NEITHER THIS WARRANT NOR THE SECURITIES UNDERLYING THIS WARRANT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR UNDER
APPLICABLE STATE SECURITIES LAWS. THIS WARRANT HAS BEEN TAKEN BY THE
REGISTERED OWNER FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TOWARD
RESALE OR DISTRIBUTION HEREOF. THIS WARRANT MAY NOT BE TRANSFERRED OR
DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER HEREOF
THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT, THE
RULES AND REGULATIONS THEREUNDER, OR APPLICABLE STATE SECURITIES LAWS. IN
CONNECTION WITH COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, NO EXERCISE, TRANSFER OR DISPOSITION OF THIS WARRANT OR THE
SECURITIES UNDERLYING THIS WARRANT SHALL BE MADE UNLESS THE CONDITIONS
SPECIFIED HEREIN ARE SATISFIED.
No. WA - __________ Number of Shares Purchasable
Issue Date: ______________, _____ Upon Exercise of Warrant: ____________
Void after 5:00 p.m. New York Time on August 25, 2006
COMMON STOCK PURCHASE WARRANT
OF
OBN HOLDINGS, INC.
This is to certify that, subject to the provisions of this Common
Stock Purchase Warrant (the "Warrant") and for value received,
________________________________ (the "Holder") is entitled to purchase
_______________________________________________(_________) shares of common
stock, $.001 par value per share, (the "Common Stock") subject to adjustment
as set forth herein of ______________________________, a [_____________]
corporation (the "Company"), at an exercise price of Four Dollars ($4.00)
per share, subject to adjustment as set forth herein (the "Exercise Price"),
at any time during the period beginning 180 days following the effectiveness
of the registration statement in which the shares underlying this warrant
are registered and ending August 25, 2006 or the Redemption Date as defined
in Section 10, whichever is earlier (the "Expiration Date"), but not later
than 5:00 p.m. eastern standard time on the Expiration Date.
1. EXERCISE OF WARRANT. Subject to the provisions of Section 9
below, this Warrant may be exercised in whole or in part at any time or from
time to time during the period beginning 180 days following the effectiveness
of the registration statement in which the shares underlying this warrant
are registered and until the Expiration Date; provided, however, that if
either of such days is a day on which banking institutions are authorized
bylaw to close (a "Bank Holiday"), then on the next succeeding day which
shall not be a Bank Holiday. This Warrant may be exercised by presentation
and surrender hereof to the Company at its principal office or at the office
of its transfer agent, if any (the "Transfer Agent"). The presentation and
surrender of this Warrant for exercise must be accompanied by: (a) the
form of subscription which is attached hereto in Annex A (the "Form of
Subscription") duly executed with signature guaranteed, and (b) payment
of the aggregate Exercise Price for the number of shares specified in such
form. If this Warrant should be exercised in part only, upon presentation and
surrender of this Warrant to
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the Company or the Transfer Agent for cancellation, the Company shall
execute and deliver a new warrant evidencing the rights of the Holder to
purchase the balance of the shares purchasable hereunder. Upon receipt of
this Warrant by the Company at its office or by the Transfer Agent at its
office, in proper form for exercise, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise;
provided, however that if at the date of surrender of such Warrant and
payment of the aggregate Exercise Price, the transfer books for the Common
Stock shall be closed, the certificates representing the shares of Common
Stock or other securities subject to issuance upon such exercise shall be
issuable as of the date on which the Company's transfer books shall next be
opened. Until such date, the Company shall be under no duty to deliver any
certificate representing such shares of Common Stock or other securities and
the Holder shall not be deemed to have become a holder of record or owner of
such shares of Common Stock or such other securities. The Company reserves
the right to pay any broker-dealer registered under the Securities Exchange
Act of 1934, as amended, a fee not to exceed ten percent of the Exercise
Price upon the exercise of this Warrant in accordance with applicable
federal and state securities laws and applicable regulations of the National
Association of Securities Dealers, Inc.
2. RESERVATION OF SHARES. There shall at all times be reserved for
issuance upon exercise of this Warrant such number of shares of Common Stock
as shall be subject hereto.
3. FRACTIONAL SHARES. Notwithstanding any other provision hereof,
the Company shall not be required to issue fractional shares of Common Stock
upon the exercise of this Warrant. If any fraction of a share would, except
for the provisions hereof, be issuable upon the exercise of this Warrant,
then: (a) if the fraction of a share otherwise issuable is equal to or less
than one-half, the Company shall round down and issue only the largest whole
number of shares of Common Stock to which the Holder is otherwise entitled,
or (b) if the fraction of a share otherwise issuable is greater than one-
half, the Company shall round up and issue one additional share of Common
Stock in addition to the largest whole number of shares of Common Stock to
which the Holder is otherwise entitled.
4. EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT. Subject to the
provisions of this Section 4 and of Section 9 below, this Warrant is
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company or the Transfer Agent, for
other warrants of different denominations entitling the holder thereof to
purchase in the aggregate the same number of shares of Common Stock
purchasable hereunder. Subject to the provisions of this Section 4 and of
Section 9 below, upon surrender of this Warrant to the Company or the
Transfer Agent accompanied by: (a) the form of assignment which is attached
hereto as Annex B (the "Form of Assignment") duly executed; and (b) funds
sufficient to pay any transfer tax, the Company shall, without charge,
execute and deliver a new warrant in the name of the assignee named in the
Form 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 the Transfer
Agent, accompanied by a written notice signed by the Holder hereof
specifying the names and denominations in which new warrants are to be
issued.
Notwithstanding anything herein to the contrary, the Company may,
without any obligation to do so, at its option, at any time and from time to
time prior to the Expiration Date require that the Holder surrender this
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Warrant to the Company or the Transfer Agent in exchange for a warrant
certificate in engraved or other form as may be approved by the Board of
Directors representing this Warrant, bearing such letters, numbers or other
marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Board of
Directors may deem appropriate, having terms and conditions substantially
similar to those contained in this Warrant or which, in the reasonable
judgment of the Board of Directors, afford the Holder or Holders of the
outstanding Warrants issued by the Company as a class a net benefit when
considered under the totality of the circumstances or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Warrants may
be listed, or to conform to usage; it being understood and agreed, however,
that the terms and conditions of this Warrant may be modified, amended or
superseded by the Company at any time hereafter as set forth herein. The
term "Warrant" as defined above shall hereafter include any warrant into
which this Warrant may be divided, exchanged or combined, and any Warrant as
the same may be hereafter modified or amended from time to time.
5. THEFT, DESTRUCTION, LOSS OR MUTILATION OF WARRANT. Subject to
the provisions of Section 4, in the event of the theft, destruction, loss or
mutilation of this Warrant, upon receipt by the Company of evidence
satisfactory to it of such theft, destruction, loss or mutilation and, in
the case of loss, theft or destruction, of such indemnification as the
Company may in its discretion impose, and in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall execute and
deliver a new warrant of like tenor and date.
6. RIGHTS OF THE HOLDER. Prior to the exercise of any Warrant
represented hereby, the Holder shall not be entitled by virtue hereof to any
rights of a stockholder in the Company, either at law or equity. The rights
of the Holder are limited to those expressed in this Warrant and are
enforceable against the Company only to the extent set forth herein.
7. ANTI-DILUTION PROVISIONS. The Exercise Price and the number and
kind of securities purchasable upon the exercise of this Warrant shall be
subject to adjustment from time to time as hereinafter provided:
(a) In case the Company shall issue Common Stock as a dividend
upon Common Stock or in payment of a dividend thereon, or shall subdivide
the number of outstanding shares of its Common Stock into a greater number
of shares or shall contract the number of outstanding shares of its Common
Stock into a lesser number of shares, the Exercise Price then in effect
shall be adjusted, effective at the close of business on the record date for
the determination of stockholders entitled to receive the same, to the price
(computed to the nearest cent) determined by dividing (A) the product
obtained by multiplying the Exercise Price in effect immediately prior to
the close of business on such record date by the number of shares of Common
Stock outstanding prior to such divided, subdivision or contraction, by (B)
the number of shares of Common Stock outstanding immediately after such
dividend, subdivision, or contraction.
(b) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
or into another corporation, or the sale of all or substantially all of its
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assets to another corporation shall be effected, then, as a condition of
such reorganization, reclassification, consolidation, merger or sale, lawful
and adequate provision shall be made whereby the holder of this Warrant
shall thereafter have the right to purchase and receive upon the basis and
upon the terms and conditions specified in this Warrant and in lieu of the
shares of Common Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented by this Warrant,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock immediately theretofore purchasable and receivable upon the exercise
of the rights represented by this Warrant had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any
such case appropriate provision shall be made with respect to the rights and
interests of the Holder to the end that the provisions of this Warrant
(including, without limitation, provisions for adjustment of the Exercise
Price and of the number of shares of Common Stock or other securities
issuable upon the exercise of this Warrant) shall thereafter be applicable
as nearly as may be practicable in relation to any shares of stock,
securities, or assets thereafter deliverable upon exercise of this Warrant.
The Company shall not effect any such consolidation, merger or sale unless
prior to or simultaneously with the consummation thereof, the successor
corporation (if other than the Company) resulting from such consolidation or
merger of the corporation purchasing such assets shall assume, by written
instrument, the obligation to deliver to the Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the
Holder may be entitled to purchase.
(c) Upon each adjustment of the Exercise Price pursuant hereto,
the number of shares of Common Stock specified in this Warrant shall
thereupon evidence the right to purchase that number of shares of Common
Stock (calculated to the nearest hundredth of a share of Common Stock)
obtained by multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of shares of Common Stock purchasable
immediately prior to such adjustment upon exercise of this Warrant and
dividing the product so obtained by the Exercise Price in effect after such
adjustment.
(d) Irrespective of any adjustments of the number or kind of
securities issuable upon exercise of this Warrant or the Exercise Price, any
warrants theretofore or thereafter issued may continue to express the same
number of shares of Common Stock and Exercise Price as are stated in similar
warrants previously issued.
(e) The Company may, at its sole option, retain the independent
public accounting firm regularly retained by the Company, or another firm of
independent public accountants of recognized standing selected by the
Company's board of directors (the "Board of Directors"), to make any
computation required under this section and a certificate signed by such
firm shall be conclusive evidence of any computation made under this
section.
(f) Whenever there is an adjustment in the Exercise Price
and/or in the number or kind of securities issuable upon exercise of this
Warrant, as provided herein, the Company shall: (I) promptly file in the
custody of its Secretary or Assistant Secretary a certificate signed by the
Chairman of the Board of Directors or the President or an Executive Vice
President of the Company and by the Treasurer or an Assistant Treasurer or
the Secretary of an Assistant Secretary of the Company, showing in detail
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the facts requiring such adjustment and the number and kind of securities
issuable upon exercise of this Warrant after such adjustment; and (ii) cause
a notice to be sent to the Holder stating that such adjustment has been
effected and stating the Exercise Price then in effect and the number and
kind of securities issuable upon exercise of this Warrant.
(g) The Exercise Price and the number of shares issuable upon
exercise of this Warrant shall only be adjusted in the manner and upon the
conditions heretofore specifically referred to in Subsections 7(a) through
7(f) above.
8. REGISTRATION RIGHTS. The Company hereby covenants and agrees as
follows:
(a) Definitions. As used in this Section 8, the following
terms shall have the meanings set forth below:
(i) The terms "register," "registered" and "registration"
shall refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering of the effectiveness of such
registration statement or document.
(ii) The term "Registrable Securities" shall mean: (A)
this Warrant; (B) the Common Stock issued or issuable upon exercise of this
Warrant; and (C) any Warrant or Common Stock or other securities of the
Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
Stock referenced in (A) or (B) immediately above, excluding in all cases,
however, any registrable Securities sold to the public pursuant to a
registration under the Securities Act or an applicable exemption therefrom.
(b) Piggy-back Registration Rights. If (but without any
obligation to do so) the Company at any time during the two year period
commencing ___________, ____ proposes to register (including for this
purpose a registration effected by the Company for security holders other
than the Holder) any of its securities under the Securities Act in
connection with the public offering of such securities solely for cash
(other than a registration on Form S-4, Form S-8 or any form which does not
include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities), the Company shall, each such time, promptly give the Holder
written notice of such registration. Upon the written request of the Holder
given within twenty (20) days after receipt of such written notice from the
Company, the Company shall, subject to the provisions of this Section 8,
cause to be registered under the Securities Act all of the Registrable
Securities that the Holder has requested to be registered; provided,
however, that the Company shall have not such obligation if, in the good
faith judgment of the Company's Board of Directors, it would be seriously
detrimental to the Company and its security holders to include any
Registrable Securities in the subject registration statement or offering or
if the managing underwriter of the subject proposed offering objects in
writing addressed to the Company to the inclusion of any Registrable
Securities in the subject registration statement or offering; and provided
further, however, that the Registrable Securities shall be subject to
5
restrictions on transfer for 90 days after the effective date of the subject
registration statement. The inclusion of any of the Holder's Registrable
Securities in a registration statement filed by the Company and declared
effective by the Securities and Exchange Commission ("SEC") shall be deemed
to be the exercise by such Holder of the piggy-back registration rights
granted herein to such Holder.
(c) Obligations of the Company. Whenever required hereunder to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective, and, upon
the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for at
least four (4) months.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement.
(iii) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under the securities laws
of such jurisdictions as shall be reasonably requested by the Holders for
the distribution of the securities covered by the registration statement,
provided that the Company shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general
consent to service of process in any such jurisdiction.
(v) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement with
terms generally satisfactory to the managing underwriter of such offering.
(vi) Notify the Holders, promptly after the Company shall
have received notice thereof, of the time when the registration statement
becomes effective or any supplement to any prospectus forming a part of the
registration statement has been filed.
(vii) Notify the Holders of any stop order suspending the
effectiveness of the registration statement and use its reasonable best
efforts to remove such stop order.
(d) Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant hereto that the
Holder, having chosen to have its Registrable Securities included for
registration, shall flurnish to the Company such information regarding the
6
Holder, its Registrable Securities and the intended method of disposition of
such securities as shall be required to effect the registration thereof.
The Holder shall be required to represent to the Company that all sluch
information which is given is complete and accurate in all material
respects. The Holder shall deliver to the Company a statement in writing
from the beneficial owners of such securities that such beneficial owners
bona fide itend to sell, transfer or otherwise dispose of such securities.
(e) Expenses.
(i) Registration Expenses. All expenses incurred by the
Companpy in complying with Subsections 8(b), 8(c) and 8(d) hereof, including
without limitation, all registration and filing fees, printing expenses,
fees and disbursements of counsel for the Companpy, "Blue Sky" fees and
expenses, and the expense of any special audits incident to or required by
any such registration (but exclulding the compensation of regular employees
of the Companpy which shall be paid in any event by the Company) shall be
borne by the Company.
(ii) Selling Expenses. All underwriting discounts,
underwriters' expense allowance, and selling commissions applicable to the
sale of Registrable Securities by the Holders and all fees and disbursements
of any special counsel (other than the Company's regular counsel) shall be
borne by the Holders of the Registrable Securities so registered pro rata on
the basis of the number of Registrable Securities so registered.
(f) Underwriting Requirements. All Holders proposing to
distribute their Registrable Securities through an underwriting in which the
Company has proposed or is proposing to participate, shall (together with
the Company and any other Holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for underwriting by the Company.
Notwithstanding any other subsection of this Section 8, at the request of
the managing underwriter, the Holder shall delay the sale of Registrable
Securities which such Holder has requested be registered hereunder for up to
90 days following the effective date of the registration statement. If any
Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities excluded or withdrawn from such
underwriting shall not be withdrawn from such registration except at the
election of the Holder.
(g) Delay of Registration. No Holder shall lhave any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this section.
(h) Indemnification. In the event that any Registrable
Securities are included in a registration statement pursuant hereto:
(i) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the officers, directors and
partners of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or
7
underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against any losses,
claims, damages or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively, a "Violation"): (A) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto; (B)
the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading; or (C) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any applicable state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or
any applicable state securities law; and the Company will reimburse the
Holder for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement
contained in this Subsection 8(h)(i) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by the Holder; and further
provided, however, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any untrue statement, alleged
untrue statement, omission or alleged omission made in any preliminary
prospectus but eliminated or remedied in the prospectus, such indemnity
agreement shall not inure to the benefit of any underwriter or broker, if a
copy of the prospectus was not sent or given to such person with or prior to
the confirmation of the sale of such securities to such person.
(ii) To the extent permitted by law, each sellling Holder
will indemnify and hold harmless the Company, its directors, its officers,
any person who controls the Company within the meaning of the Securities Act
or the Exchange Act, any underwriter (within themeaning of the Securities
Act) for the Company and any person who controls such underwriter against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, or underwriter or
controllling person may become subject, under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by the Holder expressly for use in connection
with such registration; and the Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any s uch director, officer,
controlling person, underwriter or controllling person thereof, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement
contained in this Subsection 8(b)(ii) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld.
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(iii) Promptly after receipt by an indemnified party under
this Subsection 9(b) of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Subsection
8(h), notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to
the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly notified, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if representationof
such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests
betweensuch indemnified party and any other party represented by such
counsel insuch proceeding. The failure to notify an indemnifying party
within a reasonable time of the commencement of any such action,to the
extent prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Subsection 8(h), but the omission so to notify the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Subsection 8(h).
(i) Reports Under Exchange Act. Following registration of
the Companpy's securities under the Exchange Act and with a view of making
available to the Holders the benefits of Rule 144 under the Securities Act
and any other rule or regulation promulgated by the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration, the Company agrees to:
(i) use its best efforts to make and keep public
information available, as those terms are understood and defined in Rule
144, at all times; and
(ii) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act.
(j) Termination of the Company's Obligations.
-----------------------------------------
(i) The Company shall have no obligations pursuant to
Subsection 8(b) with respect to any request made by the Holder after
August 25, 2006.
(ii) Notwithstanding any provision hereof to the contrary,
the Companpy shall not be required to effect any registration under the
Securities Act or under any state securities laws on behalf of any Holder or
Holders if, in the opinion of counsel for the Companpy, the offering or
transfer by such Holder or Holders in the manner proposed (including without
limitation,the number of shares proposed to be offered or transferred and
the method of offering or transfer) is exempt from the registration
requirements of the Securities Act and the securities or "Blue Sky" laws of
applicable states.
(k) Holder's Acceptance of Obligations. Acceptance of this
Warrant by its Holder(s) shall be deemed to constitute the unqualified
acceptance by the Holder of all of the terms and conditions set forth
herein.
9
9. TRANSFER TO COMPLY WITH THE SECURITIES ACT AND OTHER APPLICABLE
SECURITIES LAWS. Neither this Warrant nor the shares of Common Stock (or
other securities) issuable upon exercise hereof have been registered under
the securities Act or under state securities laws. Except as provided in
Section 4 above: (a) this Warrant may not be transferred, assigned, pledged,
sold, or otherwise disposed of, and (b) the shares of Common Stock (or other
securities) issuable upon exercise of this Warrant may not be transferred,
assigned, pledged, sold or otherwise disposed of in the absence of
registration under or exemption from the applicable provisions of the
Securities Act, unless the Holder provides the Company with an opinion of
counsel in form and substance satisfactory to the Company (together with
such other representations and warranties as the Company may request) that
the shares of Common Stock issued or issuable, as applicable, upon exercise
of this Warrant may be legally transferred without violating the Securities
Act, and any other applicable securities law and then only against receipt
of an agreement of the transferee (in form and substance satisfactory to the
Company) to comply with the provisions of this section with respect to any
resale or other disposition of such securities.
10. REDEMPTION. This Warrant may be redeemed at the option of the
Company, at a redemption price of $.001 per Warrant at any time on or before
August 25, 2006 provided that (i) the Company's Common Stock is then quoted on
the NASDAQ Stock Market or listed on an exchange and (ii) the market price
(as defined herein) for the Common Stock shall equal or exceed 120% of the
then Exercise Price of the Warrant for twenty (20) consecutive trading days
(or such other period in excess of such period as the Company may determine)
prior to any such call for redemption. Notice of redemption shall be given
to the Holder by first class mail, postage prepaid, not later than the
thirtieth day before the date fixed for redemption (the "Redemption Date").
On and after the Redemption Date, the Holder shall have no rights with
respect to this Warrant except to receive the $0.001 per Warrant upon
surrender of this Warrant. For purposes of this section, market price shall
mean (i) the average closing bid price for twenty (20) consecutive trading
days of the Company's Common Stock as reported by the NASDAQ Stock Market or
(ii) the last reported sale price, for twenty (20) consecutive trading days
if the Company's Common Stock is traded on a national securities exchange.
All Warrants must be redeemed if any of that class are redeemed.
11. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have
been made when delivered or mailed by first class mail, postage prepaid, as
follows: If to the Holder of this Warrant, at the address of the Holder as
shown on the registry books maintained by the Company, its transfer agent or
the Warrant Agent; and if to the Company, at 8275 South Eastern Avenue, Suite
200, Las Vegas, Nevada 89123 attention: President.
12. SURVIVAL. All agreements, covenants, representations and
warranties set forth herein shall survive the execution and delivery of this
Warrant any investigation at any time made by or on behalf of any parties
hereto and the exercise and purchase of this Warrant.
13. AMENDMENTS. The Company may, in its sole discretion, by
supplemental agreement or pursuant to an amended warrant certificate issued
in exchange for this Warrant make any changes or corrections to the terms
10
and conditions hereof which it deems appropriate in order to (i) reduce the
Exercise Price; (ii) extend the Expiration Date of this Warrant; (iii) cure
any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained; (iv) modify such other terms and
conditions hereof which modification, in the judgment of the Board of
Directors, provides, when considered under the totality of the circumstances
a net benefit to or which, in the exercise of such judgment, the Board of
Directors determines would not be contrary to the interests of the Holder of
this Warrant and/or to all of the Holders of the then outstanding Warrants
of like tenor; provided, however, that no adverse change in the number or
nature of the securities purchasable upon the exercise of this Warrant, or
the Purchase Price therefore, or the acceleration of the Warrant Expiration
Date, shall be made without the consent in writing of the Holder of this
Warrant. In addition, the Company may at any time hereafter enter into an
agreement with a qualified warrant agent (a "Warrant Agent") chosen by it in
its sole discretion to act on behalf of the Company in connection with the
issuance, registration, transfer, exchange and redemption of the Warrants,
the issuance of certificates representing the Warrants, the exercise of the
Warrants and the rights of the Holders thereof (a "Warrant Agreement"). The
registration rights contained in Section 8 hereof shall survive any such
modification or replacement of this Warrant.
14. AGREEMENT OF WARRANT HOLDERS. Every Holder of a Warrant, by his
acceptance thereof, consents and agrees with the Company, any Warrant Agent,
any Transfer Agent and every other Holder of a Warrant that:
(a) The Warrants are transferable only on the registry books of the
Company, the Transfer Agent or the Warrant Agent by the Holder thereof in
person or by his attorney duly authorized in writing and only if the warrant
certificates representing such Warrants are surrendered at the office of the
Company or the Warrant Agent, if any, duly endorsed or accompanied by a
proper instrument of transfer satisfactory to the Company and the Warrant
Agent, if any, in their sole discretion, together with payment of any
applicable transfer taxes;
(b) The Company and any Warrant Agent may deem and treat the person
in whose name the warrant certificate is registered as the Holder and as the
absolute, true and lawful owner of the Warrants represented thereby for all
purposes, and none of the Company, the Transfer Agent or the Warrant Agent
shall be affected by any notice or knowledge to the contrary, except as
otherwise expressly provided in Section 5 hereof;
(c) Each Warrant shall be subject in all respects to the terms and
conditions set forth in any amended warrant certificate upon the issuance
thereof or in any Warrant Agreement entered into by the Company as permitted
pursuant to Section 13 hereof upon the execution thereof and, in either such
case, upon the mailing by the Company of notice of the amendment of the
terms and conditions of this Warrant. In the event of the execution of any
such Warrant Agreement, a true copy thereof such be promptly mailed by the
Company to the Holder;
(d) He shall execute all such further instruments and documents and
take such further action as the Company may reasonably require in order to
effectuate the terms and purposes of this Warrant.
(e) The use of proceeds shall be for the repayment of debt to Bank
Midwest. Should the proceeds of the warrant sale exceed the debt, the amount
exceeding the debt shall become general funds for the company operations.
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15. SEVERABILITY. The provisions of this Warrant shall be
considered severable in the event that any of such provisions are held by a
court of competent jurisdiction to be invalid, void or otherwise
unenforceable. Such invalid, void or otherwise unenforceable provisions
shall be automatically replaced by other provisions which are valid and
enforceable and which are as similar as possible in term and intent to those
provisions deemed to be invalid, void or otherwise unenforceable.
Notwithstanding the foregoing, the remaining provisions hereof shall remain
enforceable to the fullest extent permitted by law.
16. ENTIRE AGREEMENT. This Warrant is intended to and does contain
and embody the entire understanding and agreement of the Company and the
Holder with respect to the subject matter hereof and there exists no oral
agreement or understanding, express or implied whereby the absolute, final
and unconditional character and nature of this Warrant shall be in any way
invalidated, unempowered or affected.
17. HEADINGS. The headings in this Warrant are for convenience of
reference only and are not part of this Warrant.
18. GOVERNING LAW. This Warrant shall be governed by and construed
and interpreted in accordance with the laws of the State of ________________
without reference to principles of conflict of laws.
IN WITNESS WHEREOF, ____________________________________________________
as caused this Warrant to be signed in its name and on its behalf and its
corporate seal to be affixed hereon by its duly authorized officers as of the
date of issuance first above written.
___________________________
[SEAL] By: ____________________________
President
Attest:
_______________________________
Secretary
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Annex A to Common Stock Purchase Warrant
FORM OF SUBSCRIPTION
--------------------
(Complete and sign only upon exercise of the Common Stock Purchase Warrant
in whole or in part.)
TO: _____________________________
The undersigned, the Holder of the attached Common Stock Purchase
Warrant to which this Form of Subscription applies, hereby irrevocably
elects to exercise the purchase rights represented by such warrant for and
to purchase thereunder ____shares of common stock, par value $.001 per share
(the "Common Stock") from _______________________ (or such other securities
issuable pursuant to the terms of the Common Stock Purchase Warrant) and
herewith makes payment of $_______ therefor in cash or by certified or
official bank check. The undersigned hereby requests that the
certificate(s) representing such securities be issued in the name(s) and
delivered to the address(es) as follows:
Name:
Address:
Social Security Number:
Deliver to:
Address:
If the foregoing subscription evidences an exercise of the Common
Stock Purchase Warrant to purchase fewer than all of the shares of Common
Stock (or other securities issuable pursuant to the terms of the Common
Stock Purchase Warrant) to which the undersigned is entitled under such
warrant, please issue a new warrant, of like tenor, relating to the
remaining position of the securities issuable upon exercise of such warrant
(or other securities issuable pursuant to the terms of such warrant) in the
name(s), and deliver the same to the address(es), as follows:
Name:
Address:
Dated: ___________, ______.
________________________
(Name of Holder) (Social Security or Taxpayer Identification
Number or Holder, if applicable)
(Signature of Holder or Authorized Signatory)
Signature of Guaranteed:
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Annex B to Common Stock Purchase Warrant
FORM OF ASSIGNMENT
------------------
(To be executed upon transfer of Common Stock Purchase Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers to ___________________________ the right represented by the Common
Stock Purchase Warrant to which this Form of Assignment applies, No. WA-
________, together with all rights, title and interest therein, and does
hereby irrevocably constitute and appoint _________________________ attorney
to transfer such Common Stock Purchase Warrant on the warrant register of
__________________________, the issuer of the Common Stock Purchase Warrant,
with full power of substitution.
Dated: _____________, ______.
Signature:
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant)
Signature Guaranteed:
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