warrant or any portion thereof (the
"Net Issuance Right") into Common Stock as provided in this
Section G.1 at any time or from time to time during the period
specified on page one of this Warrant Agreement, hereof by the
surrender of this Warrant to the Company with a duly executed
and completed Exercise Form marked to reflect net issuance
exercise. Upon exercise of the Net Issuance Right with respect
to a particular number of shares of the Securities subject to
this Warrant and noted on the Exercise Form (the "Net Issuance
Warrant Shares"), the Company shall deliver to the Holder
(without payment by the Holder of any Exercise Price or any
cash or other consideration) (X) that number of shares of
fully paid and nonassessable shares of Common Stock equal to
the quotient obtained by dividing the value of this Warrant
(or the specified portion hereof) on the Net Issuance Exercise
Date, which value shall be determined by subtracting (A) the
aggregate Exercise Price of the Net Issuance Warrant Shares
immediately prior to the exercise of the Net Issuance Right
from (B) the aggregate fair market value of the Net Issuance
Warrant Shares issuable upon exercise of this Warrant (or the
specified portion hereof) on the Net Issuance Exercise Date
(as herein defined) by (Y) the fair market value one share of
Common Stock on the Net Issuance Exercise Date (as herein
defined). Expressed as a formula as shown below, such net
issuance exercise shall be computed as follows: X = B-A / Y
Where: X = the number of shares of Common Stock that may be
issued to the Holder, Y = the fair market value ("FMV") of one
share of Common Stock as of the Net Issuance Exercise Date, A
= the aggregate Exercise Price (i.e. the product determined by
multiplying the Net Issuance Warrant Shares by the Exercise
Price) and B = the aggregate FMV (i.e. the product determined
by multiplying the FMV by the Net Issuance Warrant Shares).
(G.1.2) Determination of Fair Market Value. For purposes of this
Section G.1.2, "fair market value" of a share of Common Stock
as of the Net Issuance Exercise Date shall mean:
(i) if the Net Issuance Right is exercised in
connection with and contingent upon a Public
Offering, and if the Company's registration
Statement relating to such Public Offering
has been declared effective by the SEC, then
the initial "Price to Public" specified in
the final Prospectus with respect to such
offering.
(ii) if the Net Issuance Right is not exercised
in connection with and contingent upon a
Public Offering, then as follows:
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(a) If traded on a securities
exchange, the fair market value of
the Common Stock shall be deemed
to be the last reported sale price
or if no reported sale takes
place, the average of the last
reported sale prices for the last
three (3) trading days prior to
the Net Issuance Date;
(b) If traded on the Nasdaq National
Market or the Nasdaq Small Cap
Market, the fair market value of
the Common Stock shall be deemed
to be the average of the last
reported sale price of the common
Stock on such Market over the last
three (3) trading days prior to
the Net Issuance Exercise Date;
(c) If traded over-the-counter other
than on the Nasdaq National market
or the Nasdaq SmallCap Market, the
fair market value of the Common
Stock shall be deemed to be the
average of the midpoint between
the closing bid and ask prices of
the Common Stock over the 3-day
trading period prior to the Net
Issuance Exercise Date; and,
(d) If there is no public market for
the Common Stock, then the fair
market value shall be determined
by mutual agreement of the
Warrantholder and the Company, and
if the Warrantholder and the
Company are unable to so agree, at
the Company's sole expense, by an
investment banker of national
reputation selected by the Company
and reasonably acceptable to the
Warrantholder.
(8.) Piggyback Registration. If, at any time commencing one year from the
effective date of the registration statement and expiring four (4) years
thereafter, the Company proposes to register any of its securities under
the Securities Act of 1933, as amended (the "Act") (other than in
connection with a merger or pursuant to Form S-8, S-4 or other comparable
9
registration statement) it will give written notice by registered mail, at
least thirty (30) days prior to the filing of each such registration
statement, to the Holders and to all other Holders of the Warrants and/or
the Warrant Securities of its intention to do so. If the Holder or other
Holders of the Warrants and/or Warrant Securities notify the Company
within twenty (20) days after receipt of any such notice of its or their
desire to include the resale of any such securities in such proposed
registration statement, the Company shall afford each of the Underwriter
and such Holders of the Warrants and/or Warrant Securities the opportunity
to have the resale of any such Warrant Securities registered under such
registration statement. In the event any underwriter underwriting the sale
of securities registered by such registration statement shall limit the
number of securities includable in such registration by shareholders of
the Company, the number of such securities shall be allocated pro rata
among the holders of Warrants and the holders of other securities entitled
to piggyback registration rights. Notwithstanding the provisions of this
Section, the Company shall have the right at any time after it shall have
given written notice pursuant to this Section (irrespective of whether a
written request for inclusion of any such securities 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.
(9.) Demand Registration.
(a) At any time commencing one year from the effective date of the
registration statement and expiring four (4) years thereafter, the
Holders of the Warrants and/or Warrant Securities representing a
"Majority" (as hereinafter defined) of such securities (assuming the
exercise of all of the Warrants) shall have the right (which right
is in addition to the registration rights under Section (i) hereof),
exercisable by written notice to the Company, to have the Company
prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, a registration statement and such
other documents, including a prospectus, as may be necessary in the
opinion of both counsel for the Company and counsel for the
Underwriter and Holders, in order to comply with the provisions of
the Act, so as to permit a public offering and sale of their
respective Warrant Securities for twelve (12) consecutive months by
such Holders and any other holders of the Warrants and/or Warrant
Securities who notify the Company within ten (10) days after
receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section (i) by any Holder or Holders
to all other registered Holders of the Warrants and the Warrant
Securities within ten (10) days from the date of the receipt of any
such registration request.
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(c) In addition to the registration rights under this Section (9) at any
time commencing one year after the effective date of the
registration statement and expiring four (4) years thereafter, the
Holders of Representative's Warrants and/or Warrant Securities shall
have the right, exercisable by written request to the Company, to
have the Company prepare and file, on one occasion, with the
Commission a registration statement so as to permit a public
offering and sale for twelve (12) consecutive months by such Holders
of its Warrant Securities; provided, however, that the provisions of
Section (9)(b) hereof shall not apply to any such registration
request and registration and all costs incident thereto shall be at
the expense of the Holder or Holders making such request.
(10.) Covenants of the Company With Respect to Registration. In connection with
any registration under Section (8) or (9) hereof, the Company covenants
and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within thirty (30) days of receipt of any demand therefor,
shall use its best efforts to have any registration statement
declared effective at the earliest possible time, and shall furnish
each Holder desiring to sell Warrant Securities such number of
prospectuses as shall reasonably be requested.
(b) The Company 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 (h), (i) and (j) hereof including,
without limitation, the Company's legal and accounting fees,
printing expenses, blue sky fees and expenses. If the Company shall
fail to comply with the provisions of Section (10)(a), the Company
shall, in addition to any other equitable or other relief available
to the Holder(s), extend the Exercise Period by such number of days
as shall equal the delay caused by the Company's failure.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Warrant Securities included in a
registration statement for resale under the securities or blue sky
laws of such states as are reasonably requested by the Holder(s),
provided that the Company 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.
(d) The Company shall indemnify the Holder(s) of the Warrant Securities
to be resold pursuant to any registration statement and each person,
if any, who controls such Holders within the meaning of Section 15
of the Act or Section 20(a) of the Securities Exchange Act of 1934,
as amended ("Exchange Act"), from and against all loss, claim,
damage, expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim
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whatsoever) to which any of them may become subject under the Act,
the Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect as
the provisions pursuant to which the Company has agreed to indemnify
the Underwriter contained in Section 7 of the Underwriting Agreement
relating to the offering.
(e) The Holder(s) of the Warrant Securities to be resold pursuant to a
registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and
directors and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever)
to which they may become subject under the Act, the Exchange Act or
otherwise, arising from information furnished by or on behalf of
such Holders, or their successors or assigns, for specific inclusion
in such registration statement to the same extent with the same
effect as the provisions contained in Section 7 of the Underwriting
Agreement pursuant to which the Underwriter has agreed to indemnify
the Company.
(f) The Holder(s) may exercise their Warrants prior to the initial
filing of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities other
than the Warrant Securities to be included in any registration
statement filed pursuant to Section (9) hereof, or permit any other
registration statement to be or remain effective during the
effectiveness of a registration statement filed pursuant to Section
(9) hereof, other than a secondary offering of equity securities of
the Company, without the prior written consent of the Holders of the
Warrants and Warrant Securities representing a Majority of such
securities.
(h) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart,
addressed to such Holder or underwriter, of (x) an opinion of
counsel to the Company, dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (y) a "cold comfort"
letter dated the effective date of such registration statement (and,
if such registration includes an underwritten public offering, a
letter dated the date of the closing under the underwriting
agreement) signed by the independent public accountants who have
issued a report on the Company's financial statements included in
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such registration statement, in each case covering substantially the
same matters with respect to such registration statement (and the
prospectus included therein) and, in the case of such accountants'
letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(i) The Company shall as soon as practicable after the effective date of
the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders"
(within the meaning of Rule 158 under the Act) an earnings statement
(which need not be audited) complying with Section 11(a) of the Act
and covering a period of at least 12 consecutive months beginning
after the effective date of the registration statement.
(j) The Company shall deliver promptly to each Holder participating in
the offering requesting the correspondence and memoranda described
below and to the managing underwriters, copies of all correspondence
between the Commission and the Company, its counsel or auditors and
all memoranda relating to discussions with the Commission or its
staff with respect to the registration statement and permit each
Holder and underwriter to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to
comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. ("NASD") or an Exchange.
Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such Holder
or underwriter shall reasonably request.
(k) The Holders shall be parties to any underwriting agreement relating
to an underwritten sale of their Warrant Securities and may, at
their option, require that any or all the representations,
warranties and covenants of the Company to or for the benefit of
such underwriters shall also be made to and for the benefit of such
Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or
the underwriters except as they may relate to such Holders and their
intended methods of distribution.
(l) For purposes of this Agreement, the term "Majority" in reference to
the Holders of Warrants or Warrant Securities, shall mean in excess
of fifty (50%) of the then outstanding Warrants and Warrant
Securities that (i) are not held by the Company, an affiliate,
officer, creditor, employee or agent thereof or any of their
respective affiliates, members of their family, persons acting as
nominees or in conjunction therewith or (ii) have not been resold to
the public pursuant to a registration statement filed with the
Commission under the Act.
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(11.) Buy-Out of Registration Demand. In lieu of carrying out its obligations to
effect a Piggyback Registration or Demand Registration of any registrable
securities pursuant to the Section, the Company may carry out such
obligation by offering to purchase and purchasing such Registrable
Securities requested to be registered in an amount in cash equal to the
difference between (a) 95% of the last sale price of the Common Stock on
the day the request for registration is made and (b) the Exercise Price in
effect on such day; the purchase transaction closing within three (3)
business days; provided however, that the Holder or Holders may decline
such request rather than accept such offer by the Company.
(12.) Conditions of Company's Obligations. The Company's obligation under
Section 10 hereof shall be conditioned as to each such public offering,
upon a timely receipt by the Company in writing of: (a) Information as to
the terms of such public offering furnished by or on behalf of the Holders
making a public distribution of their Warrant Securities.
(13.) Continuing Effect of Agreement. The Company's agreements with respect to
the Warrant Securities in this Warrant will continue in effect regardless
of the exercise or surrender of this Warrant.
(14) Notices. Any notices or certificates by the Company to the Holder and by
the Holder to the Company shall be deemed delivered if in writing and
delivered personally or sent by certified mail, to the Holder, addressed
to him or sent to 300 North Argonne Road, Suite 202, Spokane, Washington
99212, or, if the Holder has designated, by notice in writing to the
Company, any other address, to such other address, and, if to the Company,
addressed to Richard M. Cohen, Chief Executive Officer, 33 Newtown Lane,
East Hampton, New York 11937. The Company may change its address by
written notice to the Holder.
(15) Limited Transferability. The Warrant may be divided or combined, upon
request to the Company by the Warrant holder, into a certificate or
certificates evidencing the same aggregate number of Warrants. The Warrant
may not be offered, sold, transferred, pledged or hypothecated in the
absence of any effective registration statement as to such Warrant filed
under the Act, or an exemption from the requirement of such registration,
and compliance with the applicable federal and state securities laws. The
Company shall permit the Holder or his duly authorized attorney, upon
written request during ordinary business hours, to inspect and copy or
make extracts from its books showing the registered holders of Warrants.
(16) Transfer to Comply With the Securities Act of 1933. The Company may cause
the following legend, or one similar thereto, to be set forth on the
Warrants and on each certificate representing Warrant Securities, or any
other security issued or issuable upon exercise of this Warrant not
theretofore distributed to the public or sold to underwriters for
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distribution to the public pursuant to Sections (8) or (9) hereof; unless
counsel satisfactory to the Company is of the opinion as to any such
certificate that such legend, or one similar thereto, is unnecessary: "The
warrants represented by this certificate are restricted securities and may
not be offered for sale, sold or otherwise transferred unless an opinion
of counsel satisfactory to the Company is obtained stating that such
offer, sale or transfer is in compliance wrath state and federal
securities law. With respect to Warrant Securities that have not
theretofore been subject to a registration statement pursuant to Sections
8 or 9 hereof, upon request, the Company will arrange at its expense to
have an opinion of counsel satisfactory to the Company issued, which will
provide that to the extent Warrant Securities were acquired through the
Net Issuance Exercise of this Warrant as provided in Section 7(G.1)
without the payment of any cash, the Holder's date of acquisition of such
Warrant Securities will be the date of acquisition of the Warrant. The
issuance of any opinion relating to the transferability of any Warrant or
Warrant Securities will be conditioned upon the Holder providing evidence
satisfactory to such counsel of the proper acquisition and exercise of
this Warrant, the completion and filing of all forms or other documents
required to comply with federal and state securities laws and the
continued applicability of the current interpretation of Rule
144(d)(3)(ii) as expressed in items 4, 61 and 64 of the Division of
Corporation Finance Manual of Publicly Available Telephone
Interpretations. The Company will provide upon request to any Holder a
list of the registered holders of Warrants. Such costs and expenses of
Counsel shall be at its sole cost and expense. The Company represents and
warrants, it will not hinder, delay or impede in any fashion, the
assignment and/or exercise of the this Warrant, the issuance of any
underlying securities, and/or the resale of such underlying securities. To
effect such transaction, the Company shall cause such legal opinions to
issue in a timely and professional manner upon demand by the Underwriter.
(17) Applicable Law. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect
to conflict of law principles.
(18.) Amendment. This Warrant may not be amended except in a writing signed by
each Holder and the Company.
(19.) Severability. If any provisions of this Warrant shall be held to be
invalid or unenforceable, such invalidity or enforceability shall not
affect any other provision of this Warrant.
(20.) Survival of Indemnification Provisions. The indemnification provisions of
this Warrant shall survive until , 2016.
(21) Company to Provide Reports. Etc. While this Warrant Certificate remains
outstanding, the Company shall mail to the persons in whose name this
Warrant Certificate is registered copies of all reports and correspondence
which the Company mails to its stockholders.
15
(22) Representations and Warranties of Holder. The Holder hereby represents and
warrants to the Company:
(a) The Holder understands that this Warrant Certificate and the Common
Shares to be issued herein, HAS NOT BEEN APPROVED OR DlSAPPROVED BY
TME UNITED STATES SECURITIES AND EXCHANGE COMMISSION, THE STATE OF
DELAWARE, OR ANY OTHER STATE SECURITIES AGENCIES.
(b) This Warrant Certificate and the Common Stock to be issued herein
may not be transferred, encumbered, sold, hypothecated, or otherwise
disposed of to any person, without the express prior written consent
of the Company and the prior opinion of counsel for the Company,
that such disposition will not violate Federal and/or State
Securities Acts. Disposition shall include, but is not limited to
acts of selling, assigning, transferring, pledging, encumbering,
hypothecating, giving, and any form of conveying, whether voluntary
or not.
(c) To the extent that any Federal and/or State Securities laws shall
require, the Holder hereby agrees that any shares acquired pursuant
to this Warrant Certificate shall be without preference as to
dividends, assets, or voting rights and shall have no greater or
lesser rights per share than the securities issued for cash or its
equivalent.
(d) This Warrant is subject in all respects to the terms and provisions
of an Underwriting Agreement between the Company and Public
Securities, Inc., (the Underwriter therein and the initial Holder
hereof), relating to a public offering of the Common Stock and
Warrants of the Company dated , 2006.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officers and to be sealed with the seal of the Company this day of
June, 2006.
CAPSOURCE FINANCIAL, INC, INC.
By
---------------------------------
Richard M. Cohen
Title: Chief Executive Officer
Date:
------------------------------
Attest:
- ------------------------------------
Secretary
16
PURCHASE FORM
The Undersigned hereby exercises the Warrant Certificate to subscribe for and
purchase shares of Common Stock, $.001 par value ("Common Shares"), of NEWTOWN
LANE MARKETING, INCORPORATED, a Delaware Corporation, evidenced by the within
the Warrant Certificate and herewith makes payment of the Exercise Price. Kindly
issue certificates for the Common Shares in accordance with the instructions
given below. The certificate for the unexercised balance, if any, of the within
Warrant Certificate will be registered in the name of the undersigned.
Dated:
_______________________________________
(Signature)
Instructions for registration of Common Shares
_______________________________________
Name (Please print)
_______________________________________
Social Security or Other Identifying Number:
_______________________________________
Address:
_______________________________________
Street
_______________________________________
City, State and Zip Code
HOLDER:
PUBLIC SECURITIES, INC.
By: ___________________________________
Title: President
Instructions for registration of certificate representing the unexercised
balance of Warrant (if any)
_______________________________________
Name (Please print)
_______________________________________
Social Security or Other Identifying Number:
_______________________________________
Address:
_______________________________________
Street
_______________________________________
City, State and Zip Code
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FORM OF ASSIGNMENT
(to be executed by the registered holder hereof)
FOR VALUE RECEIVED, ____________________________ does hereby sell, assign and
transfer unto ___________________________________________ the right to purchase
shares of the Common Stock of the Company, $.001 par value ("Common Shares"), of
NEWTOWN LANE MARKETING, INCORPORATED, a Delaware Corporation, evidenced by the
within Warrant, and does hereby irrevocably constitute and appoint
____________________________ attomey, to transfer such right on the books of the
Company with full power of substitution in the premises.
DATED: ________________, 200___
_______________________________
(Signature)
_______________________________
(Signature guaranteed)
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