Exhibit
10.4 Form of Class A
Common Stock Purchase Warrant
NEITHER THE ISSUANCE AND SALE OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
(WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
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Right to Purchase _________ shares
of Common Stock of Attitude Drinks Inc. (subject to adjustment as
provided herein)
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CLASS A COMMON STOCK PURCHASE
WARRANT
No. 2009-A-001
Issue Date: March ___,
2009
ATTITUDE DRINKS INC., a corporation
organized under the laws of the State of Delaware (the
“Company”), hereby certifies that, for value received,
_____________________, or its assigns (the “Holder”),
is entitled, subject to the terms set forth below, to purchase from
the Company at any time after the Issue Date until 5:00 p.m., E.S.T
on the fifth anniversary of the Issue Date (the “Expiration
Date”), up to ________ fully paid and nonassessable shares of
Common Stock at a per share purchase price of
$0.05. The aforedescribed purchase price per
share, as adjusted from time to time as herein provided, is
referred to herein as the "Purchase Price." The number
and character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein. The
Company may reduce the Purchase Price for some or all of the
Warrants, temporarily or permanently. Capitalized terms
used and not otherwise defined herein shall have the meanings set
forth in that certain Subscription Agreement (the “
Subscription Agreement ”), dated as of March ___,
2009, entered into by the Company and the Holder.
As used herein the following terms,
unless the context otherwise requires, have the following
respective meanings:
(a) The
term “Company” shall include Attitude Drinks Inc. and
any corporation which shall succeed or assume the obligations of
Attitude Drinks Inc. hereunder.
(b) The
term “Common Stock” includes (a) the Company's
Common Stock, $0.001 par value per share, as authorized on the date
of the Subscription Agreement, and (b) any other securities into
which or for which any of the securities described in (a) may
be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The
term “Other Securities” refers to any stock (other than
Common Stock) and other securities of the Company or any other
person (corporate or otherwise) which the holder of the Warrant at
any time shall be entitled to receive, or shall have received, on
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 4 or otherwise.
(d) The
term “Warrant Shares” shall mean the Common Stock
issuable upon exercise of this Warrant.
1.
Exercise of Warrant .
1.1.
Number of Shares Issuable upon Exercise . From
and after the Issue Date through and including the Expiration Date,
the Holder hereof shall be entitled to receive, upon exercise of
this Warrant in whole in accordance with the terms of
subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3, shares of Common Stock of the
Company, subject to adjustment pursuant to
Section 4.
1.2.
Full Exercise . This Warrant may be exercised in
full by the Holder hereof by delivery of an original or facsimile
copy of the form of subscription attached as Exhibit A hereto
(the “Subscription Form”) duly executed by such Holder
and delivery within two days thereafter of payment, in cash, wire
transfer or by certified or official bank check payable to the
order of the Company, in the amount obtained by multiplying the
number of shares of Common Stock for which this Warrant is then
exercisable by the Purchase Price then in effect. The
original Warrant is not required to be surrendered to the Company
until it has been fully exercised.
1.3.
Partial Exercise . This Warrant may be exercised
in part (but not for a fractional share) by delivery of a
Subscription Form in the manner and at the place provided in
subsection 1.2 except that the amount payable by the Holder on
such partial exercise shall be the amount obtained by multiplying
(a) the number of whole shares of Common Stock designated by
the Holder in the Subscription Form by (b) the Purchase Price
then in effect. On any such partial exercise provided
the Holder has surrendered the original Warrant, the Company, at
its expense, will forthwith issue and deliver to or upon the order
of the Holder hereof a new Warrant of like tenor, in the name of
the Holder hereof or as such Holder (upon payment by such Holder of
any applicable transfer taxes) may request, the whole number of
shares of Common Stock for which such Warrant may still be
exercised for the balance of.
1.4.
Fair Market Value . Fair Market Value of a share of Common
Stock as of a particular date (the "Determination Date") shall
mean:
(a) If
the Company's Common Stock is traded on an exchange or is quoted on
the NASDAQ Global Market, Nasdaq Global Select Market, the NASDAQ
Capital Market, the New York Stock Exchange or the American Stock
Exchange, LLC, then the average of the closing or last sale prices,
respectively, reported for the ten trading days immediately
preceding the Determination Date;
(b) If
the Company's Common Stock is not traded on an exchange or on the
NASDAQ Global Market, Nasdaq Global Select Market, the NASDAQ
Capital Market, the New York Stock Exchange or the American Stock
Exchange, LLC, but is traded in the over-the-counter market, then
the average of the closing bid and ask prices reported for the ten
trading days immediately preceding the Determination
Date;
(c) Except
as provided in clause (d) below and Section 3.1, if the
Company's Common Stock is not publicly traded, then as the Holder
and the Company agree, or in the absence of such an agreement, by
arbitration in accordance with the rules then standing of the
American Arbitration Association, before a single arbitrator to be
chosen from a panel of persons qualified by education and training
to pass on the matter to be decided; or
(d) If
the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or
winding up pursuant to the Company's charter, then all amounts to
be payable per share to holders of the Common Stock pursuant to the
charter in the event of such liquidation, dissolution or winding
up, plus all other amounts to be payable per share in respect of
the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common
Stock then issuable upon exercise of all of the Warrants are
outstanding at the Determination Date.
1.5.
Company Acknowledgment . The Company will, at the time of
the exercise of the Warrant, upon the request of the Holder hereof
acknowledge in writing its continuing obligation to afford to such
Holder any rights to which such Holder shall continue to be
entitled after such exercise in accordance with the provisions of
this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.
1.6.
Trustee for Warrant Holders . In the event that a bank or
trust company shall have been appointed as trustee for the Holder
of the Warrants pursuant to Subsection 3.2, such bank or trust
company shall have all the powers and duties of a warrant agent (as
hereinafter described) and shall accept, in its own name for the
account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant
to this Section 1.
1.7
Delivery of Stock Certificates, etc. on Exercise . The
Company agrees that the shares of Common Stock purchased upon
exercise of this Warrant shall be deemed to be issued to the Holder
hereof as the record owner of such shares as of the close of
business on the date on which delivery of a Subscription Form shall
have occurred and payment made for such shares as aforesaid. As
soon as practicable after the exercise of this Warrant in full or
in part, and in any event within three (3) business days thereafter
(“Warrant Share Delivery Date”), 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 Holder
hereof, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct in compliance with applicable
securities laws, a certificate or certificates for the number of
duly and validly issued, fully paid and non-assessable shares of
Common Stock (or Other Securities) to which such Holder shall be
entitled on such exercise, plus, in lieu of any fractional share to
which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then Fair Market Value of one full share
of Common Stock, together with any other stock or other securities
and property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or
otherwise. The Company understands that a delay in the
delivery of the Warrant Shares after the Warrant Share Delivery
Date could result in economic loss to the Holder. As
compensation to the Holder for such loss, the Company agrees to pay
(as liquidated damages and not as a penalty) to the Holder for late
issuance of Warrant Shares upon exercise of this Warrant the
proportionate amount of $100 per business day after the Warrant
Share Delivery Date for each $10,000 of Purchase Price of Warrant
Shares for which this Warrant is exercised which are not timely
delivered. The Company shall pay any payments incurred
under this Section in immediately available funds upon
demand. Furthermore, in addition to any other remedies
which may be available to the Holder, in the event that the Company
fails for any reason to effect delivery of the Warrant Shares by
the Warrant Share Delivery Date, the Holder may revoke all or
part of the relevant Warrant exercise by delivery of a notice to
such effect to the Company, whereupon the Company and the Holder
shall each be restored to their respective positions immediately
prior to the exercise of the relevant portion of this Warrant,
except that the liquidated damages described above shall be payable
through the date notice of revocation or rescission is given to the
Company.
1.8
Buy-In . In addition to any other rights
available to the Holder, if the Company fails to deliver to a
Holder the Warrant Shares as required pursuant to this Warrant,
within seven (7) business days after the Warrant Share Delivery
Date and the Holder or a broker on the Holder’s behalf,
purchases (in an open market transaction or otherwise) shares of
common stock to deliver in satisfaction of a sale by such Holder of
the Warrant Shares which the Holder was entitled to receive from
the Company (a " Buy-In "), then the Company shall pay in
cash to the Holder (in addition to any remedies available to or
elected by the Holder) the amount by which (A) the Holder's total
purchase price (including brokerage commissions, if any) for the
shares of common stock so purchased exceeds (B) the aggregate
Purchase Price of the Warrant Shares required to have been
delivered together with interest thereon at a rate of 15% per
annum, accruing until such amount and any accrued interest thereon
is paid in full (which amount shall be paid as liquidated damages
and not as a penalty). For example, if a Holder
purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to $10,000 of Purchase Price
of Warrant Shares to have been received upon exercise of this
Warrant, the Company shall be required to pay the Holder $1,000,
plus interest. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In.
2.
Cashless Exercise .
(a) Payment
upon exercise may be made at the option of the Holder either in
(i) cash, wire transfer or by certified or official bank check
payable to the order of the Company equal to the applicable
aggregate Purchase Price, (ii) by delivery of Common Stock issuable
upon exercise of the Warrants in accordance with
Section (b) below or (iii) by a combination of any
of the foregoing methods, for the number of Common Stock specified
in such form (as such exercise number shall be adjusted to reflect
any adjustment in the total number of shares of Common Stock
issuable to the holder per the terms of this Warrant) and the
holder shall thereupon be entitled to receive the number of duly
authorized, validly issued, fully-paid and non-assessable shares of
Common Stock (or Other Securities) determined as provided
herein.
(b) Subject
to the provisions herein to the contrary, if the Fair Market Value
of one share of Common Stock is greater than the Purchase Price (at
the date of calculation as set forth below), in lieu of exercising
this Warrant for cash, the holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion
thereof being cancelled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed
Subscription Form in which event the Company shall issue to the
holder a number of shares of Common Stock computed using the
following formula:
X= Y (A-B)
A
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Where
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X=
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the number of shares of Common Stock
to be issued to the holder
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the number of shares of Common Stock
purchasable under the Warrant or, if only a portion of the Warrant
is being exercised, the portion of the Warrant being exercised (at
the date of such calculation)
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the average of the closing sale
prices of the Common Stock for the five (5) Trading Days
immediately prior to (but not including) the Exercise Date, or Fair
Market Value, whichever is less
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Purchase Price (as adjusted to the
date of such calculation)
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(c) The
Holder may employ the cashless exercise feature described in
Section (b) above at any time.
For purposes of Rule 144 promulgated
under the 1933 Act, it is intended, understood and acknowledged
that the Warrant Shares issued in a cashless exercise transaction
shall be deemed to have been acquired by the Holder, and the
holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued pursuant
to the Subscription Agreement.