WARRANT TO PURCHASE COMMON STOCK OF ZONE MINING LIMITEDWarrant Agreement |
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WARRANT NO.: 2
WARRANT TO PURCHASE COMMON STOCK
OF ZONE MINING LIMITED
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE. THE SECURITIES REPRESENTED HEREBY HAVE BEEN TAKEN BY THE
REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR
DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED
OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT
SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF
1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER OR OTHER
APPLICABLE SECURITIES LAWS.
WHEREAS ,
on October 20, 2006, Zone Mining Limited, a Nevada corporation (the
“Company”), issued to Trident Growth Fund, L.P., a
Delaware limited partnership, a warrant (the “Original
Warrant”) to purchase 100,000 shares of the Company's common
stock, $0.00001 par value per share (“Common Stock”),
at an initial exercise price of $1.25 per share;
WHEREAS ,
on October 24, 2006, the Company effected a reverse split of Common
Stock pursuant to which the Company's stockholders received two
shares of common stock for every three shares of common stock
owned, as a result of which the shares issuable and the exercise
price under the Original Warrant were adjusted to 66,667 shares and
$1.87, respectively; and
WHEREAS ,
the Company and Trident desire to amend and restate the Original
Warrant to, among other things, adjust the exercise price and the
number of shares of Common Stock issuable upon exercise of the
Original Warrant.
NOW ,
THEREFORE ,
in consideration of the foregoing premises, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the
parties hereto amend and restate the Original Warrant as
follows:
This
WARRANT (“Warrant”) is to verify that, FOR VALUE
RECEIVED,
Trident Growth fund, LP (“Holder”)
is entitled to purchase, subject to the terms and conditions
hereof, from
Zone Mining Limited ,
a Nevada corporation (the “Company”), 100,000 shares of
common stock, $.00001 par value per share, of the Company (the
“Common Stock”), at any time during the period
commencing at 9:00 a.m., Eastern Standard Time on November 7, 2006
(the “Commencement Date”) and ending at 5:00 p.m.
Eastern Standard Time on the third (3
rd )
anniversary of the Commencement Date (the “Termination
Date”), at an exercise price (the “Exercise
Price”) of $1.00 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.
1
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.”
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.
2
(d)
Reservation of Exercise Shares .
The Company covenants that during the term that 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 certificate 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 Exercise Shares are traded in the over-the-counter market
and not on any national securities exchange and not on the
NASDAQ National Market System or NASDAQ Small Cap Market
(together, the “NASDAQ Reporting System”), the
average of the mean between the last bid and asked 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
for an Exercise Share as furnished to the Company by any
member of the National Association of Securities Dealers,
Inc., selected by the Company for that purpose;
or
(ii)
if
the Exercise Shares are listed or traded on a national
securities exchange or the NASDAQ Reporting System, the
closing price on the principal national securities exchange on
which they are so listed or traded, on the NASDAQ Reporting
System, as the case may be, on the last business day prior to
the date of the exercise of this Warrant. The closing price
referred to in this clause (ii) shall be the last reported
sales price or, in case no such reported sale takes place on
such day, the average of the reported closing bid and asked
prices, in either case on the national securities exchange on
which the Exercise Shares are then listed or in the NASDAQ
Reporting System; or
(iii)
if
no such closing price or closing bid and asked prices are
available, as determined in any reasonable manner as may be
prescribed by the Board of Directors of the
Company.
2.
Payment of Taxes .
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 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.
3
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 them 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 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 change, 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 Shares and Exercise Price
.
The Exercise Price and the number and kind of Exercise Shares
purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events
as hereinafter provided. The Exercise Price in effect at any time
and the number and kind of securities purchasable upon exercise of
each Warrant shall be subject to adjustment as
follows:
4
(a)
In
case of any consolidation or merger of the Company with
another corporation (other than a merger with another
corporation in which the Company is the surviving corporation
and which does not result in any reclassification or change --
other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision or combination -- of outstanding Common Stock
issuable upon such exercise), the rights of the Holder of this
Warrant shall be adjusted in the manner described
below:
(i)
In
the event that the Company is the surviving corporation or is
merged into a wholly owned subsidiary for the purpose of
incorporating the Company in a different jurisdiction, this
Warrant shall, without payment of additional consideration
therefor, be deemed modified so as to provide that the Holder
of this Warrant, upon the exercise thereof, shall procure, in
lieu of each share of Common Stock theretofore issuable upon
such exercise, the kind and amount of shares of stock, other
securities, money and property receivable upon such
reclassification, change, consolidation or merger by the
holder of each share of Common Stock, had exercise of this
Warrant occurred immediately prior to such
reclassification,
change, consolidation or merger. This Warrant (as adjusted) shall
be deemed to provide for further adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided
for in this Section 6. The provisions of this clause (i) shall
similarly apply to successive reclassifications, changes,
consolidations and mergers.
(ii)
In
the event that the Company is not the surviving corporation
(except in the case of a merger of the Company into a wholly
owned subsidiary for the purpose of incorporating the Company
in a different jurisdiction), Holder shall be given at least
fifteen (15) days prior written notice of such transaction and
shall be permitted to exercise this Warrant, to the extent it
is exercisable as of the date of such notice, during this
fifteen (15) day period. Upon expiration of such fifteen (15)
day period, this Warrant and all of Holder's rights hereunder
shall terminate.
(b)
If
the Company, at any time while this Warrant, or any portion
thereof, remains outstanding and unexpired, by
reclassification of securities or otherwise, shall change any
of the securities as to which purchase rights under this
Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind
of securities as would have been issuable as the result of
such change with respect to the securities that were subject
to the purchase rights under this Warrant immediately prior to
such reclassification or other change and the Exercise Price
therefor shall be appropriately adjusted, all subject to
further adjustment as provided in this Section 6.
(c)
In
case the Company shall (i) pay a dividend or make a
distribution on its shares of Common Stock in shares of Common
Stock, (ii) subdivide or classify its outstanding Common Stock
into a greater number of shares, or (iii) combine or
reclassify its outstanding Common Stock into a smaller number
of shares, the Exercise Price in effect at the time of the
record date for such dividend or distribution or of the
effective date of such subdivision, combination or
reclassification, shall be proportionally adjusted so that the
Holder of this Warrant exercised after such date shall be
entitled to receive the aggregate number and kind of shares
that, if this Warrant had been exercised by such Holder
immediately prior to such date, he would have owned upon such
exercise and been entitled to receive upon such dividend,
subdivision, combination or reclassification. For example, if
the Company declares a 2 for 1 stock dividend or stock split
and the Exercise Price immediately prior to such event was
$2.00 per share, the adjusted Exercise Price immediately after
such event would be $1.00 per share. Such adjustment shall be
made successively whenever any event listed above shall occur.
Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to this subsection (c), the
number of Exercise Shares purchasable upon exercise of this
Warrant shall simultaneously be adjusted by multiplying the
number of Exercise Shares initially issuable upon exercise of
this Warrant by the Exercise Price in effect on the date
hereof and dividing the product so obtained by the Exercise
Price, as adjusted.
5
(d)
In
the event that at any time, as a result of an adjustment made
pursuant to subsection (a), (b) or (c) above, the Holder of
this Warrant thereafter shall become entitled to receive any
Exercise Shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock
contained in subsections (a), (b) or (c) above.
(e)
Irrespective
of any adjustments in the Exercise Price or the number or kind
of Exercise Shares purchasable upon exercise of this Warrant,
Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are
stated in the similar Warrants initially issuable pursuant to
this Warrant.
(f)
Whenever
the Exercise Price shall be adjusted as required by the
provisions of the foregoing Section 6, the Company shall
forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office and with its stock transfer
agent, if any, an officer's certificate showing the adjusted
Exercise Price determined as herein provided, setting forth in
reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of
Common Stock, if any, and such other facts as shall be
necessary to show the reason for and the manner of computing
such adjustment. Each such officer's certificate shall be made
available at all reasonable times for inspection by the holder
and the Company shall, forthwith after each such adjustment,
mail a copy by certified mail of such certificate to the
Holder.
(g)
All
calculations under this Section 6 shall be made to the nearest
cent or to the nearest one one-hundredth (1/100th) of a share,
as the case may be.
7.
Investment Intent, Exercise Restrictions and Transfer
Restrictions .
(a)
Neither
this Warrant nor any Exercise Share may be offered for sale or
sold, or otherwise transferred or sold in any transaction
which would constitute a sale thereof within the meaning of
the Securities Act of 1933, as amended (the "1933 Act"),
unless (i) such security has been registered for sale under
the 1933 Act and registered or qualified under applicable
state securities laws relating to the offer and sale of
securities, or (ii) exemptions from the registration
requirements of the 1933 Ac
