SERIES A WARRANT TO PURCHASE SHARES OF COMMON STOCK OF XSTREAM BEVERAGE GROUP, INC.

 

                                                                     Exhibit 4.1

 

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE

NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE

"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED

OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER

APPLICABLE STATE SECURITIES LAWS OR XSTREAM BEVERAGE GROUP, INC. SHALL HAVE

RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE

SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS

NOT REQUIRED.

 

                          SERIES A WARRANT TO PURCHASE

 

                             SHARES OF COMMON STOCK

 

                                        OF

 

                          XSTREAM BEVERAGE GROUP, INC.

 

 

                              Expires July 30, 2009

 

No.: W-A-04- __                                    Number of Shares: ___________

Date of Issuance: July 30, 2004

 

 

         FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,

the undersigned, XStream Beverage Group, Inc., a Nevada corporation (together

with its successors and assigns, the "Issuer"), hereby certifies that

_______________________________ or its registered assigns is entitled to

subscribe for and purchase, during the Term (as hereinafter defined), up to

____________________________________ (_____________) shares (subject to

adjustment as hereinafter provided) of the duly authorized, validly issued,

fully paid and non-assessable Common Stock of the Issuer, at an exercise price

per share equal to the Warrant Price then in effect, subject, however, to the

provisions and upon the terms and conditions hereinafter set forth. Capitalized

terms used in this Warrant and not otherwise defined herein shall have the

respective meanings specified in Section 9 hereof.

 

         1. Term. The term of this Warrant shall commence on July 30, 2004 and

shall expire at 5:00 p.m., eastern time, on July 30, 2009 (such period being the

"Term").

 

         2. Method of Exercise; Payment; Issuance of New Warrant; Transfer and

Exchange.

 

         (a) Time of Exercise. The purchase rights represented by this Warrant

may be exercised in whole or in part at any time during the Term.

 

         (b) Method of Exercise. The Holder hereof may exercise this Warrant, in

whole or in part, by the surrender of this Warrant (with the exercise form

attached hereto duly executed) at the principal office of the Issuer, and by the

 

<PAGE>

 

payment to the Issuer of an amount of consideration therefor equal to the

Warrant Price in effect on the date of such exercise multiplied by the number of

shares of Warrant Stock with respect to which this Warrant is then being

exercised, payable by certified or official bank check or by wire transfer to an

account designated by the Issuer.

 

         (c) Issuance of Stock Certificates. In the event of any exercise of the

rights represented by this Warrant in accordance with and subject to the terms

and conditions hereof, (i) certificates for the shares of Warrant Stock so

purchased shall be dated the date of such exercise and delivered to the Holder

hereof within a reasonable time, not exceeding three (3) Trading Days after such

exercise or, at the request of the Holder (provided that a registration

statement under the Securities Act providing for the resale of the Warrant Stock

is then in effect), issued and delivered to the Depository Trust Company ("DTC")

account on the Holder's behalf via the Deposit Withdrawal Agent Commission

System ("DWAC"), within a reasonable time, not exceeding three (3) Trading Days

after such exercise, and the Holder hereof shall be deemed for all purposes to

be the holder of the shares of Warrant Stock so purchased as of the date of such

exercise and (ii) unless this Warrant has expired, a new Warrant representing

the number of shares of Warrant Stock, if any, with respect to which this

Warrant shall not then have been exercised (less any amount thereof which shall

have been canceled in payment or partial payment of the Warrant Price as

hereinabove provided) shall also be issued to the Holder hereof at the Issuer's

expense within such time.

 

         (d) Transferability of Warrant. Subject to Section 2(e), this Warrant

may be transferred by a Holder without the consent of the Issuer. If transferred

pursuant to this paragraph and subject to the provisions of Section 2(e), this

Warrant may be transferred on the books of the Issuer by the Holder hereof in

person or by duly authorized attorney, upon surrender of this Warrant at the

principal office of the Issuer, properly endorsed (by the Holder executing an

assignment in the form attached hereto) and upon payment of any necessary

transfer tax or other governmental charge imposed upon such transfer. This

Warrant is exchangeable at the principal office of the Issuer for Warrants to

purchase the same aggregate number of shares of Warrant Stock, each new Warrant

to represent the right to purchase such number of shares of Warrant Stock as the

Holder hereof shall designate at the time of such exchange. All Warrants issued

upon a transfer or exchange shall be dated the Original Issue Date and shall be

identical with this Warrant except as to the number of shares of Warrant Stock

issuable pursuant hereto.

 

         (e) Compliance with Securities Laws.

 

                  (i) The Holder of this Warrant, by acceptance hereof,

         acknowledges that this Warrant or the shares of Warrant Stock to be

         issued upon exercise hereof, as applicable, are being acquired for the

         Holder's own account and not as a nominee for any other party, and for

         investment, and that the Holder will not offer, sell or otherwise

         dispose of this Warrant or any shares of Warrant Stock to be issued

          upon exercise hereof, except pursuant to an effective registration

         statement, or an exemption from registration, under the Securities Act

         and any applicable state securities laws.

 

                  (ii) Except as provided in Section 2(e)(iii), this Warrant and

         all certificates representing shares of Warrant Stock issued upon

         exercise hereof shall be stamped or imprinted with a legend in

         substantially the following form:

 

                                       -2-

<PAGE>

 

                  THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON

                  EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

                  ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE

                   SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE

                  DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND

                  UNDER APPLICABLE STATE SECURITIES LAWS OR XSTREAM BEVERAGE

                  GROUP, INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT

                  REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND

                  UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS

                  NOT REQUIRED.

 

                   (iii) The Issuer agrees to reissue this Warrant or

         certificates representing any of the Warrant Stock, without the legend

         set forth above if at such time, prior to making any transfer of any

         such securities, the Holder shall give written notice to the Issuer

         describing the manner and terms of such transfer and removal as the

         Issuer may reasonably request. Such proposed transfer and removal will

         not be effected until: (a) either (i) the Issuer has received an

         opinion of counsel reasonably satisfactory to the Issuer, to the effect

         that the registration of such securities under the Securities Act is

         not required in connection with such proposed transfer, (ii) a

         registration statement under the Securities Act covering such proposed

         disposition has been filed by the Issuer with the Securities and

         Exchange Commission and has become effective under the Securities Act,

         (iii) the Issuer has received other evidence reasonably satisfactory to

         the Issuer that such registration and qualification under the

         Securities Act and state securities laws are not required, or (iv) the

         Holder provides the Issuer with reasonable assurances that such

         security can be sold pursuant to Rule 144 under the Securities Act; and

         (b) either (i) the Issuer has received an opinion of counsel reasonably

         satisfactory to the Issuer, to the effect that registration or

         qualification under the securities or "blue sky" laws of any state is

         not required in connection with such proposed disposition, or (ii)

         compliance with applicable state securities or "blue sky" laws has been

         effected or a valid exemption exists with respect thereto. The Issuer

         will respond to any such notice from the Holder within five (5)

         business days. In the case of any proposed transfer under this Section

         2(e), the Issuer will use reasonable best efforts to comply with any

         such applicable state securities or "blue sky" laws, but shall in no

         event be required, (x) to qualify to do business in any state where it

         is not then qualified, or (y) to take any action that would subject it

         to tax or to the general service of process in any state where it is

         not then subject. The restrictions on transfer contained in this

         Section 2(e) shall be in addition to, and not by way of limitation of,

         any other restrictions on transfer contained in any other section of

         this Warrant. Whenever a certificate representing the Warrant Stock is

         required to be issued to a the Holder without a legend, in lieu of

         delivering physical certificates representing the Warrant Stock,

         provided the Issuer's transfer agent is participating in the DTC Fast

         Automated Securities Transfer program, the Issuer shall use its

         reasonable best efforts to cause its transfer agent to electronically

         transmit the Warrant Stock to the Holder by crediting the account of

         the Holder's Prime Broker with DTC through DWAC (to the extent not

 

 

                                      -3-

<PAGE>

 

         inconsistent with any provisions of this Warrant or the Purchase

         Agreement).

 

         3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

 

         (a) Stock Fully Paid. The Issuer represents, and warrants to the

Holder, and covenants and agrees for the benefit of the Holder that all shares

of Warrant Stock which may be issued upon the exercise of this Warrant or

otherwise hereunder will, upon issuance, be duly authorized, validly issued,

fully paid and non-assessable and free from all taxes, liens, charges or other

encumbrances of any nature whatsoever created by or through the Issuer. The

Issuer further covenants and agrees that during the period within which this

Warrant may be exercised, the Issuer will at all times have authorized and

reserved for the purpose of the issue upon exercise of this Warrant a sufficient

number of shares of Common Stock to provide for the exercise of this Warrant.

 

         (b) Reservation. If any shares of Common Stock required to be reserved

for issuance upon exercise of this Warrant or as otherwise provided hereunder

require registration or qualification with any governmental authority under any

federal or state law before such shares may be so issued, the Issuer will in

good faith use its best efforts at its expense to cause such shares to be duly

registered or qualified. If the Issuer shall list any shares of Common Stock on

any securities exchange or market it will, at its expense, list thereon,

maintain and increase when necessary such listing, of, all shares of Warrant

Stock from time to time issued upon exercise of this Warrant or as otherwise

provided hereunder (provided that such Warrant Stock has been registered

pursuant to a registration statement under the Securities Act then in effect),

and, to the extent permissible under the applicable securities exchange rules,

all unissued shares of Warrant Stock which are at any time issuable hereunder,

so long as any shares of Common Stock shall be so listed. The Issuer will also

so list on each securities exchange or market, and will maintain such listing

of, any other securities which the Holder of this Warrant shall be entitled to

receive upon the exercise of this Warrant if at the time any securities of the

same class shall be listed on such securities exchange or market by the Issuer.

 

         (c) Covenants. The Issuer shall not by any action including, without

limitation, amending the Articles of Incorporation or the by-laws of the Issuer,

or through any reorganization, transfer of assets, consolidation, merger,

dissolution, issue or sale of securities or any other action, avoid or seek to

avoid the observance or performance of any of the terms or provisions of this

Warrant, but will at all times in good faith assist in the carrying out of all

such terms and in the taking of all such actions as may be necessary or

appropriate to protect the rights of the Holder hereof against dilution (to the

extent specifically provided herein) or impairment. Without limiting the

generality of the foregoing, the Issuer will (i) not permit the par value, if

any, of its Common Stock to exceed the then effective Warrant Price, (ii) not

amend or modify any provision of the Articles of Incorporation or by-laws of the

Issuer in any manner that would adversely affect the rights of the Holder of

this Warrant, (iii) take all such action as may be reasonably necessary in order

that the Issuer may validly and legally issue fully paid and nonassessable

shares of Common Stock, free and clear of any liens, claims, encumbrances and

restrictions (other than as provided herein) upon the exercise of this Warrant,

and (iv) use its best efforts to obtain all such authorizations, exemptions or

consents from any public regulatory body having jurisdiction thereof as may be

 

 

                                      -4-

<PAGE>

 

reasonably necessary to enable the Issuer to perform its obligations under this

Warrant.

 

         (d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence

satisfactory to the Issuer of the ownership of and the loss, theft, destruction

or mutilation of any Warrant and, in the case of any such loss, theft or

destruction, upon receipt of indemnity or security reasonably satisfactory to

the Issuer or, in the case of any such mutilation, upon surrender and

cancellation of such Warrant, the Issuer will make and deliver, in lieu of such

lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and

representing the right to purchase the same number of shares of Common Stock.

 

         4. Adjustment of Warrant Price and Warrant Share Number. The number of

shares of Common Stock for which this Warrant is exercisable, and the price at

which such shares may be purchased upon exercise of this Warrant, shall be

subject to adjustment from time to time as set forth in this Section 4. The

Issuer shall give the Holder notice of any event described below which requires

an adjustment pursuant to this Section 4 in accordance with Section 5.

 

         (a) Recapitalization, Reorganization, Reclassification, Consolidation,

Merger or Sale.

 

                   (i) In case the Issuer after the Original Issue Date shall do

         any of the following (each, a "Triggering Event"): (a) consolidate with

         or merge into any other Person and the Issuer shall not be the

         continuing or surviving corporation of such consolidation or merger, or

         (b) permit any other Person to consolidate with or merge into the

         Issuer and the Issuer shall be the continuing or surviving Person but,

         in connection with such consolidation or merger, any Capital Stock of

         the Issuer shall be changed into or exchanged for Securities of any

         other Person or cash or any other property, or (c) transfer all or

         substantially all of its properties or assets to any other Person, or

          (d) effect a capital reorganization or reclassification of its Capital

         Stock, then, and in the case of each such Triggering Event, proper

         provision shall be made so that, upon the basis and the terms and in

         the manner provided in this Warrant, the Holder of this Warrant shall

         be entitled upon the exercise hereof at any time after the consummation

         of such Triggering Event, to the extent this Warrant is not exercised

         prior to such Triggering Event, to receive at the Warrant Price in

         effect at the time immediately prior to the consummation of such

         Triggering Event in lieu of the Common Stock issuable upon such

         exercise of this Warrant prior to such Triggering Event, the

          Securities, cash and property to which such Holder would have been

         entitled upon the consummation of such Triggering Event if such Holder

         had exercised the rights represented by this Warrant immediately prior

         thereto, subject to adjustments (subsequent to such corporate action)

         as nearly equivalent as possible to the adjustments provided for

         elsewhere in this Section 4.

 

                  (ii) Notwithstanding anything contained in this Warrant to the

         contrary, a Triggering Event shall not be deemed to have occurred if,

         prior to the consummation thereof, each Person (other than the Issuer)

         which may be required to deliver any Securities, cash or property upon

         the exercise of this Warrant as provided herein shall assume, by

         written instrument delivered to, and reasonably satisfactory to, the

         Holder of this Warrant, (A) the obligations of the Issuer under this

 

 

                                      -5-

<PAGE>

 

          Warrant (and if the Issuer shall survive the consummation of such

         Triggering Event, such assumption shall be in addition to, and shall

         not release the Issuer from, any continuing obligations of the Issuer

         under this Warrant) and (B) the obligation to deliver to such Holder

         such Securities, cash or property as, in accordance with the foregoing

         provisions of this subsection (a), such Holder shall be entitled to

         receive, and such Person shall have similarly delivered to such Holder

         an opinion of counsel for such Person, which counsel shall be

         reasonably satisfactory to such Holder, or in the alternative, a

         written acknowledgement executed by the President or Chief Financial

         Officer of the Issuer, stating that this Warrant shall thereafter

         continue in full force and effect and the terms hereof (including,

         without limitation, all of the provisions of this subsection (a)) shall

         be applicable to the Securities, cash or property which such Person may

         be required to deliver upon any exercise of this Warrant or the

         exercise of any rights pursuant hereto.

 

                  (b) Stock Dividends, Subdivisions and Combinations. If at any

         time the Issuer shall:

 

                           (i) take a record of the holders of its Common Stock

         for the purpose of entitling them to receive a dividend payable in, or

         other distribution of, shares of Common Stock,

 

                            (ii) subdivide its outstanding shares of Common Stock

         into a larger number of shares of Common Stock, or

 

                           (iii) combine its outstanding shares of Common Stock

         into a smaller number of shares of Common Stock,

 

then (1) the number of shares of Common Stock for which this Warrant is

exercisable immediately after the occurrence of any such event shall be adjusted

to equal the number of shares of Common Stock which a record holder of the same

number of shares of Common Stock for which this Warrant is exercisable

immediately prior to the occurrence of such event would own or be entitled to

receive after the happening of such event, and (2) the Warrant Price then in

effect shall be adjusted to equal (A) the Warrant Price then in effect

multiplied by the number of shares of Common Stock for which this Warrant is

exercisable immediately prior to the adjustment divided by (B) the number of

shares of Common Stock for which this Warrant is exercisable immediately after

such adjustment.

 

         (c) Certain Other Distributions. If at any time the Issuer shall take a

record of the holders of its Common Stock for the purpose of entitling them to

receive any dividend or other distribution of:

 

                            (i) cash (other than a cash dividend payable out of

         earnings or earned surplus legally available for the payment of

         dividends under the laws of the jurisdiction of incorporation of the

         Issuer),

 

                            (ii) any evidences of its indebtedness, any shares of

         stock of any class or any other securities or property of any nature

         whatsoever (other than cash, Common Stock Equivalents or Additional

         Shares of Common Stock), or

 

                                      -6-

<PAGE>

 

                           (iii) any warrants or other rights to subscribe for

         or purchase any evidences of its indebtedness, any shares of stock of

         any class or any other securities or property of any nature whatsoever

         (other than cash, Common Stock Equivalents or Additional Shares of

         Common Stock),

 

then (1) the number of shares of Common Stock for which this Warrant is

exercisable shall be adjusted to equal the product of the number of shares of

Common Stock for which this Warrant is exercisable immediately prior to such

adjustment multiplied by a fraction (A) the numerator of which shall be the Per

Share Market Value of Common Stock at the date of taking such record and (B) the

denominator of which shall be such Per Share Market Value minus the amount

allocable to one share of Common Stock of any such cash so distributable and of

the fair value (as determined in good faith by the Board of Directors of the

Issuer and supported by an opinion from an investment banking firm of recognized

national standing acceptable to (but not affiliated with) the Holder) of any and

all such evidences of indebtedness, shares of stock, other securities or

property or warrants or other subscription or purchase rights so distributable,

and (2) the Warrant Price then in effect shall be adjusted to equal (A) the

Warrant Price then in effect multiplied by the number of shares of Common Stock

for which this Warrant is exercisable immediately prior to the adjustment

divided by (B) the number of shares of Common Stock for which this Warrant is

exercisable immediately after such adjustment. A reclassification of the Common

Stock (other than a change in par value, or from par value to no par value or

from no par value to par value) into shares of Common Stock and shares of any

other class of stock shall be deemed a distribution by the Issuer to the holders

of its Common Stock of such shares of such other class of stock within the

meaning of this Section 4(c) and, if the outstanding shares of Common Stock

shall be changed into a larger or smaller number of shares of Common Stock as a

part of such reclassification, such change shall be deemed a subdivision or

combination, as the case may be, of the outstanding shares of Common Stock

within the meaning of Section 4(b).

 

         (d) Issuance of Additional Shares of Common Stock. In the event the

Issuer shall at any time following the Original Issue Date issue any Additional

Shares of Common Stock (otherwise than as provided in the foregoing subsections

(a) through (c) of this Section 4), at a price per share less than the Warrant

Price then in effect or without consideration, then the Warrant Price upon each

such issuance shall be adjusted to the price equal to the consideration per

share paid for such Additional Shares of Common Stock.

 

         (e) Issuance of Warrants or Other Rights. If at any time the Issuer

shall take a record of the holders of its Common Stock for the purpose of

entitling them to receive a distribution of, or shall in any manner (whether

directly or by assumption in a merger in which the Issuer is the surviving

corporation) issue or sell, any Common Stock Equivalents (or issue any warrant

or other rights therefor), whether or not the rights to exchange or convert

thereunder are immediately exercisable, and the price per share for which Common

Stock is issuable upon the exercise of such Common Stock Equivalents (or any

warrant or other rights therefor) shall be less than the Warrant Price in effect

immediately prior to the time of such issue or sale, then the number of shares

for which this Warrant is exercisable and the Warrant Price then in effect shall

be adjusted as provided in Section 4(d). No adjustments of the Warrant Price

then in effect or the number of Warrant Shares for which this Warrant is

exercisable shall be made upon the actual issue of such Common Stock or of such

Common Stock Equivalents upon exercise of such warrants or other rights or upon

the actual issue of such Common Stock upon such conversion or exchange of such

Common Stock Equivalents.

 

                                      -7-

<PAGE>

 

         (f) Issuance of Common Stock Equivalents. If at any time the Issuer

shall take a record of the holders of its Common Stock for the purpose of

entitling them to receive a distribution of, or shall in any manner (whether

directly or by assumption in a merger in which the Issuer is the surviving

corporation) issue or sell, any Common Stock Equivalents, whether or not the

rights to exchange or convert thereunder are immediately exercisable, and the

price per share for which Common Stock is issuable upon such conversion or

exchange shall be less than the Warrant Price in effect immediately prior to the

time of such issue or sale, then the number of shares of Common Stock for which

this Warrant is exercisable and the Warrant Price then in effect shall be

adjusted as provided in Section 4(d). No further adjustment of the number of

shares of Common Stock for which this Warrant is exercisable and the Warrant

Price then in effect shall be made under this Section 4(f) upon the issuance of

any Common Stock Equivalents which are issued pursuant to the exercise of any

warrants or other subscription or purchase rights therefor, if any such

adjustment shall previously have been made upon the issuance of such warrants or

other rights pursuant to Section 4(e). No further adjustments of the number of

shares of Common Stock for which this Warrant is exercisab