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EXHIBIT 10.(XXXVI)
INVESTMENT AGREEMENT
INVESTMENT AGREEMENT (this "Agreement") dated as of March 27, 1998 between
Bristol Asset Management II LLC, a limited liability company organized and
existing under the laws of Delaware (the "Investor"), and Nevada Manhattan
Mining, Inc., a corporation organized and existing under the laws of the State
of Nevada (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Investor shall invest up to $14,000,000 in the
Company's Common Stock, par value $.0l per share (the "Common Stock").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Purchase and Sale of Common Stock: Issuance of Warrants
Section 1.1 Purchase and Sale of Common Stock. Upon the terms and
subject to the conditions set forth herein, the Company shall issue and sell to
the Investor, and the Investor shall purchase from the Company, up to
$14,000,000 of Common Stock, such stock](to be valued as provided in Section
1.3(b) herein.
Section 1.2 Delivery of Put Notices.
(a) At any time prior to the date which is three years from
the effective date of the Registration Statement (as defined below), the Company
may deliver written notices to the Investor (each such notice hereinafter
referred to as a "Put Notice") in the form of the Put Notice annexed to this
Agreement as Exhibit A stating a dollar amount (the "Dollar Amount") of Common
Stock which the Company intends to sell to the Investor five business days
following the date (the 'Put Notice Date") on which the Put Notice is given to
the Investor by the Company in accordance with Section 6.4 herein, provided that
each Put Notice Date and Dollar Amount shall be subject to Section 1.3(a) below.
"Business day(s)" shall mean any day on which the New York Stock Exchange is
open for trading. The Dollar Amount designated by the Company in any given Put
Notice shall be an amount equal to at least $50,000.
(b) Notwithstanding any of the foregoing, the Company may
not deliver a Put Notice if (i) trading of the Common Stock on the principal
market on which it is then traded (the "Principal Market") is then suspended or
the Common Stock is then delisted from the Principal Market, (ii) the closing
price of the Common Stock on the Principal Market is less than $.25 per share
(appropriately adjusted for any stock splits, reverse splits or combinations,
stock dividends and similar events), (iii) the Registration Statement is not
effective or is subject to a stop order or is otherwise suspended, (iv) the Dow
▇▇▇▇▇ Industrial Average has dropped more than 3% within the preceding five
business days, or (v) the Common Stock is not then registered under the Exchange
Act. If any of the events described in clauses (i), (ii), (iii), (iv) or (v)
above occurs after a Put Notice is delivered but prior to the Closing (as
defined below) associated with such Put Notice, such Put Notice shall be null,
void and of no force and effect and a new Put Notice shall be required following
the termination of any such event.
Section 1.3 Determination of Share Number; Valuation Period
(a) Within ten days after the end of each calendar month, at
the option of the Company it may require a purchase of Common Stock by the
Investor (except as hereinafter provided), subject to the procedures set forth
in Section 1.2(a), in a maximum amount not to exceed the lesser of (i)
$14,000,000 less all amounts previously paid by the Investor pursuant to this
Section 1.3(a), (ii) $1,166,667, (iii) the product of (x) the number of shares
of Common Stock traded on the Principal Exchange during the preceding calendar
month, multiplied by (y) the average of the closing bid prices as noted in
Bloomberg (or other appropriate published source) for the Common Stock during
the prior calendar month, multiplied by (z) 10% and (iv) such Dollar Amount
which would result in the Investor beneficially owning no more than 4.9% of the
Common Stock outstanding on the Put Notice Date (including without limitation
Common Stock deemed beneficially owned by the Investor pursuant to the Warrants
(as defined below), as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
regulations promulgated thereunder. The Put Notice shall include a
representation of the Company as to the Common Stock outstanding on the Put
Notice Date as determined in accordance with Section 13(d) of the Exchange Act.
In the event that the amount of Common Stock outstanding as determined in
accordance with Section 13(d) of the Exchange Act and the regulations
promulgated thereunder is different on a Closing Date (as defined below) than on
the Put Notice Date associated with such Closing Date, the amount of Common
Stock outstanding on such Closing Date shall govern for purposes of determining
whether the Investor would own more than 4.9% of the Common Stock as of such
Closing Date. Notwithstanding anything to the contrary contained in this
Agreement, the Investor shall have the right to decline to purchase the Common
Stock which the Investor would otherwise be required to purchase under any two
Put Notices designated by the Investor in any 12 month period.
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For example, if a total of 1,000,000 shares of Common Stock
traded during January of a particular year on the Principal Exchange and the
average of the closing bid prices was $1.50, on or before February 10 the
Company could request a draw down not to exceed 10% of $1,500,000 or $150,000,
so long as such amount was available under this Agreement and so long as such
amount did not result in the Investor beneficially owning more than 4.9% of the
Common Stock.
(b) Simultaneously with the receipt of the funds from the
Investor in the amount of the draw down the Company shall issue and sell to the
Investor and the Investor shall be deemed to have purchased, in consideration of
the funds so drawn down, the number of shares of Common Stock equal to the draw
down divided by 78% of the lowest sale price for the Common Stock on the
Principal Exchange as noted in Bloomberg (or other appropriate published source)
(the "Lowest Sale Price") during the ten trading days prior to the Put Notice
Date (the "Look Back Period"). For example, if the Lowest Sale Price for the
Look Back Period was $1.50 and the draw down was $100,000, the number of shares
of Common Stock to be issued would be 85,470 shares. Notwithstanding the
foregoing, in the event that the Lowest Sale Price during the 20 trading days
after a particular Closing is less than 95% of the Lowest Sale Price applicable
to such Closing, then the Company shall promptly issue to the Investor an
additional number of shares of Common Stock with respect to such Closing such
that the number of shares of Common Stock issued to the Investor at such Closing
plus such additional number of shares are equal to the funds drawn down at such
Closing divided by 78% of the Lowest Sale Price during such 20 trading day
period. The Investor shall also be issued additional Warrants equal to 12% of
the number of additional shares so issued and the exercise price of such
additional Warrants and the Warrants issued at such Closing shall be adjusted to
94% of the average closing bid price for the Common Stock on the Principal
Exchange as noted by Bloomberg (or other appropriate published source) during
such 20 trading day period.
(c) The Company shall not be required to issue fractions of
shares of Common Stock and instead shall refund to the Investor an amount equal
to the fraction which would otherwise have been issued times 78 % of the Lowest
Sale Price during the Look Back Period determined as provided in Section 1.3(b)
above.
Section 1.4 Closing.
(a) Each Closing of a purchase and sale of Common Stock (a
"Closing") shall take place at 10:00 a.m. Los Angeles time on the fifth business
day following the Put Notice Date to which such Closing relates or the earliest
date thereafter on which all conditions to Closing have been satisfied. Each
date on which a Closing occurs is referred to herein as a "Closing Date."
(b) On each Closing Date, the Investor shall deliver to the
Company the Dollar Amount with respect to such Closing by cashier's check or
wire transfer to such account as shall be designated in writing by the Company.
On each Closing Date, the Company shall deliver to the Investor certificates
representing the number of shares to be issued and sold to the Investor on such
date and registered in the name of the Investor. In addition, each of the
Company and the Investor shall deliver all documents, instruments and writings
required to be delivered either of them pursuant to this Agreement at or prior
to each Closing.
(c) On each Closing Date, except as provided in Section
1.4(d) below, the Company shall also deliver to the Investor warrants in the
form annexed to this Agreement as Exhibit B ("Warrants") to purchase shares of
Common Stock (the "Warrant Shares"), which Warrants shall expire on the fifth
anniversary of the date of issuance thereof. The Warrants issuable at any
Closing shall entitle the holder thereof to purchase a number of Warrant Shares
equal to 12% of the number of shares of Common Stock purchased at the Closing in
question at an initial exercise price (subject to the provisions of Section
1.3(b) above) equal to 94% of the average closing bid price for the Common Stock
on the Principal Exchange as noted by Bloomberg (or other appropriate published
source) during the Look Back Period in question for the particular Closing.
(d) (i) To the extent that the Company has not delivered Put
Notices to the Investor on or before one year from the date of this Agreement in
an aggregate Dollar Amount equal to the lesser of (a) $4,666,667 and (b) the
maximum Dollar Amount with respect to which Put Notices could have been
delivered prior to such date, then any Warrants which have not theretofore been
delivered to the Investor which would have been issued had such Put Notices been
delivered shall promptly be issued to the Investor. The initial exercise price
of such Warrants shall be equal to 94% of the average closing bid price for the
Common Stock on the Principal Exchange as noted by Bloomberg (or other
appropriate published source) during the ten trading days prior to such one year
anniversary.
(ii) To the extent that the Company has not delivered Put Notices to the
Investor on or before two years from the date of this Agreement in an aggregate
Dollar Amount equal to the lesser of (a) $9,333,332 and (b) the maximum Dollar
Amount with respect to which Put Notices could have been delivered prior to such
date, then any Warrants which have not theretofore been delivered to the
Investor which would have been issued had such Put Notices been delivered shall
promptly be issued to the Investor. The initial exercise price of such Warrants
shall be equal to 94% of the average closing bid price for the Common Stock on
the Principal Exchange as noted by Bloomberg (or other appropriate published
source) during the ten trading days prior to such two year anniversary. 3
(iii) To the extent that the Company has not delivered Putt Notices to the
Investor on or before the termination of this Agreement in an aggregate Dollar
Amount equal to the lesser of $14,000,000 and the maximum Dollar Amount with
respect to which Put Notices could have been delivered prior to such date, then
any Warrants which have not theretofore been delivered to the Investor which
would have been issued had such Put Notices been delivered shall promptly be
issued to the Investor. The initial exercise price of such Warrants shall be
equal to 94% of the average closing bid price for the Common Stock on the
Principal Exchange as noted by Bloomberg (or other appropriate published source)
during the ten trading days prior to such termination date.
On each Closing Date subsequent to the issuance of Warrants pursuant
to this Section 1.4(d), notwithstanding the provisions of Section 1.4(b) above,
the Company shall only be obligated to issue Warrants pursuant to Section 1.4(b)
at such times as and to the extent that the total Dollar Amount of Put Notices
delivered to the Investor exceeds the Dollar Amount set forth in the clause
pursuant to which the Warrants were issued. For example, if Warrants are issued
pursuant to clause (i) above, then no Warrants shall thereafter be issuable
pursuant to Section 1.4(b) until such time as the aggregate Dollar Amount of Put
Notices delivered to the Investor pursuant to this Agreement exceeds $4,666,667.
(a) The Company agrees that all shares of Common Stock
issued to the Investor pursuant to this Agreement shall, at the time of such
issuance and for so long thereafter as is required by this Agreement, be subject
to an effective registration statement covering both the issuance of such shares
by the Company to the Investor hereunder and the resale or other disposition
thereof by the Investor at any time and from time to time after each such
issuance and, with respect to the Warrant Shares, covering both the issuance of
the Warrant Shares and the resale of other disposition by the holders thereof at
any time and from time to time after each such issuance. The shares of Common
Stock to be issued to the Investor pursuant to this Agreement and any Warrant
Shares are collectively referred to as the "Shares." The Company agrees that the
Registration Statement described in this Section 1.5(a) (together with all
amendments and supplements thereto, the "Registration Statement") shall, in
accordance with Section 1.5(c) below, remain effective pursuant to the
provisions of the Securities Act of 1933, as amended (the "Securities Act"), or
otherwise, (x) in the case of any Registration Statement covering Shares issued
pursuant to this Agreement at all times during the term of this Agreement and
for a period of 120 days after termination of this Agreement and (y) in the case
of any Registration Statement covering the Warrant Shares at all times during
the term of the Warrant and for a period of three years thereafter (as
applicable, the "Registration Period").
(b) The Company shall use its best efforts in order that the
Registration Statement may become effective within 30 days of the date of this
Agreement.
(c) The Company shall, as expeditiously as reasonably
possible and in accordance with Section 1.5(a) herein:
(i) Prepare and file with the Securities and Exchange (Commission (the
"SEC") such amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary to comply with this
Agreement and the provisions of the Securities Act with respect to the issuance
and disposition of all securities covered by such Registration Statement.
(ii) Furnish to the Investor and any Warrant
Holders, as the case may be, such numbers of copies of a prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as the Investor and Warrant Holders, as the case may be, may
reasonably require in order to facilitate the disposition of shares sold
pursuant to this Agreement or issued pursuant to the Warrant.
(iii) Insure that all Shares subject to the
Registration Statement shall at
all times during the applicable Registration Period be registered and qualified
under such other securities or "Blue Sky" laws of such jurisdictions as shall be
requested by the Investor and/or the Warrant Holders, as the case may be,
provided that the Company shall not be required in connection herewith or as a
condition hereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(iv) Notify the Investor and/or any Warrant Holders of the happening of any
event or the existence of any circumstance as a result of which the prospectus
included in the Registration Statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing and as soon as may be practicable
prepare and file with the SEC such amendments and supplements to such
Registration Statement and prospectus used in connection therewith as may be
necessary to eliminate or correct such untrue statement or omission and
otherwise to cause such Registration Statement and prospectus to remain current
and useable for the purposes intended hereunder.
(v) Make available for inspection by the Investor's designated
representatives upon request from time to time, all SEC Documents (as defined
below), require the Company's officers and, to the extent reasonably necessary
to enable the Investor's designated representatives to conduct reasonably
appropriate due diligence with respect to each Put Notice, the Company 5
employees to supply all information reasonably required by the Investor's
designated representatives in connection with the Registration Statement,
require the Company's officers and, to the extent reasonably necessary to enable
the Investor's designated representatives to conduct reasonably appropriate due
diligence, the Company's employees to meet with representatives of the
Investor's designated representatives during normal business hours and on such
basis as the Investor's designated representatives may reasonably request, and
make available to the Investor's designated representatives, contemporaneously
with the provision of such information, any and all information about the
Company provided by the Company to securities analysts. In addition, the Company
will permit Investor's designated representatives access to the Company's
premises and personnel, consultants, agents, attorneys, accountants, customers,
suppliers, bankers and others who have significant relationships or agreements
with the Company and the Company's assets, books and records and the Company
will provide the Investor's designated representatives with information
(financial and otherwise) concerning the Company to enable the Investor's
designated representatives to conduct reasonably appropriate ongoing due
diligence review of the Company The Company will disseminate to the Investor's
designated representatives all press releases and public information
disseminated by the Company at the same time it disseminates such releases and
information to others.
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As a condition to the Company's obligations under this subparagraph
(v), the Investor's designated representatives shall enter into a
confidentiality agreement with the Company in form and substance reasonably
satisfactory to the Company.
(vi) Except as required, in the opinion of the Company's counsel, by law or
consented to in advance by the Investor (which consent shall not be unreasonably
withheld), refrain from using the name of the Investor in the Registration
Statement or other regulatory filings (including the SEC Documents).
(d) (i) The Company shall indemnify, defend and hold harmless
the Investor and Warrant Holders and each of their respective officers,
directors, partners, employees, agents and counsel and each person, if any, who
controls any such person within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (each, an "Indemnified Party") from and
against, and shall reimburse the Indemnified Parties with respect to, any and
all claims, suits, demands, causes of action, losses, damages, liabilities,
costs or expenses ("Liabilities") to which such Indemnified Parties may become
subject under the Securities Act or otherwise, arising from or relating to (A)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any prospectus contained therein or (B) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
the Company shall not be liable in any such case to the extent that ally such
Liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by the Investor or any Warrant Holder in writing specifically for use
in the preparation thereof.
(ii) The Investor and/or the Warrant Holder, as the case may be, shall
indemnify, defend and hold harmless the Company and each of its respective
officers, directors, partners, employees, agents and counsel and each person, if
any, who controls any such person within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, an "Indemnified Party")
from and against, and shall reimburse the Indemnified Parties with respect to,
any and all Liabilities to which such Indemnified Parties may become subject
under the Securities Act or otherwise, arising from or relating to (A) any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement or any prospectus contained therein or (B) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent and only to the extent that any such Liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by the Investor or the
Warrant Holder, as the case may be, in writing specifically for use in the
preparation thereof. In addition, if a Registration Statement is suspended by
the SEC as a result of any untrue statement of a material fact intentionally
made by the Investor in the Registration Statement, then the Investor shall
indemnify, defend and hold harmless the Company from losses actually incurred by
the Company (excluding any speculative or consequential damages or damages for
loss of profits or lost opportunities) from its failure to be able to require
purchases of Common Stock under this Agreement during the period of such
suspension provided that the Company proves that (a) it would have required such
purchases and (b) no alternative sources of financing were available.
(iii) Promptly after receipt by an Indemnified Party of notice of the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the other party (the "Indemnifying Party")
hereunder, notify the Indemnifying Party in writing thereof, but the omission so
to notify the Indemnifying Party shall not relieve the Indemnifying Party from
any Liability which it may have to any Indemnified Party other than under this
section and shall only relieve it from any Liability which it may have to any
Indemnified Party under this section if and to the extent the Indemnifying Party
is materially prejudiced by such omission. In case any such action shall be
brought against an Indemnified Party and the Indemnified Party shall notify the
Indemnifying Party of the commencement thereof, the Indemnifying Party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to the
Indemnified Parties and, after notice from the Indemnifying Party to the
Indemnified Parties of its election so to assume and undertake the defense
thereof, the Indemnifying Party shall not be liable to the Indemnified Parties
under this section for any legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, provided,
however, that if the defendants in any such action include both the Indemnifying
Party and an Indemnified Party and the Indemnified Party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the Indemnifying Party, the
Indemnified Parties shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the reasonable expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the Indemnifying
Party as incurred. If the Investor is a defendant in such action, the Investor
shall select such separate counsel to represent the Investor and all Indemnified
Parties; however, if the Investor is not a defendant, such separate counsel
shall be selected by the majority of the Indemnified Parties named as
defendants. The legal fees and expenses of any Indemnified Party choosing not to
be represented by such separate counsel selected by the Investor or the majority
of the Indemnified Parties, as the case may be, shall be borne by such
Indemnified Party
(e) If the indemnification provided for in Section 1.5(d)
above is unavailable to an Indemnified Party in respect of any Liabilities, then
the Indemnifying Party, in lieu of indemnifying the Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Liabilities, such proportion of such Liabilities as is appropriate to
reflect the relative fault of the Indemnifying Party and of the Indemnified
Party in connection with such statements or omissions described in Section 1
.5(d)(i) or (ii) above, as well as any other relevant equitable considerations.
The relative fault of the Indemnifying Party and of the Indemnified Party shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
"Liabilities" pursuant to this Section 1.5(e) and Section 1.5(d) shall be deemed
to include without limitation any legal or other expenses reasonably incurred by
the Indemnified Parties in connection with investigating or defending any action
or claim by a third party and in connection with any enforcement of this Section
1.5(e) and Section 1.5(d).
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(f) (i) All legal, accounting and other fees, costs and
expenses of and incidental to the Registration Statement (including without
limitation the fees, costs and expenses of the Investor's designated
representatives as provided in Section l .5(c)(v) and the fees, costs and
expenses of the Investor's counsel) shall be borne by the Company (other than
such fees, costs and expenses as are in the nature of commissions incurred in
connection with the sale of Shares by the Investor or any Warrant Holder).
(ii) The fees, costs and expenses or registration to be borne by the
Company as provided in this subsection (e) shall include, without limitation,
all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company and all legal fees and
disbursements and other expenses of complying with state securities or "Blue
Sky" laws of any jurisdiction or jurisdictions in which securities to be offered
are to be registered and qualified.
Section 1.6 Distributions. In the event the Company delivers a Put
Notice, the Company shall not make any distributions to its shareholders
(including without limitation any rights to purchase securities or properties)
from the beginning of the Look Back Period to the day after the Closing.
Section 1.7 Delisting and Registration Statement Suspension. If
within 60 days after a Closing the Common Stock is delisted from the Principal
Market or the Common Stock is not registered under the Exchange Act, the
Investor shall have the right, at its option in its sole discretion, which right
shall be exercised within 30 days of such delisting or deregistration, to sell
to the Company, and the Company agrees to buy, promptly upon the exercise of
such right by the Investor, all or any part of the Shares purchased by the
Investor at such Closing at a price equal to the purchase price therefor. In
addition if at any time during the Registration Period the Registration
Statement is not effective for a 30-day period or if the Investor and/or the
Warrant Holders are not otherwise able to sell their Shares pursuant to the
Registration Statement for a 30-day period, then the Investor and/or the Warrant
Holder, as the case may be, shall have the right, at their option in their sole
discretion, which right shall be exercised within 90 days after such 30-day
period, to sell to the Company, and the Company agrees to buy, promptly upon the
exercise of such right, all or any part of the Shares then held by the Investor
and/or the Warrant Holder, as the case may be, and/or the Warrants held by the
Warrant Holder at a price equal to the average closing sales prices for the
Common Stock on the Principal Market as noted by Bloomberg (or other appropriate
published source) for the ten trading days prior to the delisting or
deregistration (Iess any applicable exercise price for unexercised Warrants).
ARTICLE 2
Representations and Warranties
Section 2.1 Representations and Warranties of the Company. The
Company makes the following representations and warranties to the Investor as of
the date hereof and as of each Closing Date:
(a) Organization and Qualification. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of Nevada
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation to do business and is in good standing
in every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary and where the failure to so
qualify would have a Material Adverse Effect. "Material Adverse Effect" means
any adverse effect on the operations, properties, prospects or financial
condition of the Company and/or any of its subsidiaries which is material to the
Company and its subsidiaries taken as a whole.
(b) Authorization; Enforcement. The Company has the
requisite corporate power and authority to enter into and perform this Agreement
and to issue all Shares and Warrants in accordance with the terms hereof and
thereof. The execution and delivery of this Agreement and the Warrants by the
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action, and no further consent:
or authorization of the Company or its Board of Directors or stockholders is
required. This Agreement has been and the Warrants will be duly executed and
delivered by the Company. This Agreement constitutes and the Warrants will
constitute a valid and binding obligation of the Company enforceable against the
Company in accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
(c) Capitalization. As of November 30, 1997 the authorized
capital stock of the Company and the shares thereof currently issued and
outstanding (and shares subject to issuance upon outstanding options, warrants
and/or convertible securities) were as set forth in the Company's Form l0-Q for
the period then ended. All of the outstanding shares of Common Stock have been
validly issued and are fully paid and non-assessable. No shares of Common Stock
are entitled to preemptive rights. Except as disclosed in the SEC Documents
filed prior to the date of this Agreement with respect to the Company's
Brazilian subsidiary as to which the Cornpany owns 99%, the Company owns 100% of
the equity securities of any of its subsidiaries, and no other person has the
right (contingent or otherwise) to acquire any such securities.
(d) Issuance of Shares. The issuance of all Shares and
Warrants to be issued hereunder has been duly authorized and all such Shares,
when paid for and issued in accordance with the terms hereof and the Warrants,
shall be validly issued, fully paid and non-assessable. The Company has
authorized and reserved for issuance the requisite number of shares of Common
Stock to be issued pursuant to the Warrants.
(e) Agreements. There has been no breach or default by the
Company or by any other party thereto of any provisions of any material
agreements to which the Company is a party which would result in a Material
Adverse Effect, and nothing has occurred which, with lapse of time or the giving
of notice of both, would constitute such a breach or default by the Company by
any other party thereto.
(f) Brokers. The Investor shall not be responsible for any
fees of any broker, finder, commission agent or other person employed by the
Company in connection with this Agreement and the transactions contemplated
hereby.
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(g) No Conflicts. The execution, delivery and performance of
this Agreement and the Warrants by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby do not and will not
(i) result in a violation of the Company's charter documents or by-laws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company is a party, or result in a
violation of any Federal, state, local or foreign law, rule, regulation, order,
judgment or decree (including Federal and state securities laws and regulations)
applicable to the Company or by which any property or asset of the Company is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). The business
of the Company is not being conducted in violation of any law, ordinance or
regulations of any governmental entity, except for violations which either
singly or in the aggregate do not have a Material Adverse Effect. The Company is
not required under law, rule or regulation to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement or issue and sell any shares in accordance with the terms
hereof (other than the filing and effectiveness of the Registration Statement
and compliance with applicable state securities or "Blue Sky" laws).
(h) SEC Documents, Financial Statements. The Common Stock is registered pursuant
to Section 12 of the Exchange Act, and the Company has timely filed all reports,
schedules, forms, statements and other documents, together with all exhibits,
financial statements and schedules thereto, required to be filed by it with the
SEC pursuant to the reporting requirements of the Exchange Act, including
material filed pursuant to Section 13(a) or 15(d) (all of the foregoing, whether
heretofore or hereafter filed with the SEC, and the Registration Statement, when
declared effective and as it may be amended from time to time, being hereinafter
referred to herein as the "SEC Documents"). As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder and other Federal, state and local
laws, rules and regulations applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of the date of delivery by the Investor and/or a holder
of Warrant Shares of the prospectus contained in the Registration Statement in
connection with sales of Shares by the Investor and/or holder of Warrant Shares,
such prospectus will comply in all material respects with the requirements of
the Securities Act and the rules and regulations of the SEC promulgated
thereunder, and other Federal, state and local laws, rules and regulations
applicable to such prospectus. The financial statements of the Company included
in the SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (x)
as may be otherwise indicated in such financial statements or the notes thereto
or (y) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and will fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).
(i) The SEC has not issued an order preventing or suspending
the use of any prospectus relating to the offering of any Shares nor instituted
proceedings for that purpose.
(j) No Material Adverse Change. No Material Adverse Effect
has occurred or exists with respect to the Company since the date of this
Agreement.
(k) No Undisclosed Events or Circumstances. No material
event or circumstance has occurred or exists with respect to the Company or its
business, properties, prospects, operations or financial condition, which would
be required to be disclosed by the Company under the Exchange Act or other
applicable law but which has not been so publicly announced or disclosed.
(1) There has been no material adverse change in the number
and/or stature of firms making a market in the Common Stock since the date of
this Agreement.
Section 2.2 Representations and Warranties of the Investor. The
Investor makes the following representations and warranties to the Company as of
the date hereof and as of each Closing Date:
(a) Authorization; Enforcement. The Investor is duly
organized and validly existing under the laws of Delaware. The Investor has the
requisite power and authority to enter into and perform this Agreement and to
purchase the Shares to be sold hereunder. The execution and delivery of this
Agreement by the Investor and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate or
other action, and no further consent or authorization of the Investor is
required. This Agreement: has been duly authorized, executed and delivered by
the Investor. This Agreement constitutes a valid and binding obligation of the
Investor enforceable against the Investor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
(b) No Conflicts. The execution, delivery and performance of
this Agreement and the consummation by the Investor of the transactions
contemplated hereby or relating hereto do not and will not (i) result in a
violation of the Investor's charter documents or (ii) conflict with, or
constitute a default (or an event which with notice of lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Investor is a party, or result in a violation of any
law, rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to the Investor or any of its properties (except
for such conflicts, defaults and violations as would not individually or in the
aggregate have a material adverse effect on the Investor or a Material Adverse
Effect on the Company or the transactions contemplated hereunder). The Investor
is not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or
purchase securities in accordance with the terms hereof.
7
(c) Opportunity for Review. The Investor has been afforded,
to the satisfaction of the Investor, the opportunity to review the SEC Documents
and obtain such additional information concerning the Company and its business,
and to ask such questions and receive such answers, as the Investor deems
necessary to make an informed investment decision and to evaluate the merits and
risks of an investment in shares of Common Stock and the Warrants.
(d) Investment Representation. The Investor is an
"accredited investor" as that term is defined by the Securities Act. The
Investor is purchasing the shares of Common Stock and the Warrants for its own
account. The Investor has no present intention to sell any such securities (or
shares of Common Stock issuable upon exercise of the Warrants) except in
compliance with the Securities Act.
ARTICLE 3
Covenants
Section 3.1 Securities Compliance.
(a) The Company shall notify the SEC and the Principal
Market and any other applicable market in accordance with their requirements, if
any, of the transactions contemplated by this Agreement and shall take all other
necessary action and proceedings as may be required by applicable law, rule and
regulation for the legal and valid issuance of all securities to be issued to
the Investor hereunder.
(b) The Company will cause its Common Stock to continue to
be registered under Section 12 of the Exchange Act, will comply in all material
respects with its reporting and filing obligations under said Act, will comply
in all material respects with its reporting and filing obligations under said
act, will comply with all requirements related to the Registration Statement,
and will not take any action or file any document (whether or not permitted by
said Act or the rules thereunder) to terminate or suspend such Registration
Statement or to terminate or suspend its reporting and filing obligations under
the Exchange Act, expect as permitted herein. The Company will take all action
necessary to continue the listing or trading of its Common Stock on the
Principal Market and will comply in all material respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the
Principal Market.
(c) The Investor agrees that it will not "sell short" shares
of Common Stock (i.e., sales of shares when the Investor does not beneficially
own an equal number of such shares or other equity securities convertible into
or exercisable for such number of shares) in anticipation of required purchases
of shares under this Agreement.
Section 3.2 Preliminary Put Notice. The Company shall deliver to the
Investor, at least ten calendar days prior to the delivery of each Put Notice, a
preliminary Put Notice which notice shall state that the Company is considering
delivery of a Put Notice to the Investor ten or more calendar days following
delivery of the preliminary Put Notice and the maximum Dollar Amount of such Put
Notice. In no event shall delivery of a preliminary Put Notice to the Investor
obligate the Company to deliver any Put Notice to the Investor, but any Put
Notice so delivered shall not require the Investor to purchase a Dollar Amount
greater than the amount set forth in such preliminary Put Notice.
ARTICLE 4
Conditions
Section 4.1 Conditions Precedent to the Obligation of the Company to
Issue Warrants and Sell Shares. The obligation hereunder of the Company to issue
Warrants and/or sell shares of Common Stock hereunder to the Investor is further
subject to the satisfaction at or before each Closing of each of the following
conditions set forth below. These conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion.
(a) Accuracy of the Investor Representations and Warranties.
The representations and warranties of the Investor shall be true and correct in
all material respects as of the date when made and as of the date of each
Closing Date as though made at that time.
(b) Performance by the Investor. The Investor shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Investor at or prior 10 such Closing.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
Section 4.2 Conditions Precedent to the Obligation of the Investor to
Purchase any Shares. The obligation of the Investor to purchase any Shares under
this Agreement is subject to the satisfaction, at or before each Closing, of
each of the following conditions set forth below. These conditions are for the
Investor's sole benefit and may be waived by the Investor at any time in its
sole discretion.
(a) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of each Closing
Date as though made at that time (except for representations and warranties that
speak as of a particular date or refer to a particular point in time).
(b) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to such Closing.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.
(d) No Adverse Change. There shall have been no adverse
change in the business, assets, liabilities or prospects of the Company since
the date of this Agreement which the Investor reasonably believes would have a
Material Adverse Effect.
8
(e) Principal Market. Trading in the Company's Common Stock
shall not have been suspended by the SEC or the Principal Market, and trading in
securities generally as reported by the Principal Market shall not have been
suspended or limited or minimum prices shall not have been established on
securities whose trades are reported by the Principal Market.
(f) Opinion of Counsel, Etc. At each Closing the Investor
shall have received an opinion of counsel to the Company, which counsel shall be
satisfactory to the Investor, dated the effective date of such Closing
concerning such matters as the Investor shall reasonably request, a copy of a
"cold comfort" letter addressed to the Company from an accounting firm
satisfactory to the Investor, dated the effective date of such Closing
concerning such matters as the Investor shall reasonably request, and such other
certificates, opinions of other counsel, and documents as the Investor or its
counsel shall reasonably request incident to such Closing. The form of all such
certificates, opinions, "cold comfort" letters and other documents shall be
satisfactory to the Investor.
(g) Effectiveness of Registration Statement. The
Registration Statement shall be effective at the time of each Closing and no
stop order suspending the effectiveness of the Registration Statement shall have
been instituted or shall be pending.
(h) Accuracy of Registration Statement. The Registration
Statement (including information or documents incorporated by reference therein)
and any amendments or supplements thereto shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(i) Officer's Certificate. At each Closing the Investor
shall have received certificates from the CEO and the CFO of the Company
concerning such matters as the Investor shall reasonably request incident to
such Closing. The form of such certificates shall be satisfactory to the
Investor.
ARTICLE 5
Change of Control
Section 5.1 Change in Control. From and after the date hereof, at the
Investor's election upon any Change of Control (as defined below) the Company
shall no longer have the right to deliver any Put Notice to the Investor. A
"Change of Control" shall mean any transaction or series of transactions which
results in any person or affiliated group of persons gaining Control of 30% or
more of the voting stock of the Company or the right to elect 30% or more of the
Company's Board of Directors.
ARTICLE 6
Miscellaneous
Section 6.1 Fees and Expenses. The Company shall pay the fees and
expenses of the Investor incident to the negotiation, preparation, execution and
delivery of this Agreement, which are agreed to be $10,000 for services through
the date of this Agreement. The Company shall pay all stamp and other taxes and
duties levied in connection with the issuance of any Shares issued pursuant
hereto.
Section 6.2 Specific Enforcement; Consent to Jurisdiction.
(a) The Company and the Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
(b) Each of the Company and the Investor (i) hereby
irrevocably submits to the exclusive jurisdiction of the Federal and state
courts in Los Angeles County, California for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement and (ii) hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that the
suit, action or proceeding is brought in an inconvenient forum or that the venue
of the suit, action or proceeding is improper. Each of the Company and the
Investor consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this paragraph
shall affect or limit any right to serve process in any other manner permitted
by law. The prevailing party in any such suit, action or proceeding shall be
entitled to attorney's fees and costs.
Section 6.3 Entire Agreement; Amendments. This Agreement contains the
entire understanding of the parties with respect to the transactions
contemplated hereby and, except as specifically set forth herein, neither the
Company nor the Investor makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by a written instrument signed by the party against
whom enforcement of any such amendment or waiver is sought.
Section 6.4 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective upon
hand delivery or delivery by facsimile at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received). The addresses for such communications shall be:
to the Company: Nevada Manhattan Mining, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, a Professional Law Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.(▇▇▇)▇▇▇-▇▇▇▇
to the Investor: Bristol Asset Management II LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No.(▇▇▇)▇▇▇-▇▇▇▇
with copies to: Christensen, Miller, Fink, Jacobs,
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
2121 Avenue of the Stars, 18th Fl.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Att: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
9
Either party hereto may from time to time change its address for notices under
this Section 6.4 by giving written notice of such changed address to the other
party hereto.
Section 6.5 Waivers. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter. The parties hereto waive any and
all rights to a jury trial in connection with any action or proceeding arising
under this Agreement or the transactions contemplated hereby.
Section 6.6 Headings. The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 6.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their permitted successors and
permitted assigns. The parties hereto may amend this Agreement without notice to
or the consent of any third party.. Neither the Company nor the Investor shall
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the other (which consent may be withheld for any reason in
the sole discretion of the party from whom consent is sought).
Section 6.8 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provisions hereof be
enforced by, any other person.
Section 6.9 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without regard to the principles of conflict of laws.
Section 6.10 Execution. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.
Section 6.11 Publicity and Confidentiality. The Company and the
Investor shall consult and cooperate with each other in issuing any press
releases or otherwise making public statements with respect to the transactions
contemplated hereby, provided the foregoing shall not interfere with the legal
obligations of either party with respect to public disclosure.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date hereof.
"The Company"
Nevada Manhattan Mining, Inc.
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:_______________________
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:_______________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: COO & Secretary
"The Investor"
Bristol Asset Management II LLC
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
By:________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President
10
EXHIBIT A
Nevada Manhattan Mining, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------,-----
Bristol Asset Management II LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Gentlemen:
Reference is made to that certain Investment Agreement (the
"Agreement") dated as of March __, 1998 between you and the undersigned. This is
a Put Notice as that term is defined in Section 1.2 of the Agreement.
This is to advise you that the undersigned intends to sell
to you five business days (as that term is defined in the Agreement) following
the date this Put Notice is given to you in accordance with Section 6.4 of the
Agreement $_______________ of the undersigned's Common Stock.
Very truly yours,
Nevada Manhattan Mining, Inc.
By ______________________
11
EXHIBIT B
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
---------------,-----
NEVADA MANHATTAN MINING, INC.
COMMON STOCK PURCHASE WARRANT
Warrant to Purchase _____________ Shares of Common Stock
Expiring __________________,______
THIS CERTIFIES THAT, for value received, _______________________ or its
permitted assigns (collectively, the "Warrant Holder"), at any time and from
time to time on any Business Day on or prior to 5:00 p.m., Los Angeles time, on
_________ ____,____ [five years from the date of issuance] (the "Expiration
Date") is entitled to purchase from Nevada Manhattan Mining, Inc., a Nevada
corporation (the "Company"), __________ shares of Common Stock at a price per
share equal to the Exercise Price; provided that the number of shares of Common
Stock issuable upon any exercise of this Warrant and the Exercise Price shall be
adjusted and readjusted from time to time in accordance with Section 3.
1. Certain Definitions.
The following terms, as used herein, have the following meanings:
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Los Angeles, California are authorized by law to
close.
"Capital Reorganization" has the meaning set forth in Section 3(1:).
"Cashless Exercise" has the meaning set forth in Section 2.
"Common Stock" means the Company's currently authorized common stock,
$.01 par value per share, and stock of any other class or other
consideration into which such currently authorized common stock may
hereafter have been changed.
"Common Stock Reorganization" has the meaning set forth in Section
3(a).
"Exercise Price" means $___ per share, as adjusted from time to time
pursuant to Section
3.
"Investment Agreement" means that certain Investment Agreement dated
as of March ___, 1998 pursuant to which the Warrant has been issued.
"Notice of Exercise" has the meaning set forth in Section 2.
"Principal Market" has the meaning set forth in the Investment
Agreement.
"Warrant Shares" means the shares of Common Stock issued or issuable
upon exercise of this Warrant, as such number may be adjusted from time to
time pursuant to Section 3.
2. Exercise of Warrant.
The Warrant Holder may exercise this Warrant in whole or in part, at
any time or from time to time on any Business Day on or prior to the Expiration
Date, by delivering to the Company a duly executed notice (a "Notice of
Exercise") in the form of Annex A hereto, by payment to the Company of the
Exercise Price per Warrant Share (by wire transfer or certified check) in an
amount equal to the product of (i) the Exercise Price times (ii) the number of
Warrant Shares as to which this Warrant is being exercised.
At the election of the Warrant Holder, in lieu of paying the Exercise
Price in cash, this Warrant may be exercised by reducing the number of shares of
Common Stock received upon such exercise (a "Cashless Exercise"). The number of
shares of Common Stock delivered upon a Cashless Exercise shall be determined
based on the formula:
N = E/
FMV
where:
N equals the number of Warrant Shares which would
otherwise have been received but are not to be
received upon a Cashless Exercise
E equals the aggregate Exercise Price for the number
of Warrants being exercised that would have been
paid without the Cashless Exercise
FMV equals the average closing price of the Common
Stock Stock on the Principal Market for the ten
trading days prior to the date of the Notice of
Exercise.
12
For example, if the Warrant Holder is exercising 100 Warrants with a per
Warrant exercise price of $1 .00 per share through a Cashless Exercise when the
Common Stock's FMV is $20.00 per share, upon such Cashless Exercise the Warrant
Holder will receive 95 Warrant Shares rather than 100.
As soon as practicable after the Company shall have received such
Notice of Exercise and any required payment, the Company shall execute and
deliver or cause to be executed and delivered, in accordance with such Notice of
Exercise, to the Warrant Holder at the address set forth in such Notice of
Exercise a certificate or certificates representing the number of shares of
Common Stock specified in such Notice of Exercise. The Warrant shall be deemed
to have been exercised and such share certificate or certificates shall be
deemed to have been issued, and the Warrant Holder shall be deemed for all
purposes to have become a holder of record of shares of Common Stock, as of the
date that such Notice of Exercise and any required payment shall have been
received by the Company.
The Warrant Holder shall surrender this Warrant certificate to the
Company when it delivers the Notice of Exercise, and in the event of a partial
exercise of the Warrant, the Company shall execute and deliver to the Warrant
Holder, at the time the Company delivers the share certificate or certificates
issued pursuant to such Notice of Exercise, new Warrant certificate for the
unexercised portion of the Warrant, but in all other respect identical to this
Warrant certificate.
The Company shall not be required to issue fractions of shares of
Common Stock upon an exercise of the Warrant. If any fraction of a share would,
but for this restriction, be issuable upon an exercise of the Warrant, in lieu
of delivering such fractional share, the Company shall pay to the Warrant
Holder, in cash, an amount equal to the same fraction times the FMV for the
Common Stock (as defined above) immediately prior to the date of such exercise.
The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of certificates for the
Warrant Shares and any new Warrant certificates.
3. Antidilution Provisions.
The Exercise Price in effect at any time, and the number of Warrant
Shaires that may be purchased upon any exercise of the Warrant, shall be subject
to change or adjustment as follows:
(a) Common Stock Reorganization. If the Company shall
subdivide its outstanding shares of Common Stock into a greater number of
shares, by way of stock split, stock dividend or otherwise, or consolidate its
outstanding shares of Common Stock into a smaller number of shares (any such
event being herein called a "Common Stock Reorganization"), then (i) the
Exercise Price shall be adjusted, effective immediately after the effective date
of such Common Stock Reorganization, to a price determined by multiplying the
Exercise Price in effect immediately prior to such effective date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such effective date before giving effect to such Common Stock Reorganization
and the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization, and (ii)
the number of shares of Common Stock subject to purchase upon exercise of this
Warrant shall be adjusted, effective at such time, to a number determined by
multiplying the number of shares of Common Stock subject to purchase immediately
before such Common Stock Reorganization by a fraction, the numerator of which
shall be the number of shares outstanding after giving effect to such Common
Stock Reorganization and the denominator of which shall be the number of shares
of Common Stock outstanding immediately before giving effect to such Common
Stock Reorganization.
(b) Capital Reorganization. If there shall be any
consolidation or merger to which the Company is a party, other than a
consolidation or a merger of which the Company is the surviving corporation and
which does not result in any reclassification of, or change (other than a Common
Stock Reorganization) in, outstanding shares of Common Stock, or any sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety, or any similar recapitalization of the Company (any such event being
called a "Capital Reorganization"), then, effective upon the effective date of
such Capital Reorganization, the Warrant Holder shall no longer have the right
to purchase Common Stock, but shall have instead the right to purchase, upon
exercise of this Warrant, the kind and amount of shares of stock and other
securities and property (including cash) which the Warrant Holder would have
owned or have been entitled to receive pursuant to such Capital Reorganization
if the Warrant had been exercised immediately prior to the effective date of
such Capital Reorganization. As a condition to effecting any Capital
Reorganization, the Company or the successor or surviving corporation, as the
case may be, shall execute and deliver to each Warrant Holder an agreement as to
the Warrant Holder's rights in accordance with this Section 3(b), providing, to
the extent of any right to purchase equity securities hereunder, for subsequent
adjustment as nearly equivalent as may be practicable to the adjustment provided
for in this Section 3. The provisions of this Section 3(b) shall similarly apply
to successive Capital Reorganizations.
(c) Distributions. In the event the Company shall distribute
to its stockholders any cash, other property or rights to the holders of Common
Stock, (other than regular quarterly stock dividends), the Exercise Price in
effect immediately prior to such distribution shall be reduced by an amount
equal to the per share fair market value of such distribution to the holders of
Common Stock.
(d) Investment Agreement Adjustment. The Exercise Price shall
be adjusted as provided in Section 1.3(b) of the Investment Agreement.
(e) Adjustment Rules.
(i) Any adjustments pursuant to this Section 3 shall be made
successively whenever any event referred to herein shall occur.
(ii) Any adjustment made to the Exercise Price of this Warrant and the
number of shares of Common Stock purchasable upon exercise of the Warrant
shall not be applicable to any portion of this Warrant exercised prior to
such adjustment.
13
4. Lost, Mutilated or Missing Warrant Certificates.
Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of any Warrant certificate, and, in the case of
loss, theft or destruction, upon receipt of indemnification reasonably
satisfactory to the Company, or, in the case of mutilation, upon surrender and
cancellation of the mutilated Warrant certificate, the Company shall execute and
deliver a new Warrant certificate of like tenor and representing the right to
purchase the same aggregate number of Warrant Shares.
5. Successors and Assigns.
All the provisions of this Warrant by or for the benefit of the Company
or the Warrant Holder shall bind and inure to the benefit of their permitted
respective successors and assigns. The Warrant Holder may assign this Warrant in
whole or in part, provided such assignment complies with applicable securities
laws, in which event the Company shall issue new Warrants to the transferee and
to the Warrant Holder if this Warrant is only assigned in part.
6. Notices.
Any notice or other communication hereunder shall be in writing and
shall be sufficient if sent by first-class mail or courier, postage prepaid, and
addressed as follows (a) if to the Company, addressed to Nevada Manhattan
Mining, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ and (b) if to the Warrant Holder, addressed to
7. Miscellaneous.
(a) This Warrant shall not entitle the Warrant Holder, prior
to the exercise of the Warrant, to any rights as a shareholder of the Company.
(b) In case any one or more of the provisions contained in
this Warrant shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions
(c) Without limiting the rights of the Company and the
Warrant Holder to pursue all other legal and acceptable rights available to such
party for the other party's failure to perform its obligations hereunder, the
Company and the Warrant Holder each acknowledge and agree that the remedy at law
for any failure to perform any obligations hereunder would be inadequate and
that each shall be entitled to specific performance, injunctive relief or other
suitable remedies in the event of any such failure.
(d) The Warrant shall be construed and enforced in
accordance with the internal laws of the State of California without regard to
principles of conflict of laws.
(e) Each of the Company and the Warrant Holder (i) hereby
irrevocably submits to the exclusive jurisdiction of the Federal and state
courts in Los Angeles County, California for the purposes of any suit, action or
proceeding arising out of or relating to the Warrant and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the Warrant
Holder consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices to
it under the Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this paragraph
shall affect or limit any right to serve process in any other manner permitted
by law. The prevailing party in any such suit, action or proceeding shall be
entitled to attorney's fees and costs.
(f) The section headings used herein are for convenience of
reference only and shall not be construed in any way to affect the
interpretation of any provisions of the Warrant.
(g) This Warrant is being issued pursuant to the Investment
Agreement and the Warrant Holder is entitled to all the protections and benefits
provided for therein.
IN WITNESS WHEREOF, the Company has caused the Warrant to be duly
executed by its authorized officer, and its corporate seal to be hereunto
affixed, and attested by its Secretary, all as of the day and year first above
written.
Nevada Manhattan Mining, Inc.
By:
Name:
Title:
Attested:
Nevada Manhattan Mining, Inc.
By:
Name:
Title: Secretary
15
ANNEX A
Form of Notice of Exercise
To: Nevada Manhattan Mining, Inc.
Reference is made to the Common Stock Purchase Warrant dated
____________ ____ ____ (the "Warrant"), a copy of which is annexed hereto. Terms
defined therein are used herein as therein defined.
The undersigned, pursuant to the provisions set forth in the Warrant,
hereby irrevocably elects and agrees to purchase ________ shares of Common
Stock, and
______ makes payment herewith in full therefor at the Exercise Price of
(initial if $___________ or
applicable)
_______ elects to have a Cashless Exercise.
(initial if
applicable)
If said number of shares is less than all of the shares purchasable hereunder,
the undersigned hereby requests that a new Warrant Certificate representing the
remaining balance of the shares be registered in the name of the undersigned,
whose address is set forth below.
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[NAME OF WARRANT HOLDER]
By: ___________________________
Name: _________________________
Title: __________________________
[ADDRESS OF WARRANT HOLDER]
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