EXHIBIT 4.1
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED
UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER,
SALE OR TRANSFER.
AN
INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
HOLDERS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND
ASSESSMENT OF THE RISKS INVOLVED.
|
Warrant
to Purchase
|
|
|
|
900,000 shares
|
|
Warrant
Number ____
|
Warrant to Purchase Common Stock
of
Alternative Construction Technologies, Inc.
THIS
CERTIFIES that
[[
BRIDGEPOINTE MASTER FUND LTD
., a Cayman Islands Exempted Company]] or
any subsequent holder hereof (
“Holder” )
has the right to purchase from
Alternative Construction Technologies, Inc.
,
a Florida corporation (the
“Company” ),
up to Nine Hundred Thousand (900,000
) fully
paid and nonassessable shares, of the Company's common stock,
$0.0001 par value per share (
“Common Stock” ),
subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time during
the Term (as defined below).
Holder
agrees with the Company that this Warrant to Purchase Common
Stock of the Company (this
“Warrant” or
this
“Agreement” )
is issued and all rights hereunder shall be held subject to all of
the conditions, limitations and provisions set forth
herein.
1.
Date of Issuance and Term.
This
Warrant shall be deemed to be issued on May 8, 2008 (
“Date of Issuance” ).
The term of this Warrant begins on the Date of Issuance and ends at
5:00 p.m., New York City time, on the date that is
five (5) years
after the Date of Issuance (the
“Term” ).
This Warrant was issued in conjunction with the Line of Credit
Agreement by and between the Company and the Holder of the Company
of date even herewith (the
“Line of Credit Agreement” ).
Notwithstanding
anything to the contrary herein, the applicable portion of
this Warrant shall not be exercisable during any time that,
and only to the extent that, the number of shares of Common
Stock to be issued to Holder upon such Exercise (as defined in
Section 2(a)), when added to the number of shares of Common
Stock, if any, that the Holder otherwise beneficially owns
(outside of this Warrant, and not including any other warrants
or securities of Holder’s having a provision
substantially similar to this paragraph) at the time of such
Exercise, would exceed 4.99% (the
“Maximum Percentage” )
of the number of shares of Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock
issuable upon Exercise of this Warrant held by the Holder, as
determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the
“Beneficial Ownership Limitation”
).
The Beneficial Ownership Limitation shall be conclusively satisfied
if the applicable Notice of Exercise includes a signed
representation by the Holder that the issuance of the shares in
such Notice of Exercise will not violate the Beneficial Ownership
Limitation.
Notwithstanding
the above, in the event that the Company receives any
purchase, tender or exchange offer or any offer to enter into
a merger with another entity whereby the Company shall not be
the surviving entity (an
“Offer” ),
then the Maximum Percentage shall be increased (but not decreased)
to 9.99%, and “4.99%” shall be automatically revised
immediately after such offer to read “9.99%” each place
it occurs in this Section 1. The Beneficial Ownership Limitation
provisions of this Section 1 may be waived by such Holder, at the
election of such Holder, upon not less than 61 days’ prior
notice to the Company, to change the Beneficial Ownership
Limitation to any amount not in excess of 9.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon Exercise of
this Warrant held by the Holder and the Beneficial Ownership
Limitation shall continue to apply. Upon such a change by a Holder
of the Beneficial Ownership Limitation from such 4.99% limitation
to such 9.99% limitation, the Beneficial Ownership Limitation may
not be further waived by such Holder, provided that, if an Event of
Default occurs, thereafter the Beneficial Ownership Limitation
provisions of this Section 1 may be waived by such Holder, at the
election of such Holder, upon not less than 61 days’ prior
notice to the Company, to change the Maximum Percentage to any
other percentage (and not limited to 9.99%) of the number of shares
of the Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock upon Exercise of the
Warrants held by the Holder and the provisions of this Section 1
shall continue to apply. The limitations on Exercise set forth in
this subsection are referred to as the
“Beneficial Ownership Limitations.”
The
provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this
Section 1 to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Beneficial
Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such
limitation.
Notwithstanding
the above, Holder shall retain the option to either Exercise
or not Exercise its option(s) to acquire Common Stock pursuant
to the terms hereof after an Offer, and, in the event of a
cash Exercise following a tender offer, the Exercise Price per
share that would otherwise be due shall instead be offset
against the tender offer price per share to be received by the
Holder, provided, however, that in the event a tender offer is
not completed, Holder, at its option may either (i) complete
any Exercise that was initiated after the Offer by promptly
paying to the Company the Exercise Price that would have been
due at the time the Warrant was Exercised, or (ii) cancel such
Exercise by providing written notice to the Company, in which
case such Exercise shall be deemed void ad initio and the
Company shall immediately refund to Holder any and all amounts
paid to the Company in respect of such Exercise.
Maximum Exercise of Rights .
In the event the Holder notifies the Company that the Exercise of
the rights described herein would result in the issuance of an
amount of Common Stock of the Company that would exceed the maximum
amount that may be issued to a Holder calculated in the manner
described above, then the issuance of such additional shares of
Common Stock of the Company to such Holder will be deferred in
whole or in part until such time as such Holder notifies the
Company that such Holder is able to beneficially own such Common
Stock without exceeding the maximum amount calculated in the manner
described herein. The determination of when such Common Stock may
be issued shall be made by each Holder as to only such
Holder.
2.
Exercise .
(a) Manner of Exercise. During
the Term, this Warrant may be Exercised as to all or any lesser
number of full shares of Common Stock covered hereby (the
“Warrant Shares” or
the
“Shares” )
upon surrender of this Warrant, with the Notice of Exercise Form
attached hereto as
Exhibit A (the
“Notice of Exercise” )
duly completed and executed, together with the full Exercise Price
(as defined below, which may be satisfied by either a Cash Exercise
or a Cashless Exercise, as each is defined below) for each share of
Common Stock as to which this Warrant is Exercised, at the office
of the Company, Alternative Construction Technologies, Inc., Attn:
Michael W. Hawkins, CEO & President, 2910 Bush Drive,
Melbourne, FL 32935, United States, Phone: 321-421-6601, Fax:
321-308-0320, or at such other location as the Company may then be
located or such other office or agency as the Company may designate
in writing, by overnight mail, by facsimile (such surrender and
payment of the Exercise Price hereinafter called the
“Exercise” of
this Warrant). In the case of a Cashless Exercise, the Exercise
Price is deemed to have been delivered upon the Holder’s
delivery of a Notice of Exercise to the Company.
(b) Date of Exercise. The
“Date of Exercise” of
the Warrant shall be defined as the date that a copy of the Notice
of Exercise Form attached hereto as Exhibit A, completed and
executed, is sent by facsimile to the Company or its transfer agent
(
“Transfer Agent” )
(including but not limited to a scanned “PDF” file
which is delivered as an attachment to an e-mail to the Company),
provided that the original Warrant (if delivery of the original
Warrant is required pursuant to Section 2(l) hereof) and Notice of
Exercise Form are received by the Company and the Exercise Price is
satisfied, each as soon as practicable thereafter. Alternatively,
the Date of Exercise shall be defined as the date the original
Notice of Exercise Form is received by the Company, if Holder has
not sent advance notice by facsimile.
Upon delivery of the Notice
of
Exercise Form to the Company by facsimile or otherwise, subject to
the Beneficial Ownership Limitations, 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 such Warrant Shares are
credited to the Holder's DTC account or the date of delivery of the
certificates evidencing such Warrant Shares as the case may be.
The Company shall deliver any objection to any Notice of
Exercise within 1 Business Day of receipt of such notice, after
which it shall be deemed to have waived its right to object. In the
event of any dispute or discrepancy, the records of the Holder
shall be controlling and determinative in the absence of manifest
error.
(c) Delivery of Common Stock Upon Exercise.
Within 3 Trading Days from the Date of Exercise (the
“Warrant Shares Delivery Deadline”
),
the Company shall issue and deliver (or cause its transfer agent so
to issue and deliver) in accordance with the terms hereof to or
upon the order of the Holder that number of shares of Common Stock
(
“Exercise Shares” )
for the portion of this Warrant converted as shall be determined in
accordance herewith. Upon the Exercise of this Warrant or any part
thereof, the Company shall, at its own cost and expense, take all
necessary action, including obtaining and delivering, an opinion of
counsel to assure that the Company's transfer agent shall issue
stock certificates in the name of Holder (or its nominee) or such
other persons as designated by Holder and in such denominations to
be specified at Exercise representing the number of shares of
Common Stock issuable upon such Exercise. The Company warrants that
no instructions other than these instructions have been or will be
given to the transfer agent of the Company's Common Stock and that,
unless waived by the Holder, the Exercise Shares will be
free-trading, and freely transferable, and will not contain a
legend restricting the resale or transferability of the Exercise
Shares if the Unrestricted Conditions (as defined below) are met.
If the Company fails for any reason to deliver to the Holder
certificates evidencing the Warrant Shares subject to a Notice of
Exercise by the Warrant Shares Delivery Deadline (a
“Warrant Shares Delivery Failure”
),
the Company shall pay to the Holder, in cash, as liquidated damages
and not as a penalty, for each $1,000 of Warrant Shares subject to
such exercise (based on the VWAP (as defined below) of the Common
Stock on the date of the applicable Notice of Exercise), $10 per
Trading Day (increasing to $20 per Trading Day on the fifth Trading
Day after such liquidated damages begin to accrue) for each Trading
Day after such Warrant Shares Delivery Deadline until such
certificates are delivered (
“Warrant Shares Delivery Failure
Payments” ).
(d) Payment of Accrued Warrant Shares Delivery Failure
Payments. The
Company shall pay any payments incurred under this Section in cash,
on or before the fifth (5th) day of each month following a month in
which they accrue. Warrant Shares Delivery Failure Payments are in
addition to any Shares that the Holder is entitled to receive upon
Exercise of this Warrant. Nothing herein shall limit the Holder's
right to pursue actual damages (to the extent in excess of the
Warrant Shares Delivery Failure Payments) for the Company's Warrant
Shares Delivery Failure, and the Holder shall have the right to
pursue all remedies available at law or in equity (including a
decree of specific performance and/or injunctive
relief).
(e) Maximum Interest Rate. Nothing
contained herein or in any document referred to herein or delivered
in connection herewith shall be deemed to establish or require the
payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of
interest or dividends required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in
excess of such maximum shall be credited against amounts owed by
the Company to the Holder and thus refunded to the
Company.
(f)
Revocation of Exercise Upon
Delivery Failure. In
addition to any other remedies which may be available to the
Holder, in the event that the Company fails for any reason to
effect delivery of the Exercise Shares by the Warrant Shares
Delivery Deadline, the Holder will be entitled to revoke all or
part of the relevant Notice of Exercise by delivery of a notice to
such effect to the Company whereupon the Company and the Holder
shall each be restored to their respective positions immediately
prior to the delivery of such notice, except that the liquidated
damages described above shall be payable through the date notice of
revocation or rescission is given to the Company.
(g) Legends.
(i)
Restrictive Legend .
The Holder understands that the Warrant and, until such time as
Exercise Shares have been registered under the Securities Act of
1933, as amended (the “1933 Act”), or otherwise may be
sold pursuant to Rule 144 under the 1933 Act without any
restriction as to the number of securities as of a particular date
that can then be immediately sold, the Exercise Shares may bear a
restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the
certificates for such securities):
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF
COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO
COUNSEL TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.”
(ii)
Removal of Restrictive Legends .
Certificates evidencing the Exercise Shares shall not contain any
legend restricting the transfer thereof (including the legend set
forth above in subsection 2(g)(i)): (i) while a registration
statement covering the resale of such security is effective under
the 1933 Act, or (ii) following any sale of such Exercise Shares
pursuant to Rule 144, or (iii) if such Exercise Shares are eligible
for sale under Rule 144, or (iv) if such legend is not otherwise
required under applicable requirements of the 1933 Act (including
judicial interpretations and pronouncements issued by the staff of
the Securities and Exchange Commission (“the
Commission”)) (collectively, the
“Unrestricted Conditions” ).
The Company shall cause its counsel to issue a legal opinion to the
Company’s transfer agent promptly after each Date of Exercise
if required by the Company’s transfer agent to effect the
issuance of Exercise Shares without a restrictive legend or removal
of the legend hereunder if any of the Unrestricted Conditions are
met. If the Unrestricted Conditions are met at the time of issuance
or resale of Exercise Shares, then such Exercise Shares shall be
issued free of all legends. The Company agrees that at such time as
the Unrestricted Conditions are met or such legend is otherwise no
longer required under this Section 2(g), it will, no later than
three (3) Trading Days following the delivery (the
“Unlegended Shares Delivery Deadline”
)
by the Holder to the Company or the Company’s transfer agent
of a certificate representing Exercise Shares, as applicable,
issued with a restrictive legend (such third Trading Day,
the
“Legend Removal Date” ),
deliver, or cause the Transfer Agent to deliver at the
Company’s expense, to such Holder a certificate (or
electronic transfer) representing such shares that is free from all
restrictive and other legends.
(iii)
Sale of Unlegended Shares .
Holder agrees that the removal of the restrictive legend from
certificates representing Securities as set forth in Section
2(g)(i) above is predicated upon the Company’s reliance that
the Holder will sell any Exercise Shares pursuant to either the
registration requirements of the 1933 Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and
that if Securities are sold pursuant to a registration statement,
they will be sold in compliance with the plan of distribution set
forth therein.
(h) Cancellation of Warrant. This
Warrant shall be canceled upon the full Exercise of this Warrant,
and if this Warrant is not Exercised in full, Holder shall be
entitled to receive a new Warrant (containing terms identical to
this Warrant) representing any unexercised portion of this
Warrant.
(i) Holder of Record. Each
person in whose name any Warrant for shares of Common Stock is
issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant,
irrespective of the date of delivery of the Common Stock purchased
upon the Exercise of this Warrant. Nothing in this Warrant shall be
construed as conferring upon Holder any rights as a stockholder of
the Company.
(j)
Delivery of Electronic Shares. In
lieu of delivering physical certificates representing the
unlegended shares of Common Stock issuable upon Exercise
(the
“Unlegended Shares” ),
provided the Company’s transfer agent is participating in the
Depository Trust Company (
“DTC” )
Fast Automated Securities Transfer (
“FAST” )
program, upon
written request
of the Holder, so long as the certificates therefor do not bear a
legend
, are not required to bear a legend, and
the Holder is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its transfer
agent to electronically transmit the Unlegended Shares to the
Holder by crediting the account of the Holder's prime broker with
DTC
identified in the written request through
its Deposit Withdrawal Agent Commission (
“DWAC” )
system
. Otherwise,
delivery of the Common Stock shall be by physical delivery to the
address specified by the Holder in the Notice of Exercise. The time
periods for delivery and liquidated damages described herein shall
apply to the electronic transmittals described herein, or to
physical delivery, whichever is applicable.
(k) Buy-In. In
addition to any other rights available to the Holder, if the
Company fails to cause its transfer agent to transmit to the Holder
a certificate or certificates representing the Exercise Shares
pursuant to an Exercise on or before the Warrant Shares Delivery
Deadline, and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or
the Holder’s brokerage firm otherwise purchases shares of
Common Stock to deliver in satisfaction of a sale by the Holder of
the Exercise Shares which the Holder anticipated receiving upon
such Exercise (a
“Buy-In” ),
then the Company shall (1) pay in cash to the Holder the amount by
which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the
number of Exercise Shares that the Company was required to deliver
to the Holder in connection with the Exercise at issue times (B)
the price at which the sell order giving rise to such purchase
obligation was executed, and (2) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of Exercise Shares for which such Exercise was not honored or
deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its
Exercise and delivery obligations hereunder. For example, if the
Holder purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted Exercise of
shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of
the Buy-In, together with applicable confirmations and other
evidence with respect to the sell order as is reasonably requested
by the Company. Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing
shares of Common Stock upon Exercise of the Warrant as required
pursuant to the terms hereof.
(l) Surrender of Warrant Upon Exercise; Book-Entry.
Notwithstanding
anything to the contrary set forth herein, upon Exercise of this
Warrant in accordance with the terms hereof, the Holder shall not
be required to physically surrender the original Warrant
Certificate to the Company unless all of this Warrant is Exercised,
in which case such Holder shall deliver the original Warrant being
Exercised to the Company promptly following the Date of Exercise at
issue. Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder
shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased. The Holder and the Company
shall maintain records showing the amount of this Warrant that is
so Exercised and the dates of such Exercises or shall use such
other method, reasonably satisfactory to the Holder and the
Company, so as not to require physical surrender of this original
Warrant upon each such Exercise. In the event of any dispute or
discrepancy, such records of the Holder shall be controlling and
determinative in the absence of manifest error. The Holder and any
assignee, by acceptance of this Warrant, acknowledge and agree
that, by reason of the provisions of this paragraph, following the
purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given
time may be less than the amount stated on the face
hereof.
3.
Payment of Warrant Exercise Price .
The
Exercise Price (
“Exercise Price” )
shall initially equal
$2.50 per
share (the
“Initial Exercise Price” ),
subject to adjustment pursuant to the terms hereof, including but
not limited to Section 5 below.
Payment
of the Exercise Price may be made by either of the following,
or a combination thereof, at the election of
Holder:
(i)
Cash Exercise
: The
Holder may exercise this Warrant in
cash,
bank or cashiers check or wire transfer (a
“Cash Exercise” );
or
(ii)
Cashless Exercise
: The
Holder, at its option, may exercise this Warrant in one or more
cashless exercise transactions anytime that there is not a current
and effective registration statement then in effect covering the
resale of the Warrant Shares issuable upon such exercise. In order
to effect a Cashless Exercise, the Holder shall
surrender
of this Warrant at the principal office of the Company together
with notice of cashless election, in which event the Company shall
issue Holder a number of shares of Common Stock computed using the
following formula (a
“Cashless Exercise” ):
X
= Y (A-B)/A
| where: |
X
= the number of shares of Common Stock to be issued to
Holder.
|
Y
= the number of shares of Common Stock for which this Warrant
is being Exercised.
A
= the Market Price of one (1) share of Common Stock (for
purposes of this Section 3(ii), where
“Market Price,” as
of any date, means the Volume Weighted Average Price (as defined
herein) of the Company’s Common Stock during the five (5)
consecutive trading day period immediately preceding the date of
Exercise, or other applicable date.
B
= the Exercise Price.
As
used herein, the
“Volume Weighted Average Price”
or
“VWAP” for
any security as of any date means the volume weighted average sale
price on the Over the Counter Electronic Bulletin Board (the
“OTC-BB” )
as reported by, or based upon data reported by, Bloomberg L.P. or
an equivalent, reliable reporting service mutually acceptable to
and hereafter designated by holders of a majority in interest of
the Warrants and the Company (
“Bloomberg” )
or, if the OTC-BB is not the principal trading market for such
security, the volume weighted average sale price of such security
on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or, if no
volume weighted average sale price is reported for such security,
then the last closing trade price of such security as reported by
Bloomberg, or, if no last closing trade price is reported for such
security by Bloomberg, the average of the bid prices of any market
makers for such security that are listed in the
“pink sheets” by
the National Quotation Bureau, Inc. If the Volume Weighted Average
Price cannot be calculated for such security on such date in the
manner provided above, the volume weighted average price shall be
the fair market value as mutually determined by the Company and the
holders of a majority in interest of the Warrants being Exercised
for which the calculation of the volume weighted average price is
required in order to determine the Exercise Price of such
Warrants.
“Trading Day” shall
mean any day on which the Common Sock is traded for any period on
the OTC-BB, or on the principal securities exchange or other
securities market on which the Common Stock is then being
traded.
For
purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is
intended, understood and acknowledged that the Common Stock
issuable upon Exercise of this Warrant in a cashless Exercise
transaction shall be deemed to have been acquired at the time
this Warrant was issued. Moreover, it is intended, understood
and acknowledged that the holding period for the Common Stock
issuable upon Exercise of this Warrant in a cashless Exercise
transaction shall be deemed to have commenced on the date this
Warrant was issued.
4.
Transfer and Registration .
(a)
Transfer Rights. Subject
to the provisions of Section 8 of this Warrant, this Warrant may be
transferred on the books of the Company, in whole or in part, in
person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such
surrender and, as soon as practicable thereafter, the person to
whom such transfer is made shall be entitled to receive a new
Warrant or Warrants as to the portion of this Warrant transferred,
and Holder shall be entitled to receive a new Warrant as to the
portion hereof retained.
(b)
Registrable Securities. The
Warrant Shares shall be considered “Registrable
Securities” as such term is defined under the Registration
Rights Agreement (the “June 2007 Registration Rights
Agreement”) entered into pursuant to the June 2007 Securities
Purchase Agreement (as defined in the Line of Credit Agreement),
and the Holder shall have all of the same rights, privileges and
indemnities under such Registration Rights Agreement with respect
to the Warrant Shares, and the Company shall have the same
obligations with respect to the Warrant Shares, as if the Warrant
Shares were originally included in such Registration Rights
Agreement) the terms of which are incorporated herein by reference
and made a part hereof. References in the Registration Rights
Agreement to “Holder(s)” shall mean Buyer(s) as herein
defined.
5.
Anti-Dilution Adjustments; Additional Adjustments; Purchase
Rights .
(a)
Participation .
The Holder, as the holder of this Warrant, shall be entitled to
receive such dividends paid and distributions of any kind made to
the holders of Common Stock of the Company to the same extent as if
the Holder had Exercised this Warrant into Common Stock (without
regard to any limitations on exercise herein or elsewhere and
without regard to whether or not a sufficient number of shares are
authorized and reserved to effect any such exercise and issuance)
and had held such shares of Common Stock on the record date for
such dividends and distributions. Payments under the preceding
sentence shall be made concurrently with the dividend or
distribution to the holders of Common Stock.
(b) Recapitalization or Reclassification. If
the Company shall at any time effect a recapitalization,
reclassification or other similar transaction of such character
that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon
the effective date thereof, the number of shares of Common Stock
which Holder shall be entitled to purchase upon Exercise of this
Warrant shall be increased or decreased, as the case may be, in
direct proportion to the increase or decrease in the number of
shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price
shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number
of shares, proportionally increased. The Company shall give Holder
the same notice it provides to holders of Common Stock of any
transaction described in this Section 5(b).
(c) Exercise Price Adjusted. As
used in this Warrant, the term
“Exercise Price” shall
mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in this Section 5
or otherwise set forth in this Warrant, and thereafter shall mean
said price as adjusted from time to time in accordance with the
provisions of said subsection. No such adjustment under this
Section 5 shall be made unless such adjustment would change the
Exercise Price at the time by $.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the
aggregate thereof would change the Exercise Price at the time by
$.01 or more. No adjustment made pursuant to any provision of this
Section 5 shall have the net effect of increasing the Exercise
Price in relation to the split adjusted and distribution adjusted
price of the Common Stock.
(d) Adjustments: Additional Shares, Securities or
Assets. In
the event that at any time, as a result of an adjustment made
pursuant to this Section 5 or otherwise, Holder shall, upon
Exercise of this Warrant, become entitled to receive shares and/or
other securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall
be deemed to refer to and include such shares and/or other
securities or assets; and thereafter the number of such shares
and/or other securities or assets shall be subject to adjustment
from time to time in a manner and upon terms as nearly equivalent
as practicable to the provisions of this Section 5.
(e) Adjustment Upon Issuance of Shares of Common Stock or Common
Stock Equivalents .
If the Company issues or sells, or in accordance with this Section
5(e) 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 by the Company in
connection with an Exempt Issuance (as defined below) for no
consideration or 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 Applicable Price
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 in accordance with Section 5(i)
below. The adjustments required by this paragraph and by Sections
5(e)(i)-(iv) below are referred to in the singular, as a
“Subsequent Issuance Adjustment,“
and
collectively as
“Subsequent Issuance Adjustments.”
For
purposes of determining the adjusted Applicable Price under this
Section 5(e), the following shall be applicable:
(i)
Issuance of Options .
If the Company in any manner grants any Options, (as hereafter
defined) 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 5(e)(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 or number of Warrant Shares 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. No adjustment
shall be made hereunder if such adjustment would result in an
increase in the Applicable Price or a decrease in the number of
Warrant Shares.
(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 5(e)(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 and upon conversion, exercise
or exchange of such Convertible Security. In the case of a
Convertible Security which is accompanied by Options (collectively,
a
“Unit” ),
the "lowest price per share for which one share of Common Stock is
issuable upon the conversion, exercise or exchange of such
Convertible Security” shall equal (i) the consideration
deemed received in exchange for the Convertible Security, as
determined in accordance with subsection 5(e)(iv) below, divided by
(ii) the total number of shares into which such Convertible
Security is convertible or exchangeable (without regard to any
contractual limitation on the timing or amount of co
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