UNIT PURCHASE WARRANT To Purchase Shares of Common Stock and Warrants of SUB- URBAN BRANDS, INC.
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
UNIT
PURCHASE WARRANT
To
Purchase Shares of Common Stock and Warrants of
THIS
UNIT
PURCHASE WARRANT (the “Unit
Purchase Warrant”)
certifies that, for value received, Jdabbco, Inc. (the “Holder”),
is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the
“Initial
Exercise Date”)
and on
or prior to the close of business on the 270th
day
after the Initial Exercise Date (the “Termination
Date”)
but
not thereafter, to subscribe for and purchase from Sub-Urban Brands, Inc. a
Nevada corporation (the “Company”),
a
Unit, consisting of 880,000 shares of Common Stock and a Warrant to purchase
440,000 shares of Common Stock of the Company (the “Common
Stock”).
Each
Warrant included in the Unit shall be exercisable for a period of three years
from their date of issuance at $0.50 per share and shall be identical to the
warrants issued to the Holder on May 23, 2006 (the “May
Warrants”).
The
purchase price of the Unit under this Unit Purchase Warrant shall be equal
to
the number of shares of Common Stock included in the Unit multiplied by $0.25.
The shares to be issued upon exercise of the Warrants included herein are herein
referred to as the “Warrant
Shares,”
and,
together with the shares of Common Stock included in the Unit as the
“Shares.”
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in that certain Securities Purchase Agreement (the “Purchase
Agreement”),
dated
May 23, 2006, among the Company and the purchasers signatory
thereto.
Section
2. Exercise.
a) Exercise
of Unit Purchase Warrant.
Exercise of the purchase rights represented by this Unit Purchase Warrant may
be
made, in whole or in part, at any time or times on or after the Initial Exercise
Date and on or before the Termination Date by delivery to the Company of a
duly
executed facsimile copy of the Notice of Exercise Form annexed hereto (or such
other office or agency of the Company as it may designate by notice in writing
to the registered Holder at the address of such Holder appearing on the books
of
the Company); provided,
however,
within
5 Trading Days of the date said Notice of Exercise is delivered to the Company,
the Holder shall have surrendered this Unit Purchase Warrant to the Company
and
the Company shall have received payment of the aggregate Exercise Price of
the
Securities thereby purchased by wire transfer or cashier’s check drawn on a
United States bank.
1
b) Exercise
Price.
The
exercise price of the Unit under this Warrant shall be $0.25 multiplied by
the
number of shares of Common Stock purchased hereunder (the “Exercise
Price”).
c) Mechanics
of Exercise.
i. Authorization
of Securities.
The
Company covenants that all Securities which may be issued upon the exercise
of
the purchase rights represented by this Unit Purchase Warrant will, upon
exercise of the purchase rights represented by this Unit Purchase Warrant,
be
duly authorized, and (with respect to the Shares) validly issued, fully paid
and
nonassessable and free from all taxes, liens and charges in respect of the
issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).
ii. Delivery
of Common Stock and Warrants Upon Exercise.
Upon
exercise hereof, the Company shall deliver to Holder certificates representing
the Common Stock and the Warrants.
iii. Closing
of Books.
The
Company will not close its stockholder books or records in any manner which
prevents the timely exercise of this Unit Purchase Warrants, pursuant to the
terms hereof.
d) Conditions
to Closing Upon Exercise.
The
Closing is subject to the satisfaction or waiver by the party to be benefited
thereby of the following conditions:
(a) The
Company shall have delivered or caused to be delivered to the Holder the
following:
(ii) a
certificate evidencing a number of shares of Common Stock equal to ▇▇▇▇▇▇’s
aggregate amount payable upon exercise divided by the Exercise Price per Unit,
registered in the name of the HolderolderH;
(iii) Warrants
registered in the name of the Holder to purchase up to a number of shares of
Common Stock equal to one half of the number of shares of Common Stock purchased
upon exercise of this Unit Purchase Warrant;
2
(iv) a
registration rights agreement duly executed by the parties with respect to
the
Shares substantially in the form of the Registration Rights
Agreement;
(v) a
certificate, signed by the Secretary of the Company, attaching (i) the charter
and By-Laws of the Company, and (ii) resolutions passed by its Board of
Directors to authorize the transactions contemplated hereby and by the other
Transaction Documents, and certifying that such documents are true and complete
copies of the originals and that such resolutions have not been amended or
superseded, it being understood that the Holder may rely on such certificate
as
a representation and warranty of the Company made herein; and
(vi) a
certificate, signed by the Chief Executive Officer of the Company, certifying
that the conditions specified in this Section have been fulfilled as of the
date
of the exercise, it being understood that the Holder may rely on such
certificate as though it were a representation and warranty of the Company
made
herein.
Section
3. Adjustments.
All
provisions relating to adjustments to be made to the exercise price of the
May
Warrants and the number of shares of Common Stock issuable upon exercise thereof
shall apply to the exercise price of the Warrants included herein and the number
of shares of Common Stock issuable upon exercise thereof, whether this Unit
Purchase Warrant has been exercised or not.
Section
4. Transfer
of Warrant.
a) Transferability.
Subject
to compliance with any applicable securities laws and the conditions set forth
in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the
Purchase Agreement, this Unit Purchase Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Unit Purchase Warrant
at the principal office of the Company, together with a written assignment
of
this Unit Purchase Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay
any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Unit
Purchase Warrant or Unit Purchase Warrants in the name of the assignee or
assignees and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Unit Purchase Warrant
evidencing the portion of this Unit Purchase Warrant not so assigned, and this
Unit Purchase Warrant shall promptly be cancelled. A Unit Purchase Warrant,
if
properly assigned, may be exercised by a new holder without having a new Unit
Purchase Warrant issued.
b) New
Unit Purchase Warrants.
This
Unit Purchase Warrant may be divided or combined with other Unit Purchase
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Unit Purchase Warrants are to be issued, signed by the Holder or its agent
or attorney. Subject to compliance with Section 4(a), as to any transfer which
may be involved in such division or combination, the Company shall execute
and
deliver a new Unit Purchase Warrant or Unit Purchase Warrants in exchange for
the Unit Purchase Warrant or Unit Purchase Warrants to be divided or combined
in
accordance with such notice.
3
c) Warrant
Register.
The
Company shall register this Unit Purchase Warrant, upon records to be maintained
by the Company for that purpose (the “Warrant
Register”),
in
the name of the record Holder hereof from time to time. The Company may deem
and
treat the registered Holder of this Unit Purchase Warrant as the absolute owner
hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
d) Transfer
Restrictions.
If,
at the
time
of
the surrender of this Unit
Purchase Warrant
in connection with any transfer of this Unit
Purchase Warrant,
the transfer of this Unit
Purchase Warrant
shall not be registered pursuant to an effective registration
statement under the Securities Act
and
under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer (i) that the Holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be in form, substance and scope customary for opinions
of
counsel in comparable transactions) to the effect that such transfer may be
made
without
registration under
the
Securities Act and under applicable state securities or blue sky laws, (ii)
that
the holder or transferee execute and deliver to the Company an investment letter
in form and substance acceptable to the Company and (iii) that the transferee
be
an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
promulgated under the Securities Act or a qualified institutional buyer as
defined in Rule 144A(a) under the Securities Act.
Section
5. Miscellaneous.
a) Title
to Unit Purchase Warrant.
Prior
to the Termination Date and subject to compliance with applicable laws and
Section 4 of this Unit Purchase Warrant, this Unit Purchase Warrant and all
rights hereunder are transferable, in whole or in part, at the office or agency
of the Company by the Holder in person or by duly authorized attorney, upon
surrender of this Unit Purchase Warrant together with the Assignment Form
annexed hereto properly endorsed. The transferee shall sign an investment letter
in form and substance reasonably satisfactory to the Company.
b) Rights
as Shareholder.
Voting
rights, if any, with respect to the Shares shall be established in accordance
with the terms of the Warrants and the Common Stock.
c) Loss,
Theft, Destruction or Mutilation of Unit Purchase Warrant.
The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Unit
Purchase Warrant or any stock certificate relating to the Shares, and in case
of
loss, theft or destruction, of indemnity or security reasonably satisfactory
to
it (which, in the case of the Warrant, shall not include the posting of any
bond), and upon surrender and cancellation of such Unit Purchase Warrant or
stock certificate, if mutilated, the Company will make and deliver a new Unit
Purchase Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Unit Purchase Warrant or stock
certificate.
4
d) Saturdays,
Sundays, Holidays, etc.
If the
last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall be a Saturday, Sunday or a legal holiday,
then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.
e) Authorized
Shares.
The
Company covenants that during the period the Unit Purchase Warrant is
outstanding, it will reserve from its authorized and unissued Common Stock
a
sufficient number of shares to provide for the issuance of the Shares upon
the
exercise of any purchase rights under the Unit Purchase Warrants and the
exercise of Warrants included herein. The Company further covenants that its
issuance of this Unit Purchase Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Shares upon the exercise
of
this Unit Purchase Warrants and the exercise of the Warrants included herein.
The Company will take all such reasonable action as may be necessary to assure
that such Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market
upon
which the Common Stock may be listed.
Except
and to the extent as waived or consented to by the Holder, the Company shall
not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this
Unit Purchase Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may
be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Shares above the amount
payable therefor upon such exercise immediately prior to such increase in par
value, (b) take all such action as may be necessary or appropriate in order
that
the Company may validly and legally issue fully paid and nonassessable Shares
upon the exercise of the Unit Purchase Warrant and exercise of the Warrants,
and
(c) use commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.
Before
taking any action which would result in an adjustment in the number of Shares
for which this Warrant is exercisable or in the Exercise Price, the Company
shall obtain all such authorizations or exemptions thereof, or consents thereto,
as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
5
f) Jurisdiction.
All
questions concerning the construction, validity, enforcement and interpretation
of this Unit Purchase Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.
g) Restrictions.
The
Holder acknowledges that the Shares acquired upon the exercise of the Unit
Purchase Warrant and the Warrants included therein, if not registered, will
have
restrictions upon resale imposed by state and federal securities
laws.
h) Nonwaiver
and Expenses.
No
course of dealing or any delay or failure to exercise any right hereunder on
the
part of Holder shall operate as a waiver of such right or otherwise prejudice
Holder’s rights, powers or remedies, notwithstanding the fact that all rights
hereunder terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Unit Purchase Warrant,
which results in any material damages to the Holder, the Company shall pay
to
Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
i) Notices.
Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
j) Limitation
of Liability.
No
provision hereof, in the absence of any affirmative action by Holder to exercise
this Unit Purchase Warrant, and no enumeration herein of the rights or
privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
k) Remedies.
Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Unit Purchase Warrant. The Company agrees that monetary damages
would
not be adequate compensation for any loss incurred by reason of a breach by
it
of the provisions of this Unit Purchase Warrant and hereby agrees to waive
the
defense in any action for specific performance that a remedy at law would be
adequate.
l) Successors
and Assigns.
Subject
to applicable securities laws, this Unit Purchase Warrant and the rights and
obligations evidenced hereby shall inure to the benefit of and be binding upon
the successors of the Company and the successors and permitted assigns of
Holder. The provisions of this Unit Purchase Warrant are intended to be for
the
benefit of all Holders from time to time of this Unit Purchase Warrant and
shall
be enforceable by any such Holder or holder of Shares.
m) Amendment.
This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.
6
n) Severability.
Wherever possible, each provision of this Unit Purchase Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Unit Purchase Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Unit Purchase
Warrant.
o) Headings.
The
headings used in this Unit Purchase Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this Unit Purchase
Warrant.
********************
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IN
WITNESS WHEREOF, the Company has caused this Unit Purchase Warrant to be
executed by its officer thereunto duly authorized.
Dated:
May ___, 2006
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| By: | ||
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Name: |
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| Title | ||
8
NOTICE
OF EXERCISE
(1) The
undersigned hereby elects to purchase ________ Units of the Company pursuant
to
the terms of the attached Unit Purchase Warrant (only if exercised in full),
and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
Payment
shall take the form of lawful money of the United States.
(2) Please
issue a certificate or certificates representing said Warrants and shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________
Certificates
shall be delivered to the following:
_______________________________
_______________________________
_______________________________
(4)
Accredited
Investor.
The
undersigned is an “accredited investor” as defined in Regulation D promulgated
under the Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name
of
Investing Entity:
______________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
________________________________________________________
Name
of
Authorized Signatory:
__________________________________________________________________________
Title
of
Authorized Signatory:
___________________________________________________________________________
Date:
_______________________________________________________________________________________________
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this
form
and supply required information.
Do
not
use this form to exercise the warrant.)
FOR
VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
Holder’s
Signature: _____________________________
Holder’s
Address: ______________________________
_____________________________
Signature
Guaranteed: ___________________________________________
NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.