Exhibit 4.1
THIS
WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED. EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN A
SECURITIES
PURCHASE
AGREEMENT DATED AS OF MARCH 28, 2007, NEITHER THIS WARRANT
NOR ANY OF
SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER SAID
ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
SCOPE,
CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS,
THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD
PURSUANT
TO RULE 144 OR REGULATIONS UNDER SUCH ACT.
Right to
Purchase [----]
Shares of
Common
Stock, par
value $.00005
per share
STOCK PURCHASE WARRANT
THIS
CERTIFIES THAT, for value received, [-----] or its registered
assigns, is entitled to purchase from MIDNIGHT HOLDINGS GROUP,
INC., a Delaware
corporation (the "Company"), at any time or from time to time
during the period
specified in Paragraph 2 hereof, [-----] fully paid and
nonassessable shares of
the Company's Common Stock, par value $.00005 per share (the
"Common Stock"), at
an exercise price per share equal to $.08 (the "Exercise Price").
The term
"Warrant Shares," as used herein, refers to the shares of Common
Stock
purchasable hereunder. The Warrant Shares and the Exercise Price
are subject to
adjustment as provided in Paragraph 4 hereof. The term "Warrants"
means this
Warrant and the other warrants issued pursuant to that certain
Securities
Purchase Agreement, dated March 28, 2007, by and among the Company
and the
Buyers listed on the execution page thereof (the "Securities
Purchase
Agreement").
This
Warrant is subject to the following terms, provisions, and
conditions:
1. MANNER
OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, this Warrant may be exercised by
the holder
hereof, in whole or in part, by the surrender of this Warrant,
together with a
completed exercise agreement in the form attached hereto (the
"Exercise
Agreement"), to the Company during normal business hours on any
business day at
the Company's principal executive offices (or such other office or
agency of the
Company as it may designate by notice to the holder hereof), and
upon (i)
payment to the Company in cash, by certified or official bank check
or by wire
transfer for the account of the Company of the Exercise Price for
the Warrant
Shares specified in the Exercise Agreement or
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(ii) if the resale of the Warrant Shares by the holder is not then
registered
pursuant to an effective registration statement under the
Securities Act of
1933, as amended (the "Securities Act"), delivery to the Company of
a written
notice of an election to effect a "Cashless Exercise" (as defined
in Section
11(c) below) for the Warrant Shares specified in the Exercise
Agreement. The
Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or
such holder's designee, as the record owner of such shares, as of
the close of
business on the date on which this Warrant shall have been
surrendered, the
completed Exercise Agreement shall have been delivered, and payment
shall have
been made for such shares as set forth above. Certificates for the
Warrant
Shares so purchased, representing the aggregate number of shares
specified in
the Exercise Agreement, shall be delivered to the holder hereof
within a
reasonable time, not exceeding five (5) business days, after this
Warrant shall
have been so exercised. The certificates so delivered shall be in
such
denominations as may be requested by the holder hereof and shall be
registered
in the name of such holder or such other name as shall be
designated by such
holder. If this Warrant shall have been exercised only in part,
then, unless
this Warrant has expired, the Company shall, at its expense, at the
time of
delivery of such certificates, deliver to the holder a new Warrant
representing
the number of shares with respect to which this Warrant shall not
then have been
exercised. In addition to all other available remedies at law or in
equity, if
the Company fails to deliver certificates for the Warrant Shares
within five (5)
business days after this Warrant is exercised, then the Company
shall pay to the
holder in cash a penalty (the "Penalty") equal to 2% of the number
of Warrant
Shares that the holder is entitled to multiplied by the Market
Price (as
hereinafter defined) for each day that the Company fails to deliver
certificates
for the Warrant Shares. For example, if the holder is entitled to
100,000
Warrant Shares and the Market Price is $2.00, then the Company
shall pay to the
holder $4,000 for each day that the Company fails to deliver
certificates for
the Warrant Shares. The Penalty shall be paid to the holder by the
fifth day of
the month following the month in which it has accrued.
Notwithstanding anything in this Warrant to the contrary, in no
event shall the holder of this Warrant be entitled to exercise a
number of
Warrants (or portions thereof) in excess of the number of Warrants
(or portions
thereof) upon exercise of which the sum of (i) the number of shares
of Common
Stock beneficially owned by the holder and its affiliates (other
than shares of
Common Stock which may be deemed beneficially owned through the
ownership of the
unexercised Warrants and the unexercised or unconverted portion of
any other
securities of the Company (including the Notes (as defined in the
Securities
Purchase Agreement)) subject to a limitation on conversion or
exercise analogous
to the limitation contained herein) and (ii) the number of shares
of Common
Stock issuable upon exercise of the Warrants (or portions thereof)
with respect
to which the determination described herein is being made, would
result in
beneficial ownership by the holder and its affiliates of more than
4.9% of the
outstanding shares of Common Stock. For purposes of the immediately
preceding
sentence, beneficial ownership shall be determined in accordance
with Section
13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13D-G
thereunder, except as otherwise provided in clause (i) of the
preceding
sentence. Notwithstanding anything to the contrary contained
herein, the
limitation on exercise of this Warrant set forth herein may not be
amended
without (i) the written consent of the holder hereof and the
Company and (ii)
the approval of a majority of shareholders of the Company.
2. PERIOD
OF EXERCISE. This Warrant is exercisable at any time or from
time to time on or after the date on which this Warrant is issued
and delivered
pursuant to the terms of the
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Securities Purchase Agreement and before 6:00 p.m., New York, New
York time on
the fifth (5th) anniversary of the date of issuance (the "Exercise
Period").
3. CERTAIN
AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. Subject to the completion of the
Charter Amendment Actions (as such term is defined in the
Securities Purchase
Agreement), all Warrant Shares will, upon issuance in accordance
with the terms
of this Warrant, be validly issued, fully paid, and nonassessable
and free from
all taxes, liens, and charges with respect to the issue
thereof.
(b) RESERVATION OF SHARES. Subject to the completion of the
Charter
Amendment Actions, during the Exercise Period, the Company shall at
all times
have authorized, and reserved for the purpose of issuance upon
exercise of this
Warrant, a sufficient number of shares of Common Stock to provide
for the
exercise of this Warrant.
(c) LISTING. The Company shall use it best efforts to secure
the
listing of the shares of Common Stock issuable upon exercise of the
Warrant upon
each national securities exchange or automated quotation system, if
any, upon
which shares of Common Stock are then listed (subject to official
notice of
issuance upon exercise of this Warrant) and shall maintain, so long
as any other
shares of Common Stock shall be so listed, such listing of all
shares of Common
Stock from time to time issuable upon the exercise of this Warrant;
and the
Company shall so list on each national securities exchange or
automated
quotation system, as the case may be, and shall maintain such
listing of, any
other shares of capital stock of the Company issuable upon the
exercise of this
Warrant if and so long as any shares of the same class shall be
listed on such
national securities exchange or automated quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by
amendment
of its charter 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 by it hereunder, 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 reasonably be requested by the
holder of this
Warrant in order to protect the exercise privilege of the holder of
this Warrant
against dilution or other impairment, consistent with the tenor and
purpose of
this Warrant. Without limiting the generality of the foregoing, the
Company (i)
will not increase the par value of any shares of Common Stock
receivable upon
the exercise of this Warrant above the Exercise Price then in
effect, and (ii)
will take all such actions as may be necessary or appropriate in
order that the
Company may validly and legally issue fully paid and nonassessable
shares of
Common Stock upon the exercise of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon
any
entity succeeding to the Company by merger, consolidation, or
acquisition of all
or substantially all the Company's assets.
4.
ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price
and the number of Warrant Shares shall be subject to adjustment
from time to
time as provided in this Paragraph 4.
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In the
event that any adjustment of the Exercise Price as required
herein
results in a fraction of a cent, such Exercise Price shall be
rounded up to the
nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON
ISSUANCE
OF COMMON STOCK. Except as otherwise provided in Paragraphs 4(c)
and 4(e)
hereof, if and whenever on or after the date of issuance of this
Warrant, the
Company issues or sells, or in accordance with Paragraph 4(b)
hereof is deemed
to have issued or sold, any shares of Common Stock for no
consideration or for a
consideration per share (before deduction of reasonable expenses or
commissions
or underwriting discounts or allowances in connection therewith)
less than the
Market Price on the date of issuance (a "Dilutive Issuance"), then
immediately
upon the Dilutive Issuance, the Exercise Price will be reduced to a
price
determined by multiplying the Exercise Price in effect immediately
prior to the
Dilutive Issuance by a fraction, (i) the numerator of which is an
amount equal
to the sum of (x) the number of shares of Common Stock actually
outstanding
immediately prior to the Dilutive Issuance, plus (y) the quotient
of the
aggregate consideration, calculated as set forth in Paragraph 4(b)
hereof,
received by the Company upon such Dilutive Issuance divided by the
Market Price
in effect immediately prior to the Dilutive Issuance, and (ii) the
denominator
of which is the total number of shares of Common Stock Deemed
Outstanding (as
defined below) immediately after the Dilutive Issuance.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under Paragraph 4(a)
hereof, the
following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner issues or grants any warrants, rights or options, whether or
not
immediately exercisable, to subscribe for or to purchase Common
Stock or other
securities convertible into or exchangeable for Common Stock
("Convertible
Securities") (such warrants, rights and options to purchase Common
Stock or
Convertible Securities are hereinafter referred to as "Options")
and the price
per share for which Common Stock is issuable upon the exercise of
such Options
is less than the Market Price on the date of issuance or grant of
such Options,
then the maximum total number of shares of Common Stock issuable
upon the
exercise of all such Options will, as of the date of the issuance
or grant of
such Options, be deemed to be outstanding and to have been issued
and sold by
the Company for such price per share. For purposes of the preceding
sentence,
the "price per share for which Common Stock is issuable upon the
exercise of
such Options" is determined by dividing (i) the total amount, if
any, received
or receivable by the Company as consideration for the issuance or
granting of
all such Options, plus the minimum aggregate amount of additional
consideration,
if any, payable to the Company upon the exercise of all such
Options, plus, in
the case of Convertible Securities issuable upon the exercise of
such Options,
the minimum aggregate amount of additional consideration payable
upon the
conversion or exchange thereof at the time such Convertible
Securities first
become convertible or exchangeable, by (ii) the maximum total
number of shares
of Common Stock issuable upon the exercise of all such Options
(assuming full
conversion of Convertible Securities, if applicable). No further
adjustment to
the Exercise Price will be made upon the actual issuance of such
Common Stock
upon the exercise of such Options or upon the conversion or
exchange of
Convertible Securities issuable upon exercise of such Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in any
manner issues or sells any Convertible Securities, whether or not
immediately
convertible (other than where the same are issuable upon the
exercise of
Options) and the price per share for which
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Common Stock is issuable upon such conversion or exchange is less
than the
Market Price on the date of issuance, then the maximum total number
of shares of
Common Stock issuable upon the conversion or exchange of all such
Convertible
Securities will, as of the date of the issuance of such Convertible
Securities,
be deemed to be outstanding and to have been issued and sold by the
Company for
such price per share. For the purposes of the preceding sentence,
the "price per
share for which Common Stock is issuable upon such conversion or
exchange" is
determined by dividing (i) the total amount, if any, received or
receivable by
the Company as consideration for the issuance or sale of all such
Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if
any, payable to the Company upon the conversion or exchange thereof
at the time
such Convertible Securities first become convertible or
exchangeable, by (ii)
the maximum total number of shares of Common Stock issuable upon
the conversion
or exchange of all such Convertible Securities. No further
adjustment to the
Exercise Price will be made upon the actual issuance of such Common
Stock upon
conversion or exchange of such Convertible Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there is a
change at any time in (i) the amount of additional consideration
payable to the
Company upon the exercise of any Options; (ii) the amount of
additional
consideration, if any, payable to the Company upon the conversion
or exchange of
any Convertible Securities; or (iii) the rate at which any
Convertible
Securities are convertible into or exchangeable for Common Stock
(other than
under or by reason of provisions designed to protect against
dilution), the
Exercise Price in effect at the time of such change will be
readjusted to the
Exercise Price which would have been in effect at such time had
such Options or
Convertible Securities still outstanding provided for such changed
additional
consideration or changed conversion rate, as the case may be, at
the time
initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. If, in any case, the total number of shares of Common
Stock issuable
upon exercise of any Option or upon conversion or exchange of any
Convertible
Securities is not, in fact, issued and the rights to exercise such
Option or to
convert or exchange such Convertible Securities shall have expired
or
terminated, the Exercise Price then in effect will be readjusted to
the Exercise
Price which would have been in effect at the time of such
expiration or
termination had such Option or Convertible Securities, to the
extent outstanding
immediately prior to such expiration or termination (other than in
respect of
the actual number of shares of Common Stock issued upon exercise or
conversion
thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Options or Convertible Securities are issued, granted or
sold for cash,
the consideration received therefor for purposes of this Warrant
will be the
amount received by the Company therefor, before deduction of
reasonable
commissions, underwriting discounts or allowances or other
reasonable expenses
paid or incurred by the Company in connection with such issuance,
grant or sale.
In case any Common Stock, Options or Convertible Securities are
issued or sold
for a consideration part or all of which shall be other than cash,
the amount of
the consideration other than cash receive
