Exh 10-d
WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN
A FORM REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THIS
WARRANT MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT.
VERIDIUM CORPORATION
Warrant To Purchase Common Stock
Warrant No.: CCP-001 Number of Shares: 7,500,000
Date of Issuance: April 13, 2006
Veridium Corporation, a Delaware corporation (the "Company"), hereby
certifies that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Cornell Capital Partners, LP
(the "Holder"), the registered holder hereof or its permitted assigns, is
entitled, subject to the terms set forth below, to purchase from the Company
upon surrender of this Warrant, at any time or times on or after the date
hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as
defined herein) 7,500,000 fully paid and nonassessable shares of Common
Stock (as defined herein) of the Company (the "Warrant Shares") at the
exercise price per share provided in Section 1(b) below or as subsequently
adjusted; provided, however, that in no event shall the holder be entitled
to exercise this Warrant for a number of Warrant Shares in excess of that
number of Warrant Shares which, upon giving effect to such exercise, would
cause the aggregate number of shares of Common Stock beneficially owned by
the holder and its affiliates to exceed 4.99% of the outstanding shares of
the Common Stock following such exercise, except within sixty (60) days of
the Expiration Date (however, such restriction may be waived by Holder (but
only as to itself and not to any other holder) upon not less than 65 days
prior notice to the Company). For purposes of the foregoing proviso, the
aggregate number of shares of Common Stock beneficially owned by the holder
and its affiliates shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which the
determination of such proviso is being made, but shall exclude shares of
Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised Warrants beneficially owned by the holder and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company beneficially owned by the holder and its
affiliates (including, without limitation, any convertible notes or
preferred stock) subject to a limitation on conversion or exercise analogous
to the limitation contained herein. Except as set forth in the preceding
sentence, for purposes of this paragraph, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act
of 1934, as amended. For purposes of this Warrant, in determining the
number of outstanding shares of Common Stock a holder may rely on the number
of outstanding shares of Common Stock as reflected in (1) the Company's most
recent Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent
public announcement by the Company or (3) any other notice by the Company or
its transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written request of any holder, the Company shall
promptly, but in no event later than one (1) Business Day following the
receipt of such notice, confirm in writing to any such holder the number of
shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect
to the exercise of Warrants (as defined below) by such holder and its
affiliates since the date as of which such number of outstanding shares of
Common Stock was reported.
Section 1.
(a) This Warrant is the common stock purchase warrant (the
"Warrant") issued pursuant to the Securities Purchase Agreement ("Securities
Purchase Agreement") dated the date hereof between the Company and the
Buyers listed on Schedule I thereto.
(b) Definitions. The following words and terms as used in
this Warrant shall have the following meanings:
(i) "Business Day" means any day other than Saturday,
Sunday or other day on which commercial banks in the City of New York are
authorized or required by law to remain closed.
(ii) "Closing Bid Price" means the closing bid price of
Common Stock as quoted on the Principal Market (as reported by Bloomberg
Financial Markets ("Bloomberg") through its "Volume at Price" function).
(iii) "Common Stock" means (i) the Company's common stock,
par value $0.001 per share, and (ii) any capital stock into which such
Common Stock shall have been changed or any capital stock resulting from a
reclassification of such Common Stock.
(iv) "Event of Default" means an Event of Default under
the Convertible Debenture of even date herewith issued by the Company to the
Obligor.
(v) "Excluded Securities" means, (a) shares of Common
Stock issued in connection with any employee benefit plan which has been
approved by the Board of Directors of the Company, pursuant to which the
Company's securities may be issued to any employee, officer or director for
services provided to the Company, (b) provided such security is issued at a
price which is greater than or equal to the arithmetic average of the
Closing Bid Prices of the Common Stock for the ten (10) consecutive trading
days immediately preceding the date of issuance, any of the following: (i)
any issuance by the Company of securities in connection with a strategic
partnership or a joint venture (the primary purpose of which is not to raise
equity capital), or (ii) any issuance by the Company of securities as
consideration for a merger or consolidation or the acquisition of a
business, product, license, or other assets of another person or entity,
(c) those options and warrants of the Company issued prior to, and
outstanding on, the Issuance Date of this Warrant, (d) the shares of Common
Stock issuable on exercise of such options and warrants, provided such
options and warrants are not amended after the Issuance Date of this Warrant
and (e) the shares of Common Stock issuable upon exercise of this Warrant or
the Convertible Debenture.
(vi) "Expiration Date" means the date five (5) years from
the Issuance Date of this Warrant or, if such date falls on a Saturday,
Sunday or other day on which banks are required or authorized to be closed
in the City of New York or the State of New York or on which trading does
not take place on the Principal Exchange or automated quotation system on
which the Common Stock is traded (a "Holiday"), the next date that is not a
Holiday.
(vii) "Issuance Date" means the date hereof.
(viii) "Options" means any rights, warrants or
options to subscribe for or purchase Common Stock or Convertible Securities.
(ix) "Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(x) "Principal Market" means the New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market, the
Nasdaq SmallCap Market, whichever is at the time the principal trading
exchange or market for such security, or the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg or, if
no bid or sale information is reported for such security by Bloomberg, then
the average of the bid prices of each of the market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc.
(xi) "Securities Act" means the Securities Act of 1933,
as amended.
(xii) "Warrant" means this Warrant and all Warrants issued
in exchange, transfer or replacement thereof.
(xiii) "Warrant Exercise Price" shall be $0.10 or as
subsequently adjusted as provided in Section 8 hereof.
(xiv) "Warrant Shares" means the shares of Common Stock
issuable at any time upon exercise of this Warrant.
(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references
herein (A) to the Company shall be deemed to include the Company's
successors and (B) to any applicable law defined or referred to herein shall
be deemed references to such applicable law as the same may have been or may
be amended or supplemented from time to time.
(ii) When used in this Warrant, the words "herein",
"hereof", and "hereunder" and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and the words
"Section", "Schedule", and "Exhibit" shall refer to Sections of, and
Schedules and Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender
includes the masculine or feminine, and the singular number includes the
plural, and vice versa.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant
may be exercised by the holder hereof then registered on the books of the
Company, pro rata as hereinafter provided, at any time on any Business Day
on or after the opening of business on such Business Day, commencing with
the first day after the date hereof, and prior to 11:59 P.M. Eastern Time on
the Expiration Date (i) by delivery of a written notice, in the form of the
subscription notice attached as Exhibit A hereto (the "Exercise Notice"), of
such holder's election to exercise this Warrant, which notice shall specify
the number of Warrant Shares to be purchased, payment to the Company of an
amount equal to the Warrant Exercise Price(s) applicable to the Warrant
Shares being purchased, multiplied by the number of Warrant Shares (at the
applicable Warrant Exercise Price) as to which this Warrant is being
exercised (plus any applicable issue or transfer taxes) (the "Aggregate
Exercise Price") in cash or wire transfer of immediately available funds and
the surrender of this Warrant (or an indemnification undertaking with
respect to this Warrant in the case of its loss, theft or destruction) to a
common carrier for overnight delivery to the Company as soon as practicable
following such date ("Cash Basis") or (ii) if at the time of exercise, the
Warrant Shares are not subject to an effective registration statement or if
an Event of Default has occurred, by delivering an Exercise Notice and in
lieu of making payment of the Aggregate Exercise Price in cash or wire
transfer, elect instead to receive upon such exercise the "Net Number" of
shares of Common Stock determined according to the following formula (the
"Cashless Exercise"):
Net Number = (A x B) - (A x C)
----------------
B
For purposes of the foregoing formula:
A = the total number of Warrant Shares with respect to which
this Warrant is then being exercised.
B = the Closing Bid Price of the Common Stock on the date of
exercise of the Warrant.
C = the Warrant Exercise Price then in effect for the applicable
Warrant Shares at the time of such exercise.
In the event of any exercise of the rights represented by this Warrant
in compliance with this Section 2, the Company shall on or before the
fifth (5th) Business Day following the date of receipt of the Exercise
Notice, the Aggregate Exercise Price and this Warrant (or an indemnification
undertaking with respect to this Warrant in the case of its loss, theft or
destruction) and the receipt of the representations of the holder specified
in Section 6 hereof, if requested by the Company (the "Exercise Delivery
Documents"), and if the Common Stock is DTC eligible, credit such aggregate
number of shares of Common Stock to which the holder shall be entitled to
the holder's or its designee's balance account with The Depository Trust
Company; provided, however, if the holder who submitted the Exercise Notice
requested physical delivery of any or all of the Warrant Shares, or, if the
Common Stock is not DTC eligible then the Company shall, on or before the
fifth (5th) Business Day following receipt of the Exercise Delivery
Documents, issue and surrender to a common carrier for overnight delivery to
the address specified in the Exercise Notice, a certificate, registered in
the name of the holder, for the number of shares of Common Stock to which
the holder shall be entitled pursuant to such request. Upon delivery of the
Exercise Notice and Aggregate Exercise Price referred to in clause (i) or
(ii) above the holder of this Warrant shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares with
respect to which this Warrant has been exercised. In the case of a dispute
as to the determination of the Warrant Exercise Price, the Closing Bid Price
or the arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the holder the number of Warrant Shares that is not
disputed and shall submit the disputed determinations or arithmetic
calculations to the holder via facsimile within one (1) Business Day of
receipt of the holder's Exercise Notice.
(b) If the holder and the Company are unable to agree upon the
determination of the Warrant Exercise Price or arithmetic calculation of the
Warrant Shares within one (1) day of such disputed determination or
arithmetic calculation being submitted to the holder, then the Company shall
immediately submit via facsimile (i) the disputed determination of the
Warrant Exercise Price or the Closing Bid Price to an independent, reputable
investment banking firm or (ii) the disputed arithmetic calculation of the
Warrant Shares to its independent, outside accountant. The Company shall
cause the investment banking firm or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the
holder of the results no later than forty-eight (48) hours from the time it
receives the disputed determinations or calculations. Such investment
banking firm's or accountant's determination or calculation, as the case may
be, shall be deemed conclusive absent manifest error.
(c) Unless the rights represented by this Warrant shall have
expired or shall have been fully exercised, the Company shall, as soon as
practicable and in no event later than five (5) Business Days after any
exercise and at its own expense, issue a new Warrant identical in all
respects to this Warrant exercised except it shall represent rights to
purchase the number of Warrant Shares purchasable immediately prior to such
exercise under this Warrant exercised, less the number of Warrant Shares
with respect to which such Warrant is exercised.
(d) No fractional Warrant Shares are to be issued upon any pro
rata exercise of this Warrant, but rather the number of Warrant Shares
issued upon such exercise of this Warrant shall be rounded up or down to the
nearest whole number.
(e) If the Company or its Transfer Agent shall fail for any
reason or for no reason to issue to the holder within ten (10) days of
receipt of the Exercise Delivery Documents, a certificate for the number of
Warrant Shares to which the holder is entitled or to credit the holder's
balance account with The Depository Trust Company for such number of Warrant
Shares to which the holder is entitled upon the holder's exercise of this
Warrant, the Company shall, in addition to any other remedies under this
Warrant or the Placement Agent Agreement or otherwise available to such
holder, pay as additional damages in cash to such holder on each day the
issuance of such certificate for Warrant Shares is not timely effected an
amount equal to 0.025% of the product of (A) the sum of the number of
Warrant Shares not issued to the holder on a timely basis and to which the
holder is entitled, and (B) the Closing Bid Price of the Common Stock for
the trading day immediately preceding the last possible date which the
Company could have issued such Common Stock to the holder without violating
this Section 2.
(f) If within ten (10) days after the Company's receipt of the
Exercise Delivery Documents, the Company fails to deliver a new Warrant to
the holder for the number of Warrant Shares to which such holder is entitled
pursuant to Section 2 hereof, then, in addition to any other available
remedies under this Warrant, or otherwise available to such holder, the
Company shall pay as additional damages in cash to such holder on each day
after such tenth (10th) day that such delivery of such new Warrant is not
timely effected in an amount equal to 0.25% of the product of (A) the number
of Warrant Shares represented by the portion of this Warrant which is not
being exercised and (B) the Closing Bid Price of the Common Stock for the
trading day immediately preceding the last possible date which the Company
could have issued such Warrant to the holder without violating this
Section 2.
Section 3. Covenants as to Common Stock. The Company hereby
covenants and agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution
for or replacement of this Warrant will upon issuance be, duly authorized
and validly issued.
(b) All Warrant Shares which may be issued upon the exercise
of the rights represented by this Warrant will, upon issuance, be validly
issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof.
(c) During the period within which the rights represented by
this Warrant may be exercised, the Company will at all times have authorized
and reserved at least one hundred percent (100%) of the number of shares of
Common Stock needed to provide for the exercise of the rights then
represented by this Warrant and the par value of said shares will at all
times be less than or equal to the applicable Warrant Exercise Price. If at
any time the Company does not have a sufficient number of shares of Common
Stock authorized and available, then the Company shall call and hold a
special meeting of its stockholders within sixty (60) days of that time for
the sole purpose of increasing the number of authorized shares of Common
Stock.
(d) If at any time after the date hereof the Company shall
file a registration statement, the Company shall include the Warrant Shares
issuable to the holder, pursuant to the terms of this Warrant and shall
maintain, so long as any other shares of Common Stock shall be so listed,
such listing of all Warrant Shares from time to time issuable upon the
exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and
shall maintain such listing of, any other shares of capital stock of the
Company issuable upon the exercise of this Warrant if and so long as any
shares of the same class shall be listed on such national securities
exchange or automated quotation system.
(e) The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed by it hereunder, but will at
all times in good faith assist in the carrying out of all the provisions of
this Warrant and in the taking of all such action as may reasonably be
requested by the holder of this Warrant in order to protect the exercise
privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant. The
Company will not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Warrant Exercise
Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of this Warrant.
(f) This Warrant will be binding upon any entity succeeding to
the Company by merger, consolidation or acquisition of all or substantially
all of the Company's assets.
Section 4. Taxes. The Company shall pay any and all taxes, except
any applicable withholding, which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder. Except as
otherwise specifically provided herein, no holder, as such, of this Warrant
shall be entitled to vote or receive dividends or be deemed the holder of
shares of capital stock of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to
vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive
dividends or subscription rights, or otherwise, prior to the issuance to the
holder of this Warrant of the Warrant Shares which he or she is then
entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any
liabilities on such holder to purchase any securities (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 5, the Company will provide the holder of this
Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.
Section 6. Representations of Holder. The holder of this Warrant, by
the acceptance hereof, represents that it is acquiring this Warrant and the
Warrant Shares for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
of this Warrant or the Warrant Shares, except pursuant to sales registered
or exempted under the Securities Act; provided, however, that by making the
representations herein, the holder does not agree to hold this Warrant or
any of the Warrant Shares for any minimum or other specific term and
reserves the right to dispose of this Warrant and the Warrant Shares at any
time in accordance with or pursuant to a registration statement or an
exemption under the Securities Act. The holder of this Warrant further
represents, by acceptance hereof, that, as of this date, such holder is an
"accredited investor" as such term is defined in Rule 501(a)(1) of
Regulation D promulgated by the Securities and Exchange Commission under the
Securities Act (an "Accredited Investor"). Upon exercise of this Warrant
the holder shall, if requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the Warrant Shares so purchased are being
acquired solely for the holder's own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or
resale and that such holder is an Accredited Investor. If such holder
cannot make such representations because they would be factually incorrect,
it shall be a condition to such holder's exercise of this Warrant that the
Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its
securities upon exercise of this Warrant shall not violate any United States
or state securities laws.
Section 7. Ownership and Transfer.
(a) The Company shall maintain at its principal executive
offices (or such other office or agency of the Company as it may designate
by notice to the holder hereof), a register for this Warrant, in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee.
The Company may treat the person in whose name any Warrant is registered on
the register as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, but in all events recognizing
any transfers made in accordance with the terms of this Warrant.
Section 8. Adjustment of Warrant Exercise Price and Number of Shares.
The Warrant Exercise Price and the number of shares of Common Stock issuable
upon exercise of this Warrant shall be adjusted from time to time as
follows:
(a) Adjustment of Warrant Exercise Price and Number of Shares
upon Issuance of Common Stock. If and whenever on or after the Issuance
Date of this Warrant, the Company issues or sells, or is deemed to have
issued or sold, any shares of Common Stock (other than Excluded Securities)
for a consideration per share less than a price (the "Applicable Price")
equal to the Warrant Exercise Price in effect immediately prior to such
issuance or sale, then immediately after such issue or sale the Warrant
Exercise Price then in effect shall be reduced to an amount equal to such
consideration per share. Upon each such adjustment of the Warrant Exercise
Price hereunder, the number of Warrant Shares issuable upon exercise of this
Warrant shall be adjusted to the number of shares determined by multiplying
the Warrant Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product thereof by the
Warrant Exercise Price resulting from such adjustment.
(b) Effect on Warrant Exercise Price of Certain Events. For
purposes of determining the adjusted Warrant Exercise Price under Section
8(a) above, the following shall be applicable:
(i) Issuance of Options. If after the date hereof, the
Company in any manner grants any Options and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such
Option or upon conversion or exchange of any convertible securities issuable
upon exercise of any such Option is less than the Applicable Price, then
such share of Common Stock shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the granting or sale of
such Option for such price per share. For purposes of this Section 8(b)(i),
the lowest price per share for which one share of Common Stock is issuable
upon exercise of such Options or upon conversion or exchange of such
Convertible Securities shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to
any one share of Common Stock upon the granting or sale of the Option, upon
exercise of the Option or upon conversion or exchange of any convertible
security issuable upon exercise of such Option. No further adjustment of
the Warrant Exercise Price shall be made upon the actual issuance of such
Common Stock or of such convertible securities upon the exercise of such
Options or upon the actual issuance of such Common Stock upon conversion or
exchange of such convertible securities.
(ii) Issuance of Convertible Securities. If the Company
in any manner issues or sells any convertible securities and the lowest
price per share for which one share of Common Stock is issuable upon the
conversion or exchange thereof is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such
convertible securities for such price per share. For the purposes of this
Section 8(b)(ii), the lowest price per share for which one share of Common
Stock is issuable upon such conversion or exchange shall be equal to the sum
of the lowest amounts of consideration (if any) received or receivable by
the Company with respect to one share of Common Stock upon the issuance or
sale of the convertible security and upon conversion or exchange of such
convertible security. No further adjustment of the Warrant Exercise Price
shall be made upon the actual issuance of such Common Stock upon conversion
or exchange of such convertible securities, and if any such issue or sale of
such convertible securities is made upon exercise of any Options for which
adjustment of the Warrant Exercise Price had been or are to be made pursuant
to other provisions of this Section 8(b), no further adjustment of the
Warrant Exercise Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Rate of Conversion. If
the purchase price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion or exchange of any
convertible securities, or the rate at which any convertible securities are
convertible into or exchangeable for Common Stock changes at any time, the
Warrant Exercise Price in effect at the time of such change shall be
adjusted to the Warrant Exercise Price which would have been in effect at
such time had such Options or convertible securities provided for such
changed purchase price, additional consideration or changed conversion rate,
as the case may be, at the time initially granted, issued or sold and the
number of Warrant Shares issuable upon exercise of this Warrant shall be
correspondingly readjusted. For purposes of this Section 8(b)(iii), if the
terms of any Option or convertible security that was outstanding as of the
Issuance Date of this Warrant are changed in the manner described in the
immediately preceding sentence, then such Option or convertible security and
the Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such change.
No adjustment pursuant to this Section 8(b) shall be made if such adjustment
would result in an increase of the Warrant Exercise Price then in effect.
(iv) Calculation of Consideration Received. If any
Common Stock, Options or convertible securities are issued or sold or deemed
to have been issued or sold for cash, the consideration received therefore
will be deemed to be the net amount received by the Company therefore. If
any Common Stock, Options or convertible securities are issued or sold for a
consideration other than cash, the amount of such consideration received by
the Company will be the fair value of such consideration, except where such
consideration consists of marketable securities, in which case the amount of
consideration received by the Company will be the market price of such
securities on the date of receipt of such securities. If any Common Stock,
Options or convertible securities are issued to the owners of the non-
surviving entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefore will be deemed to be
the fair value of such portion of the net assets and business of the non-
surviving entity as is attributable to such Common Stock, Options or
convertible securities, as the case may be. The fair value of any
consideration other than cash or securities will be determined jointly by
the Company and the holders of Warrants representing at least two-thirds (b)
of the Warrant Shares issuable upon exercise of the Warrants then
outstanding. If such parties are unable to reach agreement within ten (10)
days after the occurrence of an event requiring valuation (the "Valuation
Event"), the fair value of such consideration will be determined within five
(5) Business Days after the tenth (10th) day following the Valuation Event by
an independent, reputable appraiser jointly selected by the Company and the
holders of Warrants representing at least two-thirds (b) of the Warrant
Shares issuable upon exercise of the Warrants then outstanding. The
determination of such appraiser shall be final and binding upon all parties
and the fees and expenses of such appraiser shall be borne jointly by the
Company and the holders of Warrants.
(v) Integrated Transactions. In case any Option is
issued in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the
Options will be deemed to have been issued for a consideration of $.01.
(vi) Treasury Shares. The number of shares of Common
Stock outstanding at any given time does not include shares owned or held by
or for the account of the Company, and the disposition of any shares so
owned or held will be considered an issue or sale of Common Stock.
(vii) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (1) to receive a
dividend or other distribution payable in Common Stock, Options or in
convertible securities or (2) to subscribe for or purchase Common Stock,
Options or convertible securities, then such record date will be deemed to
be the date of the issue or sale of the shares of Common Stock deemed to
have been issued or sold upon the declaration of such dividend or the making
of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(c) Adjustment of Warrant Exercise Price upon Subdivision or
Combination of Common Stock. If the Company at any time after the date of
issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares
of Common Stock into a greater number of shares, any Warrant Exercise Price
in effect immediately prior to such subdivision will be proportionately
reduced and the number of shares of Common Stock obtainable upon exercise of
this Warrant will be proportionately increased. If the Company at any time
after the date of issuance of this Warrant combines (by combination, reverse
stock split or otherwise) one or more classes of its outstanding shares of
Common Stock into a smaller number of shares, any Warrant Exercise Price in
effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares issuable upon exercise of this
Warrant will be proportionately decreased. Any adjustment under this
Section 8(c) shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(d) Distribution of Assets. If the Company shall declare or
make any dividend or other distribution of its assets (or rights to acquire
its assets) to holders of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement or other similar transaction) (a
"Distribution"), at any time after the issuance of this Warrant, then, in
each such case:
(i) any Warrant Exercise Price in effect immediately
prior to the close of business on the record date fixed for the
determination of holders of Common Stock entitled to receive the
Distribution shall be reduced, effective as of the close of business on such
record date, to a price determined by multiplying such Warrant Exercise
Price by a fraction of which (A) the numerator shall be the Closing Sale
Price of the Common Stock on the trading day immediately preceding such
record date minus the value of the Distribution (as determined in good faith
by the Company's Board of Directors) applicable to one share of Common
Stock, and (B) the denominator shall be the Closing Sale Price of the Common
Stock on the trading day immediately preceding such record date; and
(ii) either (A) the number of Warrant Shares obtainable
upon exercise of this Warrant shall be increased to a number of shares equal
to the number of shares of Common Stock obtainable immediately prior to the
close of business on the record date fixed for the determination of holders
of Common Stock entitled to receive the Distribution multiplied by the
reciprocal of the fraction set forth in the immediately preceding clause
(i), or (B) in the event that the Distribution is of common stock of a
company whose common stock is traded on a national securities exchange or a
national automated quotation system, then the holder of this Warrant shall
receive an additional warrant to purchase Common Stock, the terms of which
shall be identical to those of this Warrant, except that such warrant shall
be exercisable into the amount of the assets that would have been payable to
the holder of this Warrant pursuant to the Distribution had the holder
exercised this Warrant immediately prior to such record date and with an
exercise price equal to the amount by which the exercise price of this
Warrant was decreased with respect to the Distribution pursuant to the terms
of the immediately preceding clause (i).
(e) Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 8 but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity
features), then the Company's Board of Directors will make an appropriate
adjustment in the Warrant Exercise Price and the number of shares of Common
Stock obtainable upon exercise of this Warrant so as to protect the rights
of the holders of the Warrants; provided, except as set forth in section
8(c),that no such adjustment pursuant to this Section 8(e) will increase the
Warrant Exercise Price or decrease the number of shares of Common Stock
obtainable as otherwise determined pursuant to this Section 8.
(f) Notices.
(i) Immediately upon any adjustment of the Warrant
Exercise Price, the Company will give written notice thereof to the holder
of this Warrant, setting forth in reasonable detail, and certifying, the
calculation of such adjustment.
(ii) The Company will give written notice to the holder
of this Warrant at least ten (10) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend
or distribution upon the Common Stock, (B) with respect to any pro rata
subscription offer to holders of Common Stock or (C) for determining rights
to vote with respect to any Organic Change (as defined below), dissolution
or liquidation, provided that such information shall be made known to the
public prior to or in conjunction with such notice being provided to such
holder.
(iii) The Company will also give written notice to the
holder of this Warrant at least ten (10) days prior to the date on which any
Organic Change, dissolution or liquidation will take place, provided that
such information shall be made known to the public prior to or in
conjunction with such notice being provided to such holder.
Section 9. Purchase Rights; Reorganization, Reclassification,
Consolidation, Merger or Sale.
(a) In addition to any adjustments pursuant to Section 8
above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock
(the "Purchase Rights"), then the holder of this Warrant will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder could have acquired if such holder had
held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights.
(b) Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's
assets to another Person or other transaction in each case which is effected
in such a way that holders of Common Stock are entitled to receive (either
directly or upon subsequent liquidation) stock, securities or assets with
respect to or in exchange for Common Stock is referred to herein as an
"Organic Change." Prior to the consummation of any (i) sale of all or
substantially all of the Company's assets to an acquiring Person or (ii)
other Organic Change following which the Company is not a surviving entity,
the Company will secure from the Person purchasing such assets or the
successor resulting from such Organic Change (in each case, the "Acquiring
Entity") a written agreement (in form and substance satisfactory to the
holders of Warrants representing at least two-thirds (iii) of the Warrant
Shares issuable upon exercise of the Warrants then outstanding) to deliver
to each holder of Warrants in exchange for such Warrants, a security of the
Acquiring Entity evidenced by a written instrument substantially similar in
form and substance to this Warrant and satisfactory to the holders of the
Warrants (including an adjusted warrant exercise price equal to the value
for the Common Stock reflected by the terms of such consolidation, merger or
sale, and exercisable for a corresponding number of shares of Common Stock
acquirable and receivable upon exercise of the Warrants without regard to
any limitations on exercise, if the value so reflected is less than any
Applicable Warrant Exercise Price immediately prior to such consolidation,
merger or sale). Prior to the consummation of any other Organic Change, the
Company shall make appropriate provision (in form and substance satisfactory
to the holders of Warrants representing a majority of the Warrant Shares
issuable upon exercise of the Warrants then outstanding) to insure that each
of the holders of the Warrants will thereafter have the right to acquire and
receive in lieu of or in addition to (as the case may be) the Warrant Shares
immediately theretofore issuable and receivable upon the exercise of such
holder's Warrants (without regard to any limitations on exercise), such
shares of stock, securities or assets that would have been issued or payable
in such Organic Change with respect to or in exchange for the number of
Warrant Shares which would have been issuable and receivable upon the
exercise of such holder's Warrant as of the date of such Organic Change
(without taking into account any limitations or restrictions on the
exercisability of this Warrant).
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly,
on receipt of an indemnification undertaking (or, in the case of a mutilated
Warrant, the Warrant), issue a new Warrant of like denomination and tenor as
this Warrant so lost, stolen, mutilated or destroyed.
Section 11. Notice. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Warrant must be in writing and will be deemed to have been delivered:
(i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of receipt is received by the sending party
transmission is mechanically or electronically generated and kept on file by
the sending party); or (iii) one Business Day after deposit with a
nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:
If to Holder:
Cornell Capital Partners, LP
101 Hudson Street - Suite 3700
Jersey City, NJ 07302
Attention: Mark A. Angelo
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
With Copy to:
Troy Rillo, Esq.
101 Hudson Street - Suite 3700
Jersey City, NJ 07302
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
If to the Company, to:
Veridium Corporation
535 West 34th Street, Suite 203
New York, New York
Attn: Kevin Kreisler
Telephone: (646) 792-2635
If to a holder of this Warrant, to it at the address and facsimile number
set forth on Exhibit C hereto, with copies to such holder's representatives
as set forth on Exhibit C, or at such other address and facsimile as shall
be delivered to the Company upon the issuance or transfer of this Warrant.
Each party shall provide five days' prior written notice to the other party
of any change in address or facsimile number. Written confirmation of
receipt (A) given by the recipient of such notice, consent, facsimile,
waiver or other communication, (or (B) provided by a nationally recognized
overnight delivery service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
Section 12. Date. The date of this Warrant is set forth on page 1
hereof. This Warrant, in all events, shall be wholly void and of no effect
after the close of business on the Expiration Date, except that
notwithstanding any other provisions hereof, the provisions of Section 8(b)
shall continue in full force and effect after such date as to any Warrant
Shares or other securities issued upon the exercise of this Warrant.
Section 13. Amendment and Waiver. Except as otherwise provided
herein, the provisions of the Warrants may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the holders of Warrants representing at least two-thirds of the
Warrant Shares issuable upon exercise of the Warrants then outstanding;
provided that, except for Section 8(d), no such action may increase the
Warrant Exercise Price or decrease the number of shares or class of stock
obtainable upon exercise of any Warrant without the written consent of the
holder of such Warrant.
Section 14. Descriptive Headings; Governing Law. The descriptive
headings of the several sections and paragraphs of this Warrant are inserted
for convenience only and do not constitute a part of this Warrant. The
corporate laws of the State of Nevada shall govern all issues concerning the
relative rights of the Company and its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of
this Agreement shall be governed by the internal laws of the State of New
Jersey, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New Jersey or any other
jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New Jersey. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in Hudson County and the United States District Court for the
District of New Jersey, for the adjudication of any dispute hereunder or in
connection herewith or therewith, or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law.
Section 15. Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH
PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS
WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS
TRANSACTION.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
as of the date first set forth above.
COMPANY: VERIDIUM CORPORATION
By: ______________________
Name: Kevin Kreisler
Title: Chairman and Chief
Executive Officer
EXHIBIT A TO WARRANT
EXERCISE NOTICE
TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
VERIDIUM CORPORATION
The undersigned holder hereby exercises the right to purchase
______________ of the shares of Common Stock ("Warrant Shares") of Veridium
Corporation (the "Company"), evidenced by the attached Warrant (the
"Warrant"). Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Warrant.
Specify Method of exercise by check mark:
1. ___ Cash Exercise
(a) Payment of Warrant Exercise Price. The holder shall pay the
Aggregate Exercise Price of $______________ to the Company in
accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares. The Company shall deliver to the
holder _________ Warrant Shares in accordance with the terms of
the Warrant.
2. ___ Cashless Exercise
(a) Payment of Warrant Exercise Price. In lieu of making payment
of the Aggregate Exercise Price, the holder elects to receive
upon such exercise the Net Number of shares of Common Stock
determined in accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares. The Company shall deliver to the
holder _________ Warrant Shares in accordance with the terms of
the Warrant.
Date: _______________ __, ______
Name of Registered Holder
By:
Name:
Title:
EXHIBIT B TO WARRANT
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to
purchase ____________ shares of the capital stock of Veridium Corporation
represented by warrant certificate no. _____, standing in the name of the
undersigned on the books of said corporation. The undersigned does hereby
irrevocably constitute and appoint ______________, attorney to transfer the
warrants of said corporation, with full power of substitution in the
premises.
Dated:
By:
Name:
Title: