NEITHER THIS
SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
SERIES BD-5 COMMON STOCK PURCHASE
WARRANT
Series
BD-5
Certificate
No. 1
To Purchase 3,500,000
Shares
of Common Stock
of
Global Diversified Industries,
Inc.
THIS SERIES BD-5 COMMON STOCK
PURCHASE WARRANT (the “ Warrant ”) certifies
that, for value received, Midtown Partners & Co., LLC, a
Florida limited liability company (the “ Holder
”), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the “ Initial
Exercise Date ”) and on or prior to the close of business
on the seventh (7th) anniversary of the Initial Exercise Date (the
“ Termination Date ”) but not thereafter, to
subscribe for and purchase from Global Diversified Industries,
Inc., a Delaware corporation (the “ Company ”),
up to 3,500,000 shares (the “ Warrant Shares ”)
of Common Stock, par value $.001 per share, of the Company (the
“ Common Stock ”). The purchase price
of one share of Common Stock under this Warrant shall be equal to
the Exercise Price, as defined in Section 2(b) .
Section 1 .
Definitions . Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in that
certain Securities Purchase Agreement of even date herewith (the
“ Purchase Agreement ”).
Section 2 .
Exercise .
a) Exercise of
Warrant . Exercise of the purchase rights
represented by this Warrant may be made, in whole or in part, at
any time or times on or after the Initial Exercise Date and on or
before the Termination Date by delivery to the Company of a duly
executed facsimile copy of the Notice of Exercise form annexed
hereto (or such other office or agency of the Company as it may
designate by notice in writing to the registered Holder at the
address of such Holder appearing on the books of the Company); and,
within three (3) Trading Days of the date said Notice of Exercise
is delivered to the Company, the Company shall have received
payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier’s check drawn on a
United States bank. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has
purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date the final Notice of Exercise is
delivered to the Company. Partial exercises of this
Warrant resulting in purchases of a portion of the total number of
Warrant Shares available hereunder shall have the effect of
lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and
the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise within two (2) Trading Days
of receipt of such notice. THE HOLDER AND ANY
ASSIGNEE, BY ACCEPTANCE OF THIS WARRANT, ACKNOWLEDGE AND AGREE
THAT, BY REASON OF THE PROVISIONS OF THIS PARAGRAPH, FOLLOWING THE
PURCHASE OF A PORTION OF THE WARRANT SHARES HEREUNDER, THE NUMBER
OF WARRANT SHARES AVAILABLE FOR PURCHASE HEREUNDER AT ANY GIVEN
TIME MAY BE LESS THAN THE AMOUNT STATED ON THE FACE HEREOF
.
b) Exercise
Price . The exercise price per share of the Common
Stock under this Warrant shall be $0.10, subject to adjustment
hereunder (the “ Exercise Price ”).
c) Exercise
Limitations .
i. Holder’s
Restrictions . The Company shall not effect any
exercise of this Warrant, and a Holder shall not have
the right to exercise any portion of this Warrant, pursuant to
Section 2 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the
applicable Notice of Exercise, such Holder (together with such
Holder’s Affiliates, and any other person or entity acting as
a group together with such Holder or any of such Holder’s
Affiliates), as set forth on the applicable Notice of Exercise,
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by such Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with
respect to which such determination is being made, but shall
exclude the number of shares of Common Stock which would be
issuable upon (A) exercise of the remaining, nonexercised portion
of this Warrant beneficially owned by such Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company
(including, without limitation, any other Series A Preferred Stock
or Warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by
such Holder or any of its Affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 2(c)(i)
, beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder, it being acknowledged by a Holder that the
Company is not representing to such Holder that such calculation is
in compliance with Section 13(d) of the Exchange Act and such
Holder is solely responsible for any schedules required to be filed
in accordance therewith. To the extent that the
limitation contained in this Section 2(c)(i) applies, the
determination of whether this Warrant is exercisable (in relation
to other securities owned by such Holder together with any
Affiliates) and of which a portion of this Warrant is exercisable
shall be in the sole discretion of a Holder, and the submission of
a Notice of Exercise shall be deemed to be each Holder’s
determination of whether this Warrant is exercisable (in relation
to other securities owned by such Holder together with any
Affiliates) and of which portion of this Warrant is exercisable, in
each case subject to such aggregate percentage limitation, and the
Company shall have no obligation to verify or confirm the accuracy
of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. For
purposes of this Section 2(c) , in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (X) the
Company’s most recent Form 10-QSB or Form 10-KSB, as the case
may be, (Y) a more recent public announcement by the Company or (Z)
any other notice by the Company or the Company’s transfer
agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder,
the Company shall within two (2) Trading Days confirm orally and in
writing to such Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Warrant, by such Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported. The “ Beneficial Ownership
Limitation ” shall be 4.99% of the number of shares of
the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock issuable upon exercise of this
Warrant. The Beneficial Ownership Limitation provisions
of this Section 2(c)(i) may be waived by such Holder, at the
election of such Holder, upon not less than 61 days’ prior
notice to the Company to change the Beneficial Ownership Limitation
to 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common
Stock upon exercise of this Warrant, and the provisions of this
Section 2(c)(i) shall continue to apply. Upon
such a change by a Holder of the Beneficial Ownership Limitation
from such 4.99% limitation to such 9.99% limitation, the Beneficial
Ownership Limitation may not be further waived by such
Holder. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(c)(i) to correct
this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of this Warrant. Notwithstanding anything
herein to the contrary, this provision shall not apply to any
Holder that has elected to waive this provision on its
signature page to the Purchase Agreement, on or before the date of
closing.
d) Mechanics of
Exercise .
i. Authorization
of Warrant Shares . The Company covenants that all
Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges created by the Company in respect
of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
ii. Cashless
Exercise . Subject to the provisions hereof, at any
time or from time to time prior to the Termination Date, the Holder
shall also have the right to exercise this Warrant or any portion
thereof, without payment by the Holder of the Exercise Price in
cash or any other consideration (other than the surrender of rights
to receive Warrant Shares hereunder), as provided herein (a “
Cashless Exercise ”). Upon a Cashless
Exercise with respect to a particular number of Warrant Shares (the
“ Exchanged Warrant Shares ”), the Company shall
deliver to the Holder (without payment by the Holder of the
Exercise Price in cash or any other consideration (other than the
surrender of rights to receive Common Stock hereunder)) that number
of Warrant Shares computed using the following formula:
Where: X =
the number of
Warrant Shares to be delivered to theholder;
Y
= the
number of Exchanged Warrant Shares;
A
= the
Fair Market Value of the Warrant Shares; provided ,
“Fair Market Value of the Warrant Shares” means the
average VWAP (as defined in the Certificate of Designations) for
the 5 consecutive Trading Days (as defined in the Certificate of
Designations) ending on the Trading Day that is immediately prior
to the applicable Exercise Date.
B
= the
Exercise Price (as adjusted through the Cashless Exercise
Date).
A Cashless Exercise may be effected by the
Holder by the surrender of this Warrant as provided herein,
together with a written statement specifying that the Holder
thereby intends to effect a Cashless Exercise and indicating the
number of Exchanged Warrant Shares which are covered by the
Cashless Exercise. Such Cashless Exercise shall be effective upon
receipt by the Company of this Warrant, together with the aforesaid
written statement, or on such later date as is specified therein
(the “ Cashless Exercise Date ”). The
Company shall issue to the Holder as of the Cashless Exercise Date
a certificate for the Warrant Shares issuable upon the Cashless
Exercise and, if applicable, a new warrant of like tenor evidencing
the balance of the Warrant Shares remaining subject to this
Warrant.
iii. Delivery of
Certificates Upon Exercise . Certificates for
Warrant Shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Holder by crediting the
account of the Holder’s prime broker with the Depository
Trust Company through its Deposit/Withdrawal at Custodian (“
DWAC ”) system if the Company is a participant in such
system, and otherwise by delivery to the address specified by the
Holder in the Notice of Exercise, within five (5) Trading Days from
the delivery to the Company of the Notice of Exercise form,
surrender of this Warrant (if required) and payment of the
aggregate Exercise Price as set forth above (“ Warrant
Share Delivery Date ”). This Warrant shall be
deemed to have been exercised on the date the Exercise Price is
received by the Company. The Warrant Shares shall be
deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the Warrant has been exercised by payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(vii) prior to the issuance of such shares, have
been paid.
iv. Delivery of New
Warrants Upon Exercise . If this Warrant shall have
been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time
of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of
Holder to purchase the unpurchased Warrant Shares called for by
this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
v. Rescission
Rights . If the Company fails to cause its transfer
agent to transmit to the Holder a certificate or certificates
representing the Warrant Shares pursuant to Section 2(d)(ii)
above by the Warrant Share Delivery Date, then the Holder will have
the right to rescind such exercise.
vi. Obligation
Absolute; Damages . The Corporation’s
obligations to issue and deliver the certificates representing the
Warrant Shares upon exercise of the Warrant in accordance with the
terms hereof are absolute and unconditional, irrespective of any
action or inaction by the Holder to enforce the same, any waiver or
consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or
any setoff, counterclaim, recoupment, limitation or termination, or
any breach or alleged breach by the Holder or any other Person of
any obligation to the Corporation or any violation or alleged
violation of law by the Holder or any other person, and
irrespective of any other circumstance which might otherwise limit
such obligation of the Corporation to the Holder in connection with
the issuance of such certificates representing the Warrant
Shares. The Corporation shall issue the certificates
representing the Warrant Shares or, if applicable, cash, upon a
properly noticed exercise. If the Corporation fails to deliver to
the Holder such certificate or certificates pursuant to Section
2(d) within five (5) Trading Days of the Warrant Share Delivery
Date applicable to such exercise, the Corporation shall pay to such
Holder, in cash, as liquidated damages and not as a penalty, for
each $1,000 of VWAP of the Common Stock, $10 per Trading Day
(increasing to $20 per Trading Day after ten (20) Trading Days
after the Warrant Share Delivery Date) for each Trading Day after
the Warrant Share Delivery Date until such certificates are
delivered.
vii. No Fractional
Shares or Scrip . No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of
this Warrant. As to any fraction of a share which Holder
would otherwise be entitled to purchase upon such exercise, the
Company shall at its election, either pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole
share.
viii. Charges, Taxes
and Expenses . Issuance of certificates for Warrant
Shares shall be made without charge to the Holder or other
incidental expense in respect of the issuance of such certificate,
and such certificates shall be issued in the name of the Holder or
in such name or names as may be directed by the Holder;
provided , however , that in the event certificates
for Warrant Shares are to be issued in a n
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