EXHIBIT 1
NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO
WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
PREVENTION INSURANCE.COM, INC.
Warrant to Purchase Common Stock
Warrant No.: A-5
Number of Shares of Common Stock:
15,000,000
Date of Issuance: May 29,
2009
PREVENTION
INSURANCE.COM, INC., a Nevada corporation (the "Company"), hereby
certifies that, for $15,000, the receipt and sufficiency of which
are hereby acknowledged, Paragon Capital LP and/or its affiliates
and/or designees, the registered holder hereof or its permitted
assigns (the "Holder"), is entitled, subject to the terms set forth
below, to purchase from the Company, at the Exercise Price (as
defined below) then in effect, upon surrender of this Warrant, to
purchase Common Stock (including any warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, the
"Warrant"), at any time or times on or after the date hereof, but
not after 11:59 p.m., New York time, on the Expiration Date (as
defined below), 15,000,000 fully paid nonassessable shares of
Common Stock (as defined below) (the "Warrant Shares"). Except as
otherwise defined herein, capitalized terms in this Warrant shall
have the meanings set forth in Section 17. This Warrant is
the Warrant to purchase Common Stock issued pursuant to a Stock
Purchase Agreement dated as of May 29, 2009 (the "Closing Date"),
by and between the Company and the Holder (the
"Agreement").
Section
1. Exercise of Warrant.
(a)
Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in
Section 1(f)), this Warrant may be exercised by the Holder on any
day on or after the date hereof, in whole or in part, by (i)
delivery of a written notice, in the form attached hereto as
Exhibit A (the "Exercise Notice"), of the Holder's election to
exercise this Warrant and (ii) (A) payment to the Company of
an amount equal to the applicable Exercise Price
multiplied by the number of Warrant Shares as to which this Warrant
is being exercised (the "Aggregate Exercise Price") in cash or wire
transfer of immediately available funds or (B) by notifying the
Company that this Warrant is being exercised pursuant to a Cashless
Exercise (as defined in Section 1(d)). The Holder shall not be
required to deliver the original Warrant in order to effect an
exercise hereunder. Execution and delivery of the Exercise Notice
with respect to less than all of the Warrant Shares shall have the
same effect as cancellation of the original Warrant and issuance of
a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares. On or before the first Business Day following
the date on which the Company has received each of the Exercise
Notice and the Aggregate Exercise Price (or notice of a
Continued-
Cashless Exercise) (the "Exercise
Delivery Documents"), the Company shall transmit an acknowledgment
of confirmation of receipt of the Exercise Delivery Documents to
the Holder and the Company's transfer agent (the "Transfer Agent").
On or before the third Business Day following the date on which the
Company has received all of the Exercise Delivery Documents, the
Company shall (X) issue and deliver to the address specified in the
Exercise Notice, a certificate, registered in the name of the
holder of this Warrant or its designee, for the number of shares of
Common Stock to which the holder of this Warrant is entitled
pursuant to such exercise, or (Y) provided that the Transfer Agent
is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer Program, upon the request of the
Holder, credit such aggregate number of shares of Common Stock to
which the Holder is entitled pursuant to such exercise to the
Holder's or its designee's balance account with DTC through its
Deposit Withdrawal Agent Commission system. Upon delivery of the
Exercise Notice and Aggregate Exercise Price referred to in clause
(ii)(A) above or notification to the Company of a Cashless Exercise
referred to in Section 1(d), the Holder shall be deemed for all
corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date of delivery of the certificates
evidencing such Warrant Shares. If this Warrant is submitted in
connection with any exercise pursuant to this Section 1(a) and the
number of Warrant Shares represented by this Warrant submitted for
exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as
practicable and in no event later than three Business Days after
any exercise and at its own expense, issue a new Warrant (in
accordance with Section 8(d)) representing the right to purchase
the number of Warrant Shares purchasable immediately prior to such
exercise under this Warrant, less the number of Warrant Shares with
respect to which this Warrant is exercised. No fractional shares of
Common Stock are to be issued upon the exercise of this Warrant,
but rather the number of shares of Common Stock to be issued shall
be rounded up to the nearest whole number. The Company shall pay
any and all taxes which may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this
Warrant.
(b)
Exercise Price. For purposes of this Warrant, "Exercise Price"
means $0.005, subject to adjustment as provided herein.
(c)
Company's Failure to Timely Deliver Securities. If the Company
shall fail for any reason or for no reason to issue to the Holder
within three Business Days of receipt of the Exercise Delivery
Documents, a certificate for the number of shares of Common Stock
to which the Holder is entitled and register such shares of Common
Stock on the Company's share register or to credit the Holder's
balance account with DTC for such number of shares of Common Stock
to which the Holder is entitled upon the Holder's exercise of
this Warrant, and if on or after such Business Day the
Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the
Holder of shares of Common Stock issuable upon such exercise that
the Holder anticipated receiving from the Company, then the Company
shall, within three Business Days after the Holder's request and in
the Holder's discretion, either (i) pay cash to the Holder in an
amount equal to the Holder's total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased (the "Buy-In Price"), at which point the Company's
obligation to deliver such certificate (and to issue such shares of
Common Stock) shall terminate, or (ii) promptly honor its
obligation to deliver to the Holder a certificate or certificates
representing such shares of Common Stock and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Common Stock, times (B)
the Closing Bid Price on the date of exercise.
(d)
Cashless Exercise. Notwithstanding anything contained herein to the
contrary, the Holder may, in its sole discretion, exercise this
Warrant in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price (a "Cash Exercise"),
elect instead to receive upon such exercise the "Net Number" of
shares of Common Stock determined according to the following
formula (a "Cashless Exercise"):
(A x B) - (A x C)
Net Number =
-------------------------
B
For
purposes of the foregoing formula:
A
= the total number of Warrant Shares with respect to which this
Warrant is then being exercised.
B
= the Closing Sale Price of the shares of Common Stock (as reported
by Bloomberg) on the date immediately preceding the date of the
Exercise Notice.
C
= the Exercise Price then in effect for the applicable Warrant
Shares at the time of such exercise.
(e)
Disputes. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares,
the Company shall promptly issue to the Holder the number of
Warrant Shares that are not disputed and resolve such dispute in
accordance with Section 14.
(f)
Limitations on Exercise; Beneficial Ownership. The Holder shall not
have any restriction on exercise of this Warrant.
Section
2. The Exercise Price and the number of Warrant Shares shall be
adjusted from time to time as follows:
(a)
Adjustment upon Issuance of shares of Common Stock. If and whenever
on or after the Closing Date the Company issues or sells, or in
accordance with this Section 2 is deemed to have issued or sold,
any shares of Common Stock (including the issuance or sale of
shares of Common Stock owned or held by or for the account of the
Company, but excluding shares of Common Stock deemed to have been
issued or sold by the Company in connection with any Excluded
Security) for a consideration per share (the "New Issuance Price")
less than a price (the "Applicable Price") equal to the Exercise
Price in effect immediately prior to such issue or sale or deemed
issuance or sale (the foregoing a "Dilutive Issuance"), then
immediately after such Dilutive Issuance, the Exercise Price then
in effect shall be reduced to an amount equal to the New Issuance
Price. Upon each such adjustment of the Exercise Price hereunder,
the number of Warrant Shares shall be adjusted to the number of
shares of Common Stock determined by multiplying the Exercise Price
in effect immediately prior to such adjustment by the number of
Warrant Shares acquirable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment. For purposes of
determining the adjusted Exercise Price under this Section 2(a),
the following shall be applicable:
(i)
Issuance of Options. If the Company in any manner grants any
Options and the lowest price per share for which one share of
Common Stock is issuable upon the exercise of any such Option or
upon conversion, exercise or exchange of any Convertible Securities
issuable upon exercise of any such Option is less than the
Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company
at the time of the granting or sale of such Option for such price
per share. For purposes of this Section 2(a)(i), the "lowest price
per share for which one share of Common Stock is issuable upon
exercise of such Options or upon conversion, exercise or exchange
of such Convertible Securities" shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by
the Company with respect to any one share of Common Stock upon the
granting or sale of the Option, upon exercise of the Option and
upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option. No further adjustment of the
Exercise Price shall be made upon the actual issuance of such
shares of Common Stock or of such Convertible Securities upon the
exercise of such Options or upon the actual issuance of such shares
of Common Stock upon conversion, exercise or exchange of such
Convertible Securities.
(ii)
Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the lowest price per
share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company
at the time of the issuance or sale of such Convertible Securities
for such price per share. For the purposes of this Section
2(a)(ii), the "lowest price per share for which one share of Common
Stock is issuable upon the conversion, exercise or exchange" shall
be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Company with respect to one share of
Common Stock upon the issuance or sale of the Convertible Security.
No further adjustment of the Exercise Price shall be made upon the
actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities, and if any
such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustment of this Warrant has
been or is to be made pursuant to other provisions of this Section
2(a), no further adjustment of the Exercise Price shall be made by
reason of such issue or sale.
(iii)
Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any,
payable upon the issue, conversion, exercise or exchange of any
Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exercisable or exchangeable for
shares of Common Stock increases or decreases at any time, the
Exercise Price and the number of Warrant Shares in effect at the
time of such increase or decrease shall be adjusted to the Exercise
Price and the number of Warrant Shares which would have been in
effect at such time had such Options or Convertible Securities
provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the
case may be, at the time initially granted, issued or sold. For
purposes of this Section 2(a)(iii), if the terms of any Option or
Convertible Security that was outstanding as of the date of
issuance of this Warrant are increased or decreased in the manner
described in the immediately preceding sentence, then such Option
or Convertible Security and the shares of Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such increase or
decrease. No adjustment pursuant to this Section 2(a) shall be made
if such adjustment would result in an increase of the Exercise
Price then in effect or a decrease in the number of Warrant
Shares.
(iv)
Calculation of Consideration Received. In case any Option is issued
in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which no
specific consideration is allocated to such Options by the parties
thereto, the Options will be deemed to have been issued for a
consideration of $0.01. If any shares of Common Stock, Options or
Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefore will
be deemed to be the net amount received by the Company therefore.
If any shares of Common Stock, Options or Convertible Securities
are issued or sold for a consideration other than cash, the amount
of such consideration received by the Company will be the fair
value of such consideration, except where such consideration
consists of securities, in which case the amount of consideration
received by the Company will be the Closing Sale Price of such
security on the date of receipt. If any shares of Common Stock,
Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the
Company is the surviving entity, the amount of consideration
therefore will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined jointly by the
Company and the Holder. If such parties are unable to reach
agreement within ten days after the occurrence of an event
requiring valuation (the "Valuation Event"), the fair value of such
consideration will be determined within five Business Days after
the tenth day following the Valuation Event by an independent,
reputable appraiser selected by the Holder and approved by the
Company. The determination of such appraiser shall be final and
binding upon all parties absent manifest error and the fees and
expenses of such appraiser shall be borne by the
Company.
(v)
Record Date. If the Company takes a record of
the holders of shares of Common Stock for the purpose
of entitling them (A) to receive a dividend or other
distribution payable in shares of Common Stock, Options
or in Convertible Securities or (B) to subscribe for
or purchase shares of Common Stock, Options or
Convertible Securities, then such record date will be deemed to be
the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of
the granting of such right of subscription or purchase, as the case
may be.
(b)
Adjustment upon Subdivision or Combination of shares of Common
Stock. If the Company at any time on or after the Closing Date
subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common
Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately
increased. If the Company at any time on or after the Closing Date
combines (by combination, reverse stock split or otherwise) one or
more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately
prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any
adjustment under this Section 2(b) shall become effective at the
close of business on the date the subdivision or combination
becomes effective.
(c)
Other Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with
equity features), then the Company's Board of Directors will make
an appropriate adjustment in the Exercise Price so as to protect
the rights of the Holder; provided that no such adjustment pursuant
to this Section 2(c) will increase the Exercise Price or decrease
the number of Warrant Shares as otherwise determined pursuant to
this Section 2.
Section
3. Rights upon Distribution of Assets. If the Company shall declare
or make any dividend or other distribution of its assets (or rights
to acquire its assets) to holders of shares of Common Stock, by way
of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction)
(a "Distribution"), at any time after the issuance of this Warrant,
then, in each such case:
(a)
any Exercise Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders
of shares of Common Stock entitled to receive the Distribution
shall be reduced, effective as of th
