Exhibit 99.1
ALLMARINE CONSULTANTS CORPORATION
WARRANT AGREEMENT
-----------------
Date: August 8, 2005
To Whom It May Concern:
ALLMARINE CONSULTANTS CORPORATION (the "Company"), for value received, hereby
agrees to issue common stock purchase warrants entitling David M. Loev
("Holder") and his assigns to purchase an aggregate of 125,000 shares of the
Company's common stock ("Common Stock"). Such warrant is evidenced by a warrant
certificate in the form attached hereto as Schedule 1 (such instrument being
hereinafter referred to as a "Warrant," and such Warrant and all instruments
hereafter issued in replacement, substitution, combination or subdivision
thereof being hereinafter collectively referred to as the "Warrant"). The
Warrant is issued in consideration for legal services rendered. The number of
shares of Common Stock purchasable upon exercise of the Warrant is subject to
adjustment as provided in Section 5 below. The Warrant will be exercisable by
the Warrant Holder (as defined below) as to all or any lesser number of shares
of Common Stock covered thereby, at an initial purchase price of US $0.025 per
share (the "Purchase Price"), subject to adjustment as provided in Section 5
below, for the exercise period defined in Section 3(a) below. The term "Warrant
Holder" refers to the person whose name appears on the signature page of this
agreement and any transferee or transferees of any of them permitted by Section
2(a) below.
1. REPRESENTATIONS AND WARRANTIES.
-------------------------------
The Company represents and warrants to the Warrant Holder as
follows:
(a) CORPORATE AND OTHER ACTION. The Company has all requisite
-----------------------------
power and authority (corporate and other), and has taken all
necessary corporate action, to authorize, execute, deliver and
perform this Warrant Agreement, to execute, issue, sell and
deliver the Warrant and a certificate or certificates evidencing
the Warrant, to authorize and reserve for issue and, upon payment
from time to time of the Purchase Price, to issue, sell and
deliver, the shares of the Common Stock issuable upon exercise of
the Warrant ("Shares"), and to perform all of its obligations
under this Warrant Agreement and the Warrant. The Shares, when
issued in accordance with this Warrant Agreement, will be duly
authorized and validly issued and outstanding, fully paid and
nonassessable and free of all liens, claims, encumbrances and
preemptive rights. This Warrant Agreement and, when issued, each
Warrant issued pursuant hereto, has been or will be duly executed
and delivered by the Company and is or will be a legal, valid and
binding agreement of the Company, enforceable in accordance with
its terms. No authorization, approval, consent or other order of
any governmental entity, regulatory authority or other third
party is required for such authorization, execution, delivery,
performance, issue or sale.
(b) NO VIOLATION. The execution and delivery of this Warrant
-------------
Agreement, the consummation of the transactions herein
contemplated and the compliance with the terms and provisions of
this Warrant Agreement and of the Warrant will not conflict with,
or result in a breach of, or constitute a default or an event
permitting acceleration under, any statute, the Articles of
Incorporation or Bylaws of the Company or any indenture,
mortgage, deed of trust, note, bank loan, credit agreement,
franchise, license, lease, permit, or any other agreement,
understanding, instrument, judgment, decree, order, statute, rule
or regulation to which the Company is a party or by which it is
bound.
2. TRANSFER.
--------
(a) TRANSFERABILITY OF WARRANT. The Warrant Holder agrees that
---------------------------
the Warrant is being acquired as an investment and not with a
view to distribution thereof and that; the Warrant may not be
transferred, sold, assigned or hypothecated except as provided
herein. The Warrant Holder further acknowledges that the Warrant
may not be transferred, sold, assigned or hypothecated unless
pursuant to a registration statement that has become effective
under the Securities Act of 1933, as amended (the "Act"), setting
forth the terms of such offering and other pertinent data with
respect thereto, or unless the Warrant Holder has provided the
Company with an acceptable opinion from acceptable counsel that
such registration is not required. Certificates representing the
Warrant shall bear an appropriate legend. Notwithstanding the
foregoing, any request to transfer the Warrant must be
accompanied by the Form of Assignment and Transfer attached
hereto as Schedule 2 executed by the Warrant Holder.
(b) REGISTRATION OF SHARES. The Warrant Holder agrees not to
------------------------
make any sale or other disposition of the Shares except pursuant
to a registration statement which has become effective under the
Act, setting forth the terms of such offering, the underwriting
discount and commissions and any other pertinent data with
respect thereto, unless the Warrant Holder has provided the
Company with an acceptable opinion of counsel acceptable to the
Company that such registration is not required. Certificates
representing the Shares, which are not registered as provided in
this Section 2, shall bear an appropriate legend and be subject
to a "stop-transfer" order.
3. EXERCISE OF WARRANT, PARTIAL EXERCISE.
-------------------------------------
(a) EXERCISE PERIOD. This Warrant shall expire and all rights
----------------
hereunder shall be extinguished Five (5) years from the date
first written above.
(b) EXERCISE IN FULL. Subject to Section 3(a), a Warrant may be
------------------
exercised in full by the Warrant Holder by surrender of the
Warrant, with the Form of Subscription attached hereto as
Schedule 3 executed by such Warrant Holder, to the Company,
accompanied by payment as determined by 3(d) below, in the amount
obtained by multiplying the number of Shares represented by the
respective Warrant by the Purchase Price per share (after giving
effect to any adjustments as provided in Section 5 below).
(c) PARTIAL EXERCISE. Subject to Section 3(a), each Warrant may
-----------------
be exercised in part by the Warrant Holder by surrender of the
Warrant, with the Form of Subscription attached hereto as
Schedule 3 at the end thereof duly executed by such Warrant
Holder, in the manner and at the place provided in Section 3(b)
above, accompanied by payment as determined by 3(d) below, in
amount obtained by multiplying the number of Shares designated by
the Warrant Holder in the Form of Subscription attached hereto as
Schedule 3 to the Warrant by the Purchase Price per share (after
giving effect to any adjustments as provided in Section 5 below).
Upon any such partial exercise, the Company at its expense will
forthwith issue and deliver to or upon the order of the Warrant
Holder a new Warrant of like tenor, in the name of the Warrant
Holder subject to Section 2(a), calling in the aggregate for the
purchase of the number of Shares equal to the number of such
Shares called for on the face of the respective Warrant (after
giving effect to any adjustment herein as provided in Section 5
below) minus the number of such Shares designated by the Warrant
Holder in the aforementioned form of subscription.
(d) PAYMENT OF PURCHASE PRICE. The Purchase Price may be made by
----------------------------
any of the following or a combination thereof, at the election of
the Warrant Holder:
(i) In cash, by wire transfer, by certified or cashier's
check, or by money order; or
(ii) By delivery to the Company of an exercise notice that
requests the Company to issue to the Warrant Holder the full
number of shares as to which the Warrant is then
exercisable, less the number of shares that have an
aggregate Fair Market Value, as determined by the Board in
its sole discretion at the time of exercise, equal to the
aggregate purchase price of the shares to which such
exercise relates. (This method of exercise allows the
Warrant Holder to use a portion of the shares issuable at
the time of exercise as payment for the shares to which the
Warrant relates and is often referred to as a "cashless
exercise." For example, if the Warrant Holder elects to
exercise 1,000 shares at an exercise price of $0.25 and the
current Fair Market Value of the shares on the date of
exercise is $1.00, the Warrant Holder can use 250 of the
1,000 shares at $1.00 per share to pay for the exercise of
the entire Warrant (250 x $1.00 = $250.00) and receive only
the remaining 750 shares).
For purposes of this section, "Fair Market Value" shall be
defined as the average closing price of the Common Stock (if actual
sales price information on any trading day is not available, the
closing bid price shall be used) for the five trading days prior to
the date of exercise of this Warrant (the "Average Closing Bid
Price"), as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or if the Common Stock is not
traded on NASDAQ, the Average Closing Bid Price in the
over-the-counter market; provided, however, that if the Common Stock
is listed on a stock exchange, the Fair Market Value shall be the
Average Closing Bid Price on such exchange; and, provided further,
that if the Common Stock is not quoted or listed by any organization,
the fair value of the Common Stock, as determined by the Board of
Directors of the Company, whose determination shall be conclusive,
shall be used). In no event shall the Fair Market Value of any share
of Common Stock be less than its par value.
4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE.
------------------------------------------
Any exercise of the Warrant pursuant to Section 3 shall be deemed
to have been effected immediately prior to the close of business on
the date on which the Warrant together with the Form of Subscription
and the payment for the aggregate Purchase Price shall have been
received by the Company. At such time, the person or persons in whose
name or names any certificate or certificates representing the Shares
or Other Securities (as defined below) shall be issuable upon such
exercise shall be deemed to have become the holder or holders of
record of the Shares or Other Securities so purchased. As soon as
practicable after the exercise of any Warrant in full or in part, and
in any event within Ten (10) business days thereafter, the Company at
its expense (including the payment by it of any applicable issue
taxes) will cause to be issued in the name of, and delivered to the
purchasing Warrant Holder, a certificate or certificates representing
the number of fully paid and nonassessable shares of Common Stock or
Other Securities to which such Warrant Holder shall be entitled upon
such exercise, plus in lieu of any fractional share to which such
Warrant Holder would otherwise be entitled, cash in an amount
determined pursuant to Section 6(e). The term "Other Securities"
refers to any stock (other than Common Stock), other securities or
assets (including cash) of the Company or any other person (corporate
or otherwise) which the Warrant Holder at any time shall be entitled
to receive, or shall have received, upon the exercise of the Warrant,
in lieu of or in addition to Common Stock, or which at any time shall
be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 5
below or otherwise.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES PURCHASABLE.
-------------------------------------------------------------
The Purchase Price and the number of Shares are subject to
adjustment from time to time as set forth in this Section 5.
(a) In case the Company shall at any time after the date of this
Warrant Agreement (i) declare a dividend on the Common Stock in
shares of its capital stock, (ii) subdivide the outstanding
Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of Common Stock, or (iv) issue any shares of its
capital stock by reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then
in each case the Purchase Price, and the number and kind of
Shares receivable upon exercise, in effect at the time of the
record date for such dividend or of the effective date of such
subdivision, combination, or reclassification shall be
proportionately adjusted so that the holder of any Warrant
exercised after such time shall be entitled to receive the
aggregate number and kind of Shares which, if such Warrant had
been exercised immediately prior to such record date, he would
have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination, or
reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) No adjustment in the Purchase Price shall be required if
such adjustment is less than US $.05; provided, however, that any
adjustments which by reason of this subsection (b) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 5 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(c) Upon each adjustment of the Purchase Price as a result of
the calculations made in subsection (a) of this Section 5, the
Warrant outstanding prior to the making of the adjustment in the
Purchase Price shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of Shares (calculated
to the nearest thousandth) obtained by (i) multiplying the number
of Shares purchasable upon exercise of the Warrant immediately
prior to adjustment of the number of Shares by the Purchase Price
in effect prior to adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
6. FURTHER COVENANTS OF THE COMPANY.
-------------------------------
(a) DILUTION OR IMPAIRMENTS. The Company will not, by amendment of its
-------------------------
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger or dissolution, avoid or seek to avoid the observance or
performance of any of the terms of the Warrant or of this Warrant Agreement, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Warrant Holder against dilution or other impairment.
Without limiting the generality of the foregoing, the Company:
(i) shall at all times reserve and keep available, solely for issuance and
delivery upon the exercise of the Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable upon the exercise of the Warrant and
shall take all necessary actions to ensure that the par value per share, if any,
of the Common Stock (or Other Securities) is at all times equal to or less than
the then effective Purchase Price per share; and
(ii) will take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock or Other Securities upon the exercise of the Warrant from
time to time outstanding.
(b) TITLE TO STOCK. All Shares delivered upon the exercise of the Warrant
----------------
shall be validly issued, fully paid and nonassessable; each Warrant Holder
shall, upon such delivery, receive good and marketable title to the Shares, free
and clear of all voting and other trust arrangements, liens, encumbrances,
equities and claims whatsoever; and the Company shall have paid all taxes, if
any, in respect of the issuance thereof.
(c) EXCHANGE OF WARRANT. Subject to Section 2(a) hereof, upon surrender for
-------------------
exchange of any Warrant to the Company, the Company at its expense will promptly
issue and deliver to or upon the order of the holder thereof a new Warrant or
like tenor, in the name of such holder or as such holder (upon payment by such
Warrant holder of any applicable transfer taxes) may direct, calling in the
aggregate for the purchase of the number of Shares called for on the face of the
Warrant surrendered. The Warrant and all rights thereunder are transferable in
whole or in part upon the books of the Company by the registered holder thereof,
subject to the provisions of Section 2(a), in person or by duly authorized
attorney, upon surrender of the Warrant, duly endorsed, at the principal office
of the Company.
(d) REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
------------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of any
---
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company, at the expense of the Warrant Holder, will execute
and deliver, in lieu thereof, a new Warrant of like tenor.
(e) FRACTIONAL SHARES. No fractional Shares are to be issued upon the
------------------
exercise of any Warrant, but the Company shall round any fraction of a share to
the nearest whole Share.
7. OTHER WARRANT HOLDERS: HOLDERS OF SHARES.
---------------------------------------------
The Warrant is issued upon the following terms, to all of which each Warrant
Holder by the taking thereof consents and agrees: (a) any person who shall
become a transferee, within the limitations on transfer imposed by Section 2(a)
hereof, of a Warrant properly endorsed shall take such Warrant subject to the
provisions of Section 2(a) hereof and thereupon shall be authorized to represent
himself, herself or itself as absolute owner thereof and, subject to the
restrictions contained in this Warrant Agreement, shall be empowered to transfer
absolute title by endorsement and delivery thereof to a permitted bona fide
purchaser for value; (b) any person who shall become a holder or owner of Shares
shall take such shares subject to the provisions of Section 2(b) hereof; (c)
each prior taker or owner waives and renounces all of his equities or rights in
such Warrant in favor of each such permitted bona fide purchaser, and each such
permitted bona fide purchaser shall acquire absolute title thereto and to all
rights presented thereby; and (d) until such time as the respective Warrant is
transferred on the books of the Company, the Company may treat the registered
holder thereof as the absolute owner thereof for all purposes, notwithstanding
any notice to the contrary.
8. MISCELLANEOUS.
-------------
All notices, certificates and other communications from or at the request of the
Company to any Warrant Holder shall be mailed by first class, registered or
certified mail, postage prepaid, to such address as may have been furnished to
the Company in writing by such Warrant Holder, or, until an address is so
furnished, to the address of the last holder of such Warrant who has so
furnished an address to the Company, except as otherwise provided herein. This
Warrant Agreement and any of the terms hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Warrant Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Texas. The headings in this Warrant
Agreement are for purposes of reference only and shall not limit or otherwise
affect any of the terms hereof. This Warrant Agreement, together with the forms
of instruments annexed hereto as schedules, constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. For
purposes of this Warrant Agreement, a faxed signature shall constitute an
original signature. A photocopy or faxed copy of this Agreement shall be
effective as an original for all purposes.
IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be executed
on this 8th day of August, 2005, in Austin, Texas, by its proper corporate
officers, thereunto duly authorized.
ALLMARINE CONSULTANTS CORPORATION
By: /s/ Michael Chavez
-------------------------------------------
Michael Chavez, Chief Executive Officer
SCHEDULE 1
WARRANT
-------
THIS WARRANT AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER: (A) THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), IN
RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN SECTIONS 3 AND 4 OF
SUCH ACT AND REGULATION S PROMULGATED THEREUNDER; OR (B) ANY STATE SECURITIES
LAWS IN RELIANCE UPON APPLICABLE EXEMPTIONS THEREUNDER. THIS WARRANT MAY NOT BE
EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE ACT OR
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT MUST BE ACQUIRED
FOR INVESTMENT ONLY FOR THE ACCOUNT OF THE INVESTOR, AND NEITHER THE WARRANT NOR
THE UNDERLYING STOCK MAY BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE PROVISIONS
OF REGULATION S AND OTHER LAWS OR PURSUANT TO REGISTRATION UNDER THE ACT OR AN
AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS INVOLVING THIS
WARRANT OR THE SECURITIES TO BE ISSUED UPON ITS EXERCISE MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE ACT.
To Purchase 125,000 Shares
of Common Stock
ALLMARINE CONSULTANTS CORPORATION
This certifies that, for value received, the hereafter named registered owner is
entitled, subject to the terms and
conditions of this Warrant, until the expiration date, to purchase the number of
shares (the "Shares") set forth above of the common stock ("Common Stock"), of
ALLMARINE CONSULTANTS CORPORATION (the "Company") from
the Company at the purchase price per share hereafter set forth below, on
delivery of this Warrant to the Company with the exercise form duly executed and
payment of the purchase price (in cash or by certified or bank cashier's check
payable to the order of the Company) for each Share purchased. This Warrant is
subject to the terms of the Warrant Agreement between the parties thereto dated
as of August 8, 2005, the terms of which are hereby incorporated
herein. Reference is hereby made to such Warrant Agreement for a further
statement of the rights of the holder of this Warrant.
Registered Owner: David Loev Date: August 8,
2005
Purchase Price
Per Share: US $0.025
Expiration Date: Subject to Section 3(a) of the Warrant Agreement, 5:00 p.m.
Central Standard Time.
WITNESS the signature of the Company's authorized officer:
ALLMARINE CONSULTANTS CORPORATION
By: /s/ Michael Chavez
-------------------------------------------
Michael Chavez, Chief Executive Officer