MILK BOTTLE CARDS INC. WARRANT TO PURCHASE SHARES OF COMMON STOCK
|You are currently viewing:
MILK BOTTLE CARDS INC. WARRANT TO PURCHASE SHARES OF COMMON STOCK
|You are currently viewing:
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR QUALIFIED UNDER ANY APPLICABLE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER SUCH STATE SECURITIES LAWS OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR QUALIFICATION IS NOT REQUIRED.
MILK BOTTLE CARDS INC.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
THIS CERTIFIES THAT, for value received, _______________, a _______________ (the “Investor”), or Investor’s assigns (Investor and Investor’s assigns being the “Holder”), is entitled to subscribe for and purchase at any time during the Exercise Period from Milk Bottle Cards Inc., a Nevada corporation, with its principal office located at ________________________________ (the “Company”), a number of shares of Common Stock equal to the Share Number at a per share price equal to the Exercise Price in effect at such time. This Warrant is issued in conjunction with the shares of the Company’s Common Stock issued pursuant to the Subscription Agreement dated as of January 31, 2008, by and between the Company and the Investor.
1. DEFINITIONS . As used herein, the following terms shall have the following respective meanings:
(a) “Aggregate Warrant Price” shall mean the dollar value obtained by multiplying $1.00 by ________.
(b) “Common Stock” shall mean the common stock of the Company.
(c) “Exercise Period” shall mean the period commencing on the original date of issuance of this Warrant and ending on the second anniversary of the date hereof.
(d) “Exercise Price” shall mean $1.00 per share of Common Stock.
(e) “Exercise Shares” shall mean any Common Stock acquired upon exercise of this Warrant.
(f) “Share Number”, at any time, shall mean (i) the Aggregate Warrant Price minus the aggregate exercise price previously paid upon exercise of this Warrant, divided by (ii) the Exercise Price then in effect.
2. EXERCISE OF WARRANT .
2.1 General; Exercise of Warrant .
(a) The rights represented by this Warrant may be exercised as a whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder):
(i) An executed Notice of Exercise in the form attached hereto;
(ii) Payment of the Exercise Price either in cash or by check; and
(iii) This Warrant.
(b) Upon the exercise of the rights represented by this Warrant, a certificate or certificates for the Exercise Shares so purchased, registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates (and such designation is in compliance with applicable securities laws and any stockholders, investor rights or similar agreement), shall be issued and delivered to the Holder as promptly as practicable after the rights represented by this Warrant shall have been so exercised.
(c) The person in whose name any certificate or certificates for Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.
2.2 Net Issue Exercise .
(a) In lieu of paying the Exercise Price in cash or by check as provided in Section 2.1, the Holder may elect a “Net Issue Exercise” pursuant to which the Holder will receive Exercise Shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company together with an executed Notice of Exercise in the form attached hereto in which event the Company shall issue to the Holder a number of Exercise Shares computed using the following formula:
X = Y (A-B)
X = the number of Exercise Shares to be issued to the Holder;
Y = the number of Exercise Shares 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 exercise);
A = the Fair Market Value of one share of the Company’s Common Stock (at the date of such exercise); and
B = the Exercise Price (as adjusted to the date of such exercise).
(b) For purposes of the above calculation, “Fair Market Value” shall be determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a national market system, the Fair Market Value of a share of Common Stock will be the average closing sales price for such stock (or the closing bid, if no sales are reported) as quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Common Stock), over the five (5) trading day period ending on the trading day immediately preceding the day the Warrant is being exercised, as reported in the Wall Street Journal or any other source the Company considers reliable.
(ii) If the Common Stock is not listed on any established stock exchange or a national market system but is regularly quoted elsewhere by recognized securities dealers although selling prices are not reported, the Fair Market Value of a share of Common Stock will be the average mean between the high bid and low asked prices for the Common Stock over the five (5) trading day period ending on the trading day immediately preceding the day the Warrant is being exercised, as reported in the Wall Street Journal or any other source the Company considers reliable.
(iii) If the Common Stock is not traded or quoted as set forth above, the Fair Market Value will be determined in good faith by the Board of Directors of the Company.
(c) If this Warrant is not exercised in full by a Net Issue Exercise, then the “Share Number” in effect immediately after such partial exercise shall be appropriately adjusted to take into account the effect of the Net Issue Exercise.
3. COVENANTS OF THE COMPANY.
3.1 Covenants as to Exercise Shares . The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens, and charges with respect to the issuance thereof. The Company further covenants and agrees that the Company will, at all times during the Exercise Period, have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period, the number of authorized but unissued shares of Common Stock shall not be sufficient to permit exercise of this Warrant, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.
3.2 No Impairment . Except and to the extent as waived or consented to by the Holder, 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 hereunder by the Company, 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 be necessary or appropriate in order to protect the exercise rights of the Holder against impairment.
3.3 Notices of Record Date . In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least ten (10) days prior to the date specified herein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.
4. REPRESENTATIONS OF HOLDER .
4.1 Acquisition of Warrant for Personal Account . The Holder represents and warrants that it is acquiring the Warrant and any shares of capital stock issued or issuable upon exercise or conversion of the Warrant for investment purposes only and not with a view to or for resale in connection with any distribution or public offering thereof within the meaning of the Act (as defined below). The Holder also represents that the entire legal and beneficial interests of the Warrant and Exercise Shares the Holder is acquiring is being acquired for, and will be held for, the account of the Holder only.
4.2 Accredited Investor Status . The Holder represents and warrants that it is an “accredited investor” as such term is defined in Rule 501 under the Securities Act of 1933, as amended (the “ Act ”). The Holder shall provide the Company with such additional information as the Company may reasonably request with respect to the Holder’s status as an “accredited investor.”
4.3 Securities Are Not Registered .
(a) The Holder understands that the Warrant and the Exercise Shares have not been registered under the Act, on the basis that no distribution or public offering of the stock of the Company is to be effected, or registered or qualified under any applicable state securities laws. The Holder realizes that the basis for the exemption may not be present if, notwithstanding its representations, the Holder has a present intention of acquiring the securities for a fixed or determinable period in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The Holder has no such present intention.
(b) The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available.
(c) The Holder is aware that neither the Warrant nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Act unless certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale following the required holding period under Rule 144 and, pending the effectiveness of the change in certain aspects of Rule 144, the number of shares being sold during any three (3) month period not exceeding specified limitations. For so long as the Warrants are outstanding and for the one-year period thereafter, the Company will use its best efforts to satisfy these conditions.
(d) The Holder is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company, at or about the date of this Warrant, that is deemed to relate to the Company, to reach an informed and knowledgeable decision regarding its investment in the Company. The Holder is experienced in making investments of this type and has such knowledge and background in financial and business matters that the Holder is capable of evaluating the merits and risks of this investment and protecting its own interests. The Holder has had an opportunity to ask questions of, and receive answers from, the Company and its officers and employees regarding the business, financial affairs and other aspects of the Company, and has further had the opportunity to obtain information (to the extent the Company possesses or can acquire such information without unreasonable effort or expense) which the Holder deems necessary to evaluate an investment in the Company and to verify the accuracy of information otherwise provided to the Holder.
4.4 Disposition of Warrant and Exercise Shares .
(a) Except for transfers by the Holder to its affiliates in compliance with all applicable securities laws, the Holder further agrees not to mak