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 Purple
Beverage Company, Inc. (subject to adjustment as provided
herein)
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FORM OF COMMON STOCK PURCHASE WARRANT
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No.
2008-A1-00_
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Issue
Date: April 2, 2008
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PURPLE
BEVERAGE COMPANY, INC., a corporation organized under the laws
of the State of Nevada (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 commencing on 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 $3.50. 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 December 12, 2007, entered into by the Company and the
Holder in connection with the Holder’s purchase of certain
securities of the Company, including certain common stock purchase
warrants that were exercised by the Holder concurrently with the
grant by the Company to the Holder of this Warrant.
As
used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a)
The
term “Company” shall include Purple Beverage
Company, Inc. and any corporation which shall succeed or
assume the obligations of Purple Beverage Company, Inc.
hereunder.
(b)
The
term “Common Stock” includes (a) the
Company’s common stock, $.001 par value per share, as
authorized on the date hereof, 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) that 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.
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 listed, traded or quoted
on the NASDAQ Global Market, the NASDAQ Global Select Market,
the NASDAQ Capital Market, the New York Stock Exchange, the
American Stock Exchange, LLC, the OTC Bulletin Board, or the
Pink Sheets, 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 listed, traded, or
quoted on the NASDAQ Global Market, the NASDAQ Global Select
Market, the NASDAQ Capital Market, the New York Stock
Exchange, the American Stock Exchange, LLC, the OTC Bulletin
Board, or the Pink Sheets, 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 so publicly listed, traded
or quoted, 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 with such arbitration to be
conducted in New York City, New York; 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 Warrant Shares 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)
If
a registration statement (“Registration
Statement”) is effective for the public unrestricted
resale of all of the Warrant Shares issuable upon exercise of
this Warrant, this Warrant may be exercised in whole or in
part for cash only as set forth in Section 1 above. If such
Registration Statement is not available, 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:
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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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Y=
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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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A=
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the
average of the closing sale prices of the Common Stock for the
ten (10) Trading Days immediately prior to (but not including)
the Exercise Date, (or if no such closing prices are
available, then the Fair Market Value)
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B=
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Purchase
Price (as adjusted to the date of such
calculation)
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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.
3.
Adjustment for Reorganization, Consolidation, Merger,
etc.
3.1.
Fundamental Transaction .
If, at any time while this Warrant is outstanding, (A) the
Company effects any merger or consolidation of the Company with or
into another entity, (B) the Company effects any sale of all or
substantially all of its assets in one or a series of related
transactions, (C) any tender offer or exchange offer (whether by
the Company or another entity) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, (D) the Company
consummates a stock purchase agreement or other business
combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with one or
mor
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