Exhibit 4.1
WARRANT NO.: __________________
[FORM OF WARRANT]
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE
SECURITIES
LAWS. THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR
OTHERWISE DISPOSED
OF
EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT AND
REGISTRATION OR
QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN
AVAILABLE EXEMPTION THEREFROM. NO TRANSFER OF THE SECURITIES
REPRESENTED HEREBY
MAY BE MADE IN THE ABSENCE OF SUCH
REGISTRATION OR
QUALIFICATION
UNLESS THERE
SHALL HAVE BEEN DELIVERED TO THE ISSUER A WRITTEN
OPINION OF UNITED STATES
COUNSEL OF RECOGNIZED STANDING, IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER, TO THE EFFECT THAT SUCH
TRANSFER MAY BE MADE
WITHOUT REGISTRATION
OF
SUCH SECURITIES UNDER THE SECURITIES ACT
AND REGISTRATION OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE
COMMON STOCK OF
TOUCHSTONE RESOURCES USA, INC.
Void after
5:00 p.m. Eastern Standard Time on [________________]
This
warrant ("Warrant") is to verify that, FOR VALUE RECEIVED,
[______________________________________]
("Holder")
is entitled
to purchase,
subject to the terms and conditions hereof,
from TOUCHSTONE RESOURCES USA, INC.,
a Delaware corporation (the "Company"),
[__________________]
shares of common
stock, $.001 par value per share, of the
Company (the "Common
Stock"), at any
time during the period commencing on the
date hereof (the
"Commencement
Date")
and ending at 5:00 p.m. Eastern Standard Time on the third
anniversary of the
Commencement Date (the "Termination
Date"), at an exercise
price (the "Exercise
Price") of $1.50 per share of Common Stock.
The number of shares of Common Stock
purchasable upon exercise of this Warrant
and the Exercise Price per share shall
be subject to adjustment from time to time
upon the occurrence of certain events
as set forth below.
This
Warrant has been
issued in connection with the offering of units
comprised of convertible preferred stock and warrants being offered by the
Company pursuant to the Company's
Confidential
Private Placement Memorandum
dated February 22, 2005 (the "PPM").
The shares
of Common Stock or any
other shares or other units of stock or
other securities or property, or any combination thereof,
then receivable
upon
exercise of this Warrant, as adjusted from time to time, are
sometimes referred
to hereinafter as "Exercise Shares". The exercise price per share as
from time
to time in effect is referred to
hereinafter as the "Exercise Price".
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1.
Exercise
of Warrant; Issuance of Exercise Shares.
(a) Exercise of
Warrant. Subject to the terms hereof, the purchase
rights represented by this Warrant are
exercisable by the Holder in whole or in
part, at any time, or from time to time, by the surrender of this Warrant
and
the Notice of Exercise annexed hereto duly completed and executed
on behalf of
the Holder, at the office of the Company (or
such other office or agency of the
Company as it may designate by notice in
writing to the Holder at the address of
the Holder appearing on the books of the
Company) accompanied
by payment of the
Exercise Price in full either: (i) in cash
or by bank or certified check for the
Exercise Shares with respect to which this Warrant is exercised; (ii) by
delivery to the Company of shares of the
Company's Common Stock having a Fair
Market Value (as defined below) equal to the aggregate Exercise Price of the
Exercise Shares being purchased that Holder is the
record and beneficial
owner
of and that have been held by the Holder for at least six (6) months; (iii)
provided that the sale of the Exercise Shares are covered by an effective
registration statement, by delivering to the Company a Notice of Exercise
together with an irrevocable direction to a broker-dealer
registered under
the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to sell a
sufficient portion of the Exercise Shares and deliver the sales proceeds
directly to the Company to pay the Exercise
Price; or (iv) by any combination of
the procedures set forth in subsections (i), (ii) and (iii) of this Section
1(a). For the purposes of this Section
1(a), "Fair Market Value" shall be an
amount equal to the average of the Current
Market Value (as
defined below) for
the ten (10) days preceding the Company's
receipt of the duly executed Notice of
Exercise form attached hereto as Appendix
A.
In the
event that this
Warrant shall be duly
exercised in part
prior to
the Termination Date, the Company shall issue a
new Warrant or Warrants of like
tenor evidencing the rights of the Holder
thereof to purchase the balance of the
Exercise Shares purchasable under the
Warrant so surrendered that shall not have
been purchased.
(b) Issuance of
Exercise Shares:
Delivery of Warrant Certificate.
The Company shall, within ten (10) business
days or as soon
thereafter as is
practicable of the exercise of this Warrant,
issue in the name of
and cause to
be delivered to the Holder one or more
certificates
representing
the Exercise
Shares to which the Holder shall be
entitled upon such exercise under the terms
hereof. Such certificate or certificates
shall be deemed to have been issued and
the Holder shall be deemed to have
become the
record holder of the Exercise
Shares as of the date of the due exercise
of this Warrant.
(c) Exercise
Shares Fully Paid and Non-Assessable. The Company
agrees and covenants that all Exercise
Shares issuable upon
the due exercise of
the Warrant represented by this Warrant certificate ("Warrant Certificate")
will, upon issuance and payment therefor in
accordance with the terms hereof, be
duly authorized, validly issued, fully paid and non-assessable and free and
clear of all taxes (other than taxes which,
pursuant to Section 2
hereof, the
Company shall not be obligated to pay) or
liens, charges, and security interests
created by the Company with respect to the
issuance thereof.
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<PAGE>
(d) Reservation
of Exercise
Shares. The Company covenants that
during the term this Warrant is
exercisable,
the Company will
reserve from its
authorized and unissued Common Stock a sufficient
number of shares to
provide
for the issuance of the Exercise
Shares upon the
exercise of this Warrant, and
from time to time will take all steps necessary to amend its Articles of
Incorporation to provide sufficient
reserves of shares of
Common Stock issuable
upon the exercise of the Warrant.
(e) Fractional
Shares. The Company
shall not be required to issue
fractional shares of capital stock upon the exercise of this Warrant or to
deliver Warrant Certificates that evidence
fractional shares of
capital stock.
In the event that any fraction of an Exercise Share would, except for the
provisions of this subsection (e), be issuable upon the exercise of this
Warrant, the Company shall pay to the
Holder exercising the Warrant an amount in
cash equal to such fraction multiplied by the Current Market Value of the
Exercise Share on the last business day
prior to the date on which this Warrant
is exercised. For purposes of this subsection (e), the "Current Market
Value"
for any day shall be determined as
follows:
(i) If the
Common Stock is
admitted to quotation on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the Fair Market Value on any given
date shall be the average of the
highest bid and lowest asked prices of the Common Stock as reported for such
date or, if no bid and asked prices were
reported for such date, for the last
day preceding such date for which such
prices were reported;
(ii) If the Common
Stock is admitted to trading on a
United
States securities exchange or the NASDAQ
National Market System, the Fair Market
Value on any date shall be the closing
price reported for the Common Stock on
such exchange or system for such date or, if no
sales were reported
for such
date, for the last day preceding such date
for which a sale was reported;
(iii) If the Common
Stock is traded in the
over-the-counter
market and not on NASDAQ, the NASDAQ National Market System or any national
securities exchange, the Fair Market Value shall be the average of the
mean
between the last bid and ask prices per share as reported by the National
Quotation Bureau, Inc. or an equivalent
generally accepted reporting service, or
if not so reported, the average of the closing bid and asked prices of the
Common Stock as furnished to the Company by any member of the National
Association of Securities Dealers, Inc., selected by the Company for that
purpose; or
(iv) If the Fair
Market Value of the
Common Stock cannot
be
determined on the basis previously set
forth in this definition on the date that
the Fair Market Value is to be determined,
the Board of Directors of the Company
shall in good faith determine the Fair Market Value of
the Common Stock on such
date.
2. Payment
of Taxes.
(a)
The Company
will pay all
documentary
stamp taxes, if any,
attributable to the initial issuance of Exercise Shares upon the exercise of
this Warrant; provided, however, that the Company shall
not be required to pay
any tax or taxes which may be payable in
respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Exercise Shares
in a
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<PAGE>
name other than that of the Holder of a
Warrant Certificate surrendered upon the
exercise of a Warrant, and the Company
shall not be required to issue or deliver
such certificates unless or until the person or
persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall
have
established to the satisfaction of the
Company that such tax has been paid.
(b) Upon
exercise of this
Warrant, the Company shall have the
right (but only to the extent that the Company is required by law to withhold
any federal, state and local taxes) to require the Holder to remit to the
Company an amount sufficient to satisfy
federal, state and local tax withholding
requirements prior to the delivery of any certificate for Exercise Shares
issuable pursuant to the exercise of such
Warrant.
(c) A
Holder who is obligated to pay the Company an amount
required to be withheld under applicable tax withholding
requirements
may pay
such amount: (i) in cash; (ii) in the discretion of the Company's Chief
Executive Officer, through the delivery to the Company of previously-owned
shares of common stock of the Company
having an aggregate
current market
value
equal to the tax obligation, provided that
the previously owned shares delivered
in satisfaction of the withholding
obligations must have been held by the Holder
for at least six (6) months; (iii) in the discretion of the Company's Chief
Executive Officer, through the withholding of shares of common stock of the
Company otherwise issuable to the Holder in
connection with the
exercise of a
Warrant; or (iv) in the discretion of the
Company's Chief
Executive Officer,
through a combination of the procedures set
forth in clauses (i), (ii) and (iii)
of this Section 2(c).
3. Mutilated or Missing
Warrant Certificates. In case any Warrant shall
be mutilated, lost, stolen or destroyed, the Company may in its
discretion
issue, in exchange and substitution
for and upon
cancellation of the
mutilated
Warrant, or in lieu of and in substitution for the Warrant lost, stolen or
destroyed, a new Warrant or Warrants of like tenor and in the same
aggregate
denomination, but only: (i) in the case of loss,
theft or destruction, upon
receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrant and indemnity or bond, if requested, also
satisfactory to the Company, and (ii) in
the case of mutilation, upon surrender
of the mutilated Warrant. Applicants for such substitute Warrants shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company or its counsel may
prescribe.
4.
Rights of
Holder. The Holder shall not, by virtue of anything
contained in this Warrant or otherwise, be entitled to any right
whatsoever,
either in law or equity, of a stockholder of the Company, including without
limitation, the right to receive dividends or to vote or to consent or to
receive notice as a shareholder in respect
of the meetings of
shareholders or
the election of directors of the Company or
any other matter.
5.
Registration of
Transfers and Exchanges. The Warrant shall be
transferable, subject to the provisions of
Section 7 hereof, only upon the books
of the Company, if any, to be maintained by
it for that purpose,
upon surrender
of the Warrant Certificate to the Company at its
principal office
accompanied
(if so required by the Company) by a written instrument or instruments of
transfer in form satisfactory to the Company and duly executed by the Holder
thereof or by the duly appointed legal representative thereof or by a duly
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<PAGE>
authorized attorney and upon payment of any necessary transfer tax or other
governmental charge imposed upon such transfer.
In all cases of
transfer by an
attorney, the original letter of attorney,
duly approved,
or an official
copy
thereof, duly certified, shall be deposited
and remain with the Company. In case
of transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be
deposited and remain with the Company in its
discretion. Upon any such registration of transfer, a new Warrant shall be
issued to the transferee named in such instrument of transfer, and the
surrendered Warrant shall be canceled by
the Company.
Any Warrant may be exchanged, at the option of the Holder
thereof and
without charge, when surrendered to the Company at
its principal office,
or at
the office of its transfer agent, if any, for another Warrant
or other Warrants
of like tenor and representing in the aggregate the right to
purchase from the
Company a like number and kind of Exercise
Shares as the Warrant surrendered for
exchange or transfer, and the Warrant so surrendered shall be canceled by the
Company or transfer agent, as the case may
be.
6.
Adjustment
of Exercise Price and Number of Shares. The number of and
kind of securities purchasable upon exercise of this Warrant and
the Exercise
Price shall be subject to adjustment from
time to time as follows:
(a)
Subdivisions,
Combinations and Other Issuances. If the Company
shall at any time prior to the expiration of this Warrant
subdivide its
Common
Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or any
preferred stock as a dividend with
respect to any shares of its Common
Stock, then the number of Exercise
Shares
issuable on the exercise of this
Warrant shall forthwi
