THIS WARRANT
AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
WARRANT TO PURCHASE COMMON STOCK
OF MBI FINANCIAL, INC.
Void after April 17,
2012
This Warrant is
issued to
(the “Holder”) by MBI Financial, Inc., a Nevada
corporation (the “Company”), on April 17, 2007
(the “Warrant Issue Date”).
1.
Purchase Rights . Subject to the terms and conditions
hereinafter set forth, the Holder is entitled, upon surrender of
this Warrant at the principal office of the Company (or at such
other place as the Company shall notify the holder hereof in
writing), to purchase from the Company up to 2,000,000 fully paid
and nonassessable shares (the “Shares”) of Common
Stock, $ 0.0167 par value per share, of the Company (the
“Common Stock”). The number of shares of Common Stock
issuable pursuant to this Section 1 shall be subject to
adjustment from time to time pursuant to Section 9
hereof.
2.
Exercise Price . The purchase price for the Shares shall be
$0.40 per share, subject to adjustment from time to time pursuant
to Section 9 hereof (the “Exercise
Price”).
3.
Exercise Period . This Warrant shall be exercisable
commencing on the Warrant Issue Date and shall expire and be of no
further force or effect at 4:30 pm (Dallas time) on April 17,
2012 (the “Expiration Date”).
4.
Method of Exercise . While this Warrant remains outstanding
and exercisable in accordance with Section 3 above, the Holder
may exercise, in whole or in part, the purchase rights evidenced
hereby. Such exercise shall be effected by: (a) the surrender
of the Warrant, together with a duly executed copy of the form of
Notice of Election attached hereto, to the Secretary of the Company
at its principal office; and (b) the payment to the Company of
an amount equal to the aggregate Exercise Price for the number of
Shares being purchased by either, at the Holder’s option,
(i) certified check or bank draft, (ii) cancellation of
principal or interest owed to the Holder by the Company, or
(iii) number of shares of Common Stock having an aggregate
fair market value equal to or greater than the respective Exercise
Price for all Warrant Shares then being exercised. “Fair
Market Value” shall mean (a) if the Shares are then
listed or quoted on a national securities exchange, the last
reported closing price per Share through such exchange, as
applicable, (b) if subclause (a) is not applicable and
the Shares are then quoted on the OTC Bulletin Board, the average
of the last reported closing bid and ask prices per Share on the
OTC Bulletin Board, (c) if neither subclause (a) nor
subclause (b) above are applicable and prices for the Shares
are reported in the “Pink Sheets” published by the
National Quotation Bureau (or a similar organization or entity),
the average of the last reported closing bid and ask prices per
Share as listed in the Pink Sheets, and (d) if neither
subclause (a), (b) nor subclause (c) above is applicable,
the value determined by the board of directors of the Company in
good faith.
5.
Accredited Investor . On the date hereof, the Holder is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act of 1933, as amended (the “Securities
Act”). Immediately prior to any exercise of this Warrant
pursuant to Section 4 hereof, the Holder shall provide the
Company with a representation that it is still an “accredited
investor” as defined in Rule 501(a) under the Securities
Act.
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6.
Investment Representation . Unless the Shares are issued to
the Holder in a transaction registered under applicable federal and
state securities laws, by its execution hereof, the Holder
represents and warrants to the Company that all Shares which may be
purchased hereunder will be acquired by the Holder for investment
purposes for its own account and not with any present intent for
resale or distribution in violation of federal or state securities
laws. Unless the Shares are issued to the Holder in a transaction
registered under the applicable federal and state securities laws,
all certificates issued with respect to the Shares shall bear the
appropriate restrictive investment legend and shall be held
indefinitely, unless they are subsequently registered under the
applicable federal and state securities laws or the Holder obtains
an opinion of counsel, in form and substance satisfactory to the
Company and its counsel, that such registration is not
required.
7.
Certificates for Shares . Upon the exercise of the purchase
rights evidenced by Section 1 of this Warrant, one or more
certificates for the number of Shares so purchased shall be issued
as soon as practicable thereafter (with appropriate restrictive
legends, if applicable), and in any event within ten
(10) business days of the delivery of the Notice of
Election.
8.
Issuance of Shares . The Company covenants that the Shares,
when issued pursuant to the exercise of this Warrant under
Section 4 hereof, will be duly and validly issued, fully paid
and nonassessable.
9.
Anti-dilution Adjustments . The Exercise Price and the
number of shares (or amount of other securities or property)
purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the occurrence of certain events
described in this Section 9. This Section 9 shall not
require an adjustment to the Exercise Price in connection with any
dividends paid in cash out of the retained earnings of the Company
in the ordinary course of business of the Company or upon any sale
of shares of Common Stock for a per share price that is less than
the Exercise Price.
(a)
Subdivision or Combination of Stock . If the Company shall
effect a stock dividend or stock split or subdivide its outstanding
shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such stock dividend,
stock split or subdivision shall be proportionately reduced, and
conversely, if the Company shall effect a reverse stock split or
combine its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to
such reverse stock split or combination shall be proportionately
increased. Upon each adjustment of the Exercise Price, the Holder
of this Warrant shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares
obtained by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment, and dividing
the product thereof by the Exercise Price resulting from such
adjustment.
(b)
Dividends in Common Stock, Other Securities, Property,
Reclassifications . If the holders of Common Stock (or any
shares of stock or other securities at the time receivable upon the
exercise of this Warrant) shall have received or become entitled to
receive, without payment therefor,
(i) Common
Stock or any shares of stock or other securities that are directly
or indirectly convertible into or exchangeable for Common Stock, or
any rights or options to subscribe for, purchase or otherwise
acquire any of the foregoing by way of dividend or other
distribution (other than shares of Common Stock issued as a stock
dividend, stock split or subdivision, adjustments in respect of
which shall be covered by the terms of Section 9(a)
hereof),
(ii) any
cash paid or payable otherwise than as a cash dividend paid out of
the retained earnings of the Company in the ordinary course of
business (other than a liquidation or dissolution, which shall be
covered by the terms of Section 9(d) hereof), or
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(iii) additional
shares of Common Stock or additional stock or other securities or
property (including cash) by way of spin-off, split-up,
reclassification, recapitalization, reorganization, combination of
shares or similar corporate rearra
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