FIVE YEAR WARRANT To Purchase Common Stock of RUBY MINING COMPANY

 

THIS WARRANT AND THE COMMON STOCK OF RUBY MINING COMPANY, A COLORADO

CORPORATION, (THE "COMPANY") ISSUABLE UPON CONVERSION HEREOF (UNTIL SUCH TIME AS

SUCH COMMON STOCK IS REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT) HAVE NOT BEEN REGISTERED UNDER

THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER SECURITIES STATUTE, AND NO

SALE, TRANSFER, OR OTHER DISPOSITION OF ANY INTEREST HEREIN MAY BE MADE UNLESS,

IN THE WRITTEN OPINION OF COUNSEL TO THE COMPANY, SUCH TRANSFER WOULD NOT

VIOLATE OR REQUIRE REGISTRATION UNDER ANY SUCH STATUTE.

 

ISSUE NO. W061104-4                                     ISSUE DATE: JUNE 11, 2004

 

                                FIVE YEAR WARRANT

                           To Purchase Common Stock of

                               RUBY MINING COMPANY

            NOT EXERCISABLE FOR FIRST 180 DAYS FROM DATE OF ISSUANCE

 

        This is to certify that, for value received, JAMES W. LARSEN,

(together with his or its legal representatives, successors and permitted

assigns, "Holder" or "Warrant Holder"), is entitled to purchase from Ruby Mining

Company, a Georgia Corporation (the "Company"), at any time and from time to

time BEGINNING ON JUNE 11, 2004 AND EXPIRING ON JUNE 11, 2009 (except as

otherwise provided herein) 2,400,000 duly authorized, validly issued, fully paid

and nonassessable shares of common stock, par value $.001 per share, of the

Company (the "Common Stock"), at the Current Warrant Price (as hereinafter

defined) in lawful money of the United States of America. The purchase price

hereunder at any time of a single share of Common Stock is referred to herein as

the "Current Warrant Price." Initially, and until adjustment in the manner

hereinafter provided, the Current Warrant Price with respect to the shares

covered by this Warrant shall be $ 0.25 per share. The number of shares of

Common Stock purchasable hereunder and the Current Warrant Price are subject to

adjustment from time to time in the manner provided in Article 4 below. Certain

terms in this Warrant are defined in Article 5 below.

 

                                    ARTICLE 1

                              EXERCISE OF WARRANTS

 

         SECTION 1.1. METHOD OF EXERCISE. Subject to the provisions of Article 3

below, to exercise this Warrant in whole or in part, Holder shall deliver to the

Company at the Warrant Office designated pursuant to Section 2.1: (i) a written

notice, in substantially the form of the Exercise Notice appearing at the end of

this Warrant, of such Holder's election to exercise this Warrant, which notice

shall specify the number of shares of Common Stock to be purchased and

 

 

 

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the nature of payment, whether by check or by this Warrant (pursuant to Section

1.4) or by a combination thereof; (ii) a certified or official bank check

payable to the order of the Company and/or a cancellation of a number of

warrants (pursuant to Section 1.4) (and/or any other form of consideration which

the Company and the Holder hereof may have agreed to accept in payment of the

Current Warrant Price) in the aggregate equal to the aggregate Current Warrant

Price of the number of shares of Common Stock being purchased; and (iii) this

Warrant. The Company shall as promptly as practicable, and in any event within

10 days after receipt by the Company of such notice, execute and deliver or

cause to be executed and delivered, in accordance with said notice, a

certificate or certificates representing the aggregate number of shares of

Common Stock specified in said notice. The stock certificate or certificates so

delivered shall be in the denomination as may be specified in said notice and

shall be issued in the name of such Holder or such other name as shall be

designated in said notice. Such certificate or certificates shall be deemed to

have been issued and such Holder or any other person so designated to be named

therein shall be deemed for all purposes to have become a Holder of record of

such shares as of the date the consideration specified for such shares is

received by the Company as aforesaid. If this Warrant shall have been exercised

only in part, the Company shall, at the time of delivery of said certificate or

certificates, deliver to such Holder a new Warrant evidencing the rights of such

Holder to purchase the remaining shares of Common Stock called for by this

Warrant, which new Warrant shall in all other respects be identical with this

Warrant, or, at the request of such Holder, appropriate notation may be made on

this Warrant and the same returned to such Holder. The Company shall pay all

expenses, taxes and other charges payable in connection with the preparation,

issuance and delivery of such stock certificates and any new Warrant, except

that, in case such stock certificates or new Warrant shall be registered in a

name or names other than the name of the Holder of this Warrant, funds

sufficient to pay all stock transfer taxes which shall be payable upon the

issuance of such stock certificate or certificates or any new Warrant shall be

paid by the Holder hereof at the time of delivering the notice of exercise

mentioned above or promptly upon receipt of a written request of the Company for

payment of the same.

 

         SECTION 1.2. WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All

shares of Common Stock issued upon the exercise of this Warrant shall be validly

issued, fully paid and nonassessable and, if the Common Stock is then listed on

a securities exchange, shall be duly listed thereon, subject to registration

under the Exchange Act.

 

         SECTION 1.3. NO FRACTIONAL SHARES TO BE ISSUED, The Company shall not

be required upon any exercise of this Warrant to issue a certificate

representing any fraction of a share of Common Stock, but, in lieu thereof,

shall pay Holder cash in an amount equal to a corresponding fraction (calculated

to the nearest 1/100 of a share) of the Current Market Price of one share of

Common Stock as of the date of receipt by the Company of notice of exercise of

this Warrant.

 

         SECTION 1.4. PAYMENT OF CURRENT WARRANT PRICE WITH WARRANTS. Upon any

exercise of this Warrant as provided in Section 1.1, Holder may, in lieu of

payment of the Current Warrant Price in cash, surrender this Warrant (or any

successor hereto or fraction hereof) (valued for such purpose at the Current

Market Price of the underlying Common Stock for which such Warrant is

exercisable on the date of such exercise less the Current Warrant Price then in

effect)

 

 

 

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and apply all or a portion of the amount so determined to the payment of the

Current Warrant Price for the number of shares of Common Stock being purchased.

 

         SECTION 1.5. LEGEND ON WARRANT SHARES. Each certificate for shares

initially issued upon exercise of this Warrant, unless at the time of exercise

such Warrant Shares are registered under the Act, shall bear a legend in

substantially the following form (and any additional legend required by any

securities exchange upon which such Warrant Shares may, at the time of such

exercise, be listed) on the face thereof:

 

         "The securities represented by this certificate have not been

registered under the Securities Act of 1933, as amended, or the laws of any

state and may not be sold or otherwise transferred except pursuant to an

effective registration statement or the written opinion of counsel to The

Admiralty Corporation that such registration is not required."

 

         Any certificate issued at any time in exchange or substitution for any

certificate bearing such legend (except a new certificate issued upon completion

of: (i) a public distribution pursuant to a registration statement; or (ii) an

exempt sale pursuant to Rule 144 or Rule 144A under the Act of the securities

represented thereby) shall also bear such legend unless, in the opinion of

counsel for the Holder thereof as shall be reasonably acceptable to the Company,

the securities represented thereby need no longer be subject to the restrictions

contained in Article 3 below. The provisions of Article 3 below shall be binding

upon all subsequent Holders of this Warrant.

 

 

                                    ARTICLE 2

                       WARRANT OFFICE; OWNERSHIP, TRANSFER

                                   OF WARRANT

 

         SECTION 2.1. WARRANT OFFICE. The Company shall maintain an office for

certain purposes specified herein (the "Warrant Office"), which office shall

initially be the Company's office at One Securities Centre, 3490 Piedmont Road,

Suite 304, Atlanta, Georgia 30305and may subsequently be any other office of the

Company or of any transfer agent of the Common Stock in the continental United

States as to which written notice has previously been given to all of the

Warrant Holders.

 

         SECTION 2.2. OWNERSHIP OF WARRANT. The Company may deem and treat the

person in whose name this Warrant is registered as the Holder and owner hereof

(notwithstanding any notations of ownership or writing hereon made by anyone

other than the Company) for all purposes and shall not be affected by any notice

to the contrary, until presentation of this Warrant for registration of transfer

as provided in this Article 2.

 

         SECTION 2.3. TRANSFER OF WARRANT. The Company agrees to maintain books

at the Warrant Office for the registration and transfer of this Warrant, and,

subject to the provisions of Article 3 below, this Warrant and all rights

hereunder are transferable, in whole or in part, on said books at said office,

upon surrender of this Warrant at said office, together with a written

assignment of this Warrant duly executed by the Holder hereof or his duly

authorized agent or

 

 

 

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attorney and funds sufficient to pay any transfer taxes payable upon the making

of such transfer. Upon such surrender and payment, the Company shall execute and

deliver a new Warrant or Warrants in the name of the assignee or assignees and

in the denominations specified in such instrument of assignment, and this

Warrant shall promptly be canceled. A Warrant may be exercised by a new Holder

for the purchase of shares of Common Stock without having a new Warrant issued.

No Holder of this Warrant may divide this or any other Warrant into a Warrant

exercisable into less than 100 shares of Common Stock.

 

         SECTION 2.4. EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay

all expenses, taxes (other than transfer taxes) and other charges payable in

connection with the preparation, issuance and delivery of this Warrant or any

new Warrant hereunder.

 

                                     ARTICLE 3

                     RESTRICTIONS ON EXERCISE AND TRANSFER;

                       REGISTRATION RIGHTS; CALL PROVISION

 

         SECTION 3.1. RESTRICTIONS ON EXERCISE AND TRANSFER. The Holder of this

Warrant, as of the date of issuance hereof, represents to the Company that it is

not acquiring the Warrant with a view to the distribution thereof.

Notwithstanding any provisions contained in this Warrant to the contrary, this

Warrant and the related Warrant Shares shall not be transferable except pursuant

to the proviso contained in the following sentence or upon the conditions

specified in this Article 3, which conditions are intended, among other things,

to insure compliance with the provisions of the Act and applicable state law in

respect of the transfer of this Warrant or such Warrant Shares. The Holder of

this Warrant, by its acceptance hereof, agrees that it will not transfer this

Warrant or the related Warrant Shares prior to delivery to the Company of an

opinion of such Holder's counsel reasonably satisfactory to the Company (as such

opinion and such counsel are described in Section 3.2 below) or until

registration of such Warrant Shares under the Act has become effective or after

a sale of such Warrant or Warrant Shares has been consummated pursuant to Rule

144 or Rule 144A under the Act.

 

         SECTION 3.2. NOTICE OF INTENTION TO TRANSFER; OPINION OF COUNSEL. The

Holder of this Warrant, by its acceptance hereof, agrees that prior to any

transfer of this Warrant or of the related Warrant Shares (other than pursuant

to a registration under the Act), such Holder will give written notice to the

Company of its intention to effect such transfer, together with an opinion of

counsel for such Holder as shall be reasonably acceptable to the Company, to the

effect that the proposed transfer of this Warrant and/or such Warrant Shares may

be effected without registration under the Act or applicable state law. Upon

delivery of such notice and opinion to the Company, the Holder of this Warrant

or such Warrant Shares shall be entitled to transfer this Warrant and/or such

Warrant Shares in accordance with the intended method of disposition specified

in the notice delivered by such Holder to the Company; provided, however, that

if such method of disposition would, in the opinion of such counsel, require

that the Company take any reasonable action and/or execute and file with the

Commission and/or any state securities authority with jurisdiction and/or

deliver to the Warrant Holder or any other person any form or document (other

than a registration statement under the Act or under any state securities laws

or any information requirements pursuant to Regulation D) in order to establish

the entitlement of the Holder of this Warrant to take advantage of such method

of

 

 

 

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disposition, the Company agrees, at its expense, to take any such reasonable

action and/or execute and file and/or deliver any such form or document.

 

         SECTION 3.3.       "PIGGYBACK REGISTRATIONS".

 

                  (a) If the Company at any time prior to the expiration of the

Warrants, proposes to register any of its equity securities (as defined in the

Act), other than securities which are convertible into shares of Common Stock,

under the Act on Forms S-1, S-2, S-3 or SB-1, or SB-2 (but not Form S-4 or S-8)

or on any other form upon which may be registered securities similar to the

Warrant Shares, it will at each such time give written notice at least 30 days

prior to the filing of the registration statement to all Warrant Holders of its

intention so to do. Such notice shall specify the proposed date of the filing of

the registration statement and advise each Warrant Holder of its right to

participate therein. Upon the written request of any Warrant Holder given prior

to the proposed date of filing set forth in such notice, the Company will cause

each Warrant Share which the Company has been requested to register by such

Warrant Holder to be registered under the Act, all to the extent requisite to

permit the sale or other disposition by such Warrant Holder of the Warrant

Shares so registered.

 

                  (b) If, in the written opinion of the underwriter or

underwriters managing the public offering which is the subject of a registration

pursuant to Section 3.3(a) above (or in the event that such distribution shall

not be underwritten, in the written opinion of an investment banking firm of

recognized standing satisfactory to the Warrant Holders), the total amount of

the securities to be so registered, when added to the total amount of Warrant

Shares which the Warrant Holders have requested to be registered pursuant to

Section 3.3(a) above, will exceed the maximum amount of securities of the

Company which can be marketed: (i) at a price reasonably related to their then

current market value; or (ii) without otherwise materially and adversely

affecting the entire offering, then the Company shall have the right to exclude

from such registration such number of Warrant Shares which it would otherwise be

required to register pursuant to Section 3.3(a) above as is necessary to reduce

the total amount of securities to be so registered to the maximum amount of

securities which can be so marketed; provided, however, that if the securities

(other than the Warrant Shares) to be so registered for sale are to be offered

for the account of the Company and others, the Company may only cut back Warrant

Shares pro rata with the securities held by such other persons (it being agreed

that in the case where such registration is to be effected as a result of the

exercise by a Holder of the Company's securities of such Holder's right to cause

such securities to be so registered, such pro rata cut back shall include the

Company).

 

         SECTION 3.4. COMPANY'S OBLIGATIONS IN REGISTRATION. If and whenever the

Company is obligated by the provisions of this Article 3 to effect the

registration of any Warrant Shares under the Act, as expeditiously as possible

the Company will:

 

                  (a) as expeditiously prepare and file with the Commission a

registration statement with respect to such Warrant Shares and use its best

efforts to cause such registration statement to become and remain effective

during the period required for the distribution of the securities covered by the

registration statement; PROVIDED, HOWEVER, that in the event that the Warrant

Shares covered by such registration statement are not to be sold to or through

 

 

 

 

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underwriters acting for the Company, the Company shall not be required to keep

such registration statement in effect, or to prepare and file any amendments or

supplements thereto, after the expiration of six months following the date on

which such registration statement becomes effective under the Act or such longer

period during which the Commission requires that such registration statement be

kept effective with respect to any of the Warrant Shares so registered;

 

                  (b) as expeditiously as possible, prepare and file with the

Commission such amendments and supplements to such registration statement and

the prospectus used in connection therewith as may be necessary to keep such

registration statement effective and to comply with the provisions of the Act

with respect to the disposition of all Warrant Shares covered by such

registration statement, whenever the Warrant Holders for whom such Warrant

Shares are registered or are to be registered shall desire to dispose of the

same, subject, however to the proviso contained in Section 3.4(a) above;

provided, however, that in any event the Company's obligations under this

Section 3.4(b) shall terminate 90 days after the effective date of any such

registration statement if none of the Warrant Shares registered thereunder shall

have been sold;

 

                  (c) as expeditiously as possible, furnish to the Warrant

Holders for whom such Warrant Shares are registered or are to be registered and

to any underwriter or underwriters such numbers of copies of a prospectus,

including a preliminary prospectus, in conformity with the requirements of the

Act, and such other documents as such Warrant Holders may reasonably request in

order to facilitate the disposition of such Warrant Shares;

 

                  (d) use its reasonable efforts to register or qualify the

Warrant Shares covered by such registration statement under such other

securities or blue sky laws of such jurisdictions as the Warrant Holders for

whom such Warrant Shares are registered or are to be registered shall reasonably

request, and do any and all other reasonable acts and things to so register or

qualify which may be necessary or advisable to enable such Warrant Holders to

consummate the disposition in such jurisdictions of such Warrant Shares;

 

         SECTION 3.5. PAYMENT OF REGISTRATION EXPENSES. The costs and expenses

of all registrations under the Act and of all other actions which the Company is

required to take or effect pursuant to this Article 3 shall be paid for by the

Company (including, without limitation, all registration, qualification and

filing fees, printing expenses, expenses of distributing prospectuses and other

documents, fees and disbursements of counsel and accoun