THIS WARRANT AND THE SECURITIES PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS, UNLESS THE PROPOSED
TRANSFER MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR
REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
CAL-BAY INTERNATIONAL, INC.
WARRANT
No. 2 March 14, 2006
VOID AFTER March 14, 2011
THIS CERTIFIES that, for value received, PROFESSIONAL OFFSHORE OPPORTUNITY FUND
LIMITED, or its assigns (the "Holder"), shall be entitled to subscribe for and
purchase from CAL-BAY INTERNATIONAL, INC., a Nevada corporation (the
"Corporation"), 446,238 shares (subject to adjustment as provided herein, the
"Warrant Shares") of the Corporation's Common Stock at an exercise price of
$1.20 (the "Exercise Price" or the "Exercise Price Per Share") for each Warrant
Share, during the Exercise Period (as defined in Section 1), pursuant to the
terms and subject to the conditions of this Warrant. Certain terms used in this
Warrant are defined in Section 4. The Corporation represents and warrants that
the Warrant Shares, if issued on the date of this Warrant,would represent ____%
of the Corporation's issued and outstanding Common Stock.
As used herein, the term "Common Stock" shall mean (i) the class of stock
designated above or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value or from no par value to par
value. In the event the Corporation shall, after the date hereof, issue
securities of greater or superior voting rights than the shares of Common Stock
outstanding as of the date hereof, the Holder, at its option, may receive upon
exercise of any Warrant either Common Stock or a like number of such securities
with greater or superior voting rights. Notwithstanding the provisions of this
Warrant, in no event (except (i) as specifically provided in the Warrant as an
exception to this provision, (ii) during the forty-five (45) day period prior
to the expiration of the Exercise Period, or (iii) while there is outstanding a
tender offer for any or all of the shares of the Corporation's Common Stock)
shall the Holder be entitled to exercise this Warrant, or the Corporation have
the obligation to issue shares upon such exercise of all or any portion of this
Warrant to the extent that, after such exercise the sum of (1) the number of
shares of Common Stock beneficially owned by the Holder and its Affiliates
(other than shares of Common Stockwhich may be deemed beneficially owned through
ownership of the unexercised portion of the Warrants or other right to purchase
Common Stock or through the ownership of the unconverted portion of convertible
securities), and (2) the number of shares of Common Stock issuable upon the
exercise of the Warrants with respect to which the determination of the proviso
is being made, would result in beneficial ownership by the Holder and its
Affiliates of more than 4.99% of the outstanding shares of Common Stock (after
taking into account the shares to be issued to the Holder upon such exercise).
For purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 12(d) of the Securities
Exchange Act of 1934, as amended except as otherwise provided in clause (1) of
such sentence.
Section 1. Exercise Period.
This Warrant may be exercised in whole or in part by the Holder at any time
after the date hereof until 5:00 p.m. Eastern Time on March 14, 2011 (such
period being herein referred to as the "Exercise Period"). The Corporation
agrees to use reasonable efforts to mail to the original Holder by certified
mail, return receipt requested, notice of the expiration date of this Warrant,
no later than 15 days prior to such date, but failure to provide notice will not
extend the Exercise Period.
Section 2. Exercise of Warrant.
(a) The rights represented by this Warrant may be exercised, in whole or in
any part (but not as to a fractional share of Common Stock), by (i) the
surrender of this Warrant (properly endorsed) at the principal office of the
Corporation at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(or at such other agency or office of the Corporation in the United States of
America as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Corporation), (ii) delivery to the
Corporation of a notice of election to exercise in the form of Exhibit A, and
(iii) either (a)payment to the Corporation by cash,wire transfer funds or check
in an amount equal tothe then applicable Exercise Price Per Share multiplied by
the number of Warrant Shares then being purchased, or, (b) alternatively and
subject to the terms of Section 2(d) below, the Holder may exercise its right,
during the Exercise Period to receive Warrant Shares on a net basis such that,
without any payment of funds by the Holder, the Holder receives that number of
Warrant Shares otherwise issuable upon exercise of its Warrants less the number
of Warrant Shares having an aggregate Market Price at the time of exercise equal
to the aggregate Exercise Price Per Share that would otherwise have been payable
by the Holder of all such Warrant Shares.
(b) Each date on which this Warrant is surrendered and on which payment of
the Exercise Price is made in accordance with Section 2(a) above is referred to
as an "Exercise Date." Simultaneously with each exercise, the Corporation shall
issue and deliver a certificate or certificates for the Warrant Shares being
purchased pursuant to such exercise, registered in the name of the Holder or the
Holder's designee, to such Holder or designee, as the case may be. If such
exercise shall not have been for the full number of the Warrant Shares, then the
Corporation shall issue and deliver to the Holder a new Warrant, registered in
the name of the Holder, of like tenor to this Warrant, for the balance of the
Warrant Shares.
(c) The person in whose name any certificate for shares of Common Stock is
issued or issuable upon any exercise shall for all purposes be deemed to have
become the holder of record of such shares as of the Exercise Date. The
Corporation shall pay all documentary, stamp or other transactional taxes
attributable to the issuance or delivery of shares of Common Stock upon exercise
of all or any part of this Warrant; provided, however, that the Corporation
shall not be required to pay taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificate for such shares
in a name other than that of the Holder to the extent such taxes would exceed
the taxes otherwise payable if such certificate had been issued to the Holder.
No fractional shares of Common Stock will be issued in connection with any
exercise hereunder, but in lieu of such fractional shares, the Corporation shall
make a cash payment therefor equal in amount to the product of the applicable
fraction multiplied by the current Market Price per share of Common Stock.
(d) This Warrant and the Warrant Shares are covered by and are entitled to
the benefits of that certain Registration Rights Agreement dated the date hereof
between the Corporation and the Holder.
Section 3. Antidilution Provisions.
The number of shares of Common Stock
purchasable on exercise of this Warrant and payment of the Exercise Price shall
be subject to adjustment from time to time as provided in this Section 3.
(a) Issuance of Additional Common Stock. If the Corporation, at any time or
from time to time after the date of this Warrant, shall issue, sell, grant, or
shall fix a record date for the determination of holders of any class of
securities entitled to receive, shares of Common Stock at a price per share that
is less than the Exercise Price on the date the Corporation fixes the offering
price of such additional shares of Common Stock (a "Dilutive Issuance") then the
Exercise Price shall be reduced as of such date, to a price equal to the lowest
price per share received or to be received by the Corporation in such Dilutive
Issuance.
(b) Treatment of Options and Convertible Securities. If the Corporation, at
any time or from time to time after the date of this Warrant, shall issue, sell,
grant or assume, or shall fix a record date for the determination of holders of
any class of securities entitled to receive, any Options (defined below) or
Convertible Securities (defined below), then, and in each such case, the maximum
number of shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number and whether or not the right to convert or exchange or
exercise is immediate or conditioned upon the passage of time, the occurrence or
non-occurrence of some event or otherwise) issuable upon the exercise of such
Options or, in the case of Convertible Securities and options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
shares of Common Stock issued and consequently give rise to adjustment as, and
to the extent, provided in paragraph (a) as of the time of such issue, sale,
grant or assumption or, in case such a record date shall have been fixed, as of
the close of business on such record date; provided that, in each such case no
further adjustment to the Exercise Price shall be made upon the subsequent issue
or sale of shares of Common Stock upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(c) Change in Capital Stock. If the Corporation (i) pays a dividend or
makes a distribution on its Common Stock in shares of its Common Stock, (ii)
subdivides its outstanding shares of Common Stock into a greater number of
shares, (iii) combines its outstanding shares of Common Stock into a smaller
number of shares, or (iv) issues by reclassification of its Common Stock any
shares of its capital stock, then in each case the Exercise Price in effect
immediately prior to such action shall be proportionately adjusted so that the
Holder of any Warrant exercised thereafter may receive the aggregate number and
kind of shares of capital stock of the Corporation which he would have owned
immediately following such action ifsuch Warrant had been exercised immediately
prior to such action.The adjustment as provided in this paragraph (c) shall
become effective immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification. If after an adjustment, a Holder
of a Warrant, upon its exercise, may receive shares of two or more classes of
capital stock of the Corporation, the Corporation shall determine the allocation
of the adjusted Exercise Price between the classes of capital stock. After such
allocation, the exercise privilege and the exercise price of each such class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section 3.
(d) Dilution in Case of Other Securities. In case any Other Securities
shall be issued or sold or shall become subject to issue or sale upon the
conversion or exchange of any securities of the Corporation or to subscription,
purchase or other acquisition pursuant to any Options issued or granted by the
Corporation such as to dilute, on a basis to which the standards established in
the other provisions of this Section 3 are applicable, then, and in each such
case, the computations, adjustments and readjustments provided for in this
Section 3 shall be made as nearly as possible in the manner so provided and
applied to determine the amount ofOther Securities from time to time receivable
upon the exercise of the Warrants, so as to protect the Holder against the
effect of such dilution.
(e) Other Changes in Common Stock. If the Corporation shall be a party to
any Significant Corporate Event in which the previously outstanding shares of
Common Stock shall be changed into or exchanged for different securities of the
Corporation or common stock or other securities of another corporation or
interests in a noncorporate entity or other property (including cash) or any
combination of any of the foregoing, as a condition of the consummation of such
Significant Corporate Event, lawful and adequate provisions shall be made so
that (1) the Holder, upon the exercise hereof at any time on or after the date
such a Significant Corporate Event is consummated (the "Consummation Date")
(but during the Exercise Period), shall be entitled to receive,and this Warrant
shall thereafter represent the right to receive, in lieu of the Warrant Shares
issuable upon such exercise prior to the Consummation Date, the amount of
securities or other property to which the Holder would actually have been
entitled asa holder of Common Stock upon the consummation of such a Significant
Corporate Event if the Holder had exercised this Warrant immediately prior
thereto (subject to adjustments from and after the Consummation Date as nearly
equivalent as possible to the adjustments provided for in this Section 3), or
(2)in the case of a Significant Corporate Event in which the Corporation is not
the survivor, if so elected by the Holder, the Holder shall be entitled to
receive on the Consummation Date in cancellation of this Warrant, the amount of
securities or other property to which the Holder would actually have been
entitled as a holder of Common Stock upon consummation of such Significant
Corporate Event if the Holder had exercised this Warrant immediately prior
thereto and had paid the Exercise Price therefor.Notwithstanding anything
contained herein to the contrary, unless the Holder makes an election under
clause (2) above, the Corporation shall not effect any Significant Corporate
Event unless prior to the consummation thereof each acquiring corporation or
other person which may be required to deliver any securities or other property
upon the exercise of this Warrant shall assume, by written instrument delivered
to the Holder, the obligation to deliver to the Holder such securities or other
property to which, in accordance with the foregoing provisions, the Holder may
be entitled and an opinion of counsel reasonably satisfactory, which opinion
shall state that this Warrant, including, without limitation, the exercise and
anti-dilution provisions applicable to this Warrant, if any, shall thereafter
continue in full force and effect and shall be enforceable against such
acquiring corporation or other person in accordance with the terms hereof.
(f) Other Dividends or Other Distributions. If the Corporation declares a
dividend or other distribution upon its capital stock, other than a dividend
payable in shares of Common Stock, then the Corporation shall pay over to the
Holder, on the dividend payment date, the cash, stock or Other Securities and
other property which the Holder would have received ifthe Holder had exercised
this Warrant in full and had been the record holder of the Warrant Shares
represented by this Warrant on the date on which a record is taken for the
purpose of such dividend, or, if a record is not taken, the date as of which
the holders of such capital stock of record entitled to such dividend are to be
determined, provided that, in the case of a dividend consisting of stock or
securities (other than shares of Common Stock, Options or Convertible
Securities) or other property (except cash), the Holder may, at its option,
elect that instead, lawful and adequate provisions shall be made (including
without limitation any necessary reduction in the Exercise Price) whereby the
Holder shall thereafter have the right to receive,upon exercise of this Warrant
on the terms and conditions specified in this Warrant and in addition to the
Warrant Shares issuable upon such exercise, such shares of stock, securities or
property.
(g) Adjustment of Number of Shares. Upon each adjustment in the Exercise
Price, the number of Warrant Shares purchasable hereunder shall be adjusted to
the nearest whole share to the product obtained by multiplying the number of
Warrant Shares purchasable immediately prior to such adjustment in the Exercise
Price by a fraction, the numerator of which shall be the Exercise Price
immediately prior to such adjustment and the denominator of which shall be the
Exercise Price immediately thereafter.
(h) Notice of Adjustment. Whenever the Exercise Price or the number of
Warrant Shares for which this Warrant is exercisable shall be adjusted pursuant
to this Section 3, the Corporation shall deliver a certificate signed by its
chief financial officer to the Holder setting forth, in reasonable detail, the
event requiring the adjustment, the method by which adjustment was calculated
specifying the number of Warrant Shares for which this Warrant is now
exercisable, and any change in the Exercise Price.
(i) Notice of Certain Corporate Action. In case the Corporation shall
propose to (1) pay any dividend or make any other distribution to the holders of
its capital stock, (2) offer to the holders of its capital stock rights to
subscribe for or to purchase shares of Common Stock or shares of any other class
of securities, rights or options, (3) effect any reclassification of its capital
stock, (4) effect any reorganization, or (5) effect any Significant Corporate
Event, then, in each such case, the Corporation shall give to the Holder a
notice of such proposed action, which shall specify the date on which a record
is to be taken for the purposes of such dividend, distribution rights or vote,
or the date on which such reclassification, reorganization, or Significant
Corporate Event is to take place and the date of participation therein by the
holders of capital stock, if any such date is to be fixed and shall also set
forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the capital stock, if any, and the number
and kind of any other shares of capital stock which will comprise the Warrant
Shares, and the Exercise Price, after giving effect to any adjustment, if any,
which will be required by this Section 3 as a result of such action. Such notice
shall be so given in the case of any action covered by clause (1) or (2) above
at least 20 days prior to the record date for determining holders of the capital
stock for purposes of such action, and in the case of any other such action, at
least 30 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of capital stock, whichever shall
be the earlier.
(j) Certain Events. If any event occurs as to which, in the good faith
judgment of the Board of Directors of the Corporation, the other provisions of
this Section 3 are not strictly applicable or if strictly applicable would not
fairly protect the exercise rights of the Holder in accordance with the
essential intent and principles of this Section 3, then the Board of Directors
of the Corporation in the good faith, reasonable exercise of its business
judgment may decrease the Exercise Price and/or increase the number of Warrant
Shares issuable upon exercise hereof, in accordance with such essential intent
and principles so as to protect such exercise rights as aforesaid.
(k) Purchase of Common Stock by Corporation. If the Corporation at any time
while this Warrant is outstanding, directly or indirectly, through an affiliate
or otherwise, purchases, redeems or acquires any shares of Common Stock at a
price per share in excess of the then current Market Price per share for Common
Stock then the Exercise Price shall be adjusted to that price determined by
multiplying such Exercise Price by a fraction, (i) the numerator of which is the
number of outstanding shares of Common Stock prior to such purchase, redemption
or other acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would have purchased at the current Market
Price and (ii) the denominator of which is the number of outstanding shares of
Common Stock after giving effect to such purchase, redemption or acquisition.
(l) Computation of Consideration. For the purposes of this Section 3:
(1) the consideration for any shares of Common Stock or any Options or
Convertible Securities, irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, shall be computed as the amount of cash
received by the Corporation, and insofar as it consists of securities, the
Market Price therefor or insofar as it consists of other property, the Fair
Market Value thereof, as of the date immediately preceding such issue, sale,
grant, or the record date therefor, in each case without deducting any expenses
paid or incurred by the Corporation, any commissions or compensation paid or
concessions or discounts allowed to underwriters, dealers or others performing
similar services, and any accrued interest or dividends in connection with such
issue or sale, and
(ii) in case shares of Common Stock or Options or Convertible Securities are
or are to be issued, sold or granted together with other stock or securities or
other assets of the Corporation for a consideration which covers both, shall be
the proportion of such consideration so received, computed as provided in
subdivision (i) above, allocable to such shares of Common Stock or Options or
Convertible Securities, as the case may be, all as determined by the Board of
Directors of the Corporation in the good faith reasonable exercise of its
business judgment; and
(2) shares of Common Stock deemed to have been issued upon the issue, sale,
or grant of Options or Convertible Securities pursuant to Section 3(b), shall be
deemed to have been issued for a consideration per share of Common Stock
determined by dividing
(i) the total amount, if any, received and receivable (or, pursuant to this
Section 3(l), deemed to have been received) by the Corporation as consideration
for the issue, sale, or grant of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise in full of such Options or the conversion or
exchange of such Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities, in each case
comprising such consideration as provided in the foregoing subdivision (1), by
(ii) the maximum number of shares of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible Securities.
Section 4. Certain Defined Terms.
"Affiliate" means any corporation, partnership, limited liability company, joint
venture, trust, unincorporated organization or other person which, directly or
indirectly, controls or is controlled by or is under common control with the
Holder. "Convertible Securities" means any evidences of indebtedness, shares of
stock, or securities directly or indirectly convertible into or exchangeable by
their terms for shares of Common Stock. "Fair Market Value" means, on any
relevant date, as to any property, the fair market value as reasonably
determined by the Board of Directors ofthe Corporation and reasonably acceptable
to the Holder, but if the Holder has not so accepted such determination of fair
market value within 10 business days ofthe date notice of such determination by
the Board of Directors is delivered to the Holder, then as determined by an
independent investment banking firm selected by the Holder and reasonably
acceptable to the Corporation. If the Fair Market Value is determined by such
investment banking firm exceeds the Fair Market Value as determined by the Board
of Directors by 10% or more, the cost of the engagement of the investment
banking firm will be borne by the Corporation.
"Market Price" means, as to any security on any relevant date, the Fair Market
Value per share of such security, or if there shall be a public market for such
security, the average of the daily closing prices for the ten (10) consecutive
trading days before such date excluding any trades which are not bona fide arm's
length transactions. The closing price for each day shall be (a) if such
security is listed or admitted for trading on any national securities exchange,
the last sale price of such security, regular way, or the mean of the closing
bid and asked prices thereof if no such sale occurred, in each case as
officially reported on the principal securities exchange on which such security
are listed, or (b) if quoted on NASDAQ or any similar system of automated
dissemination of quotations of securities prices then in common use the mean
between the closing high bid and low asked quotations of such security in the
over-the-counter market as shown by NASDAQ or such similar system of automated
dissemination of quotations of securities prices, as reported by any member firm
of the New York Stock Exchange selected by the Corporation, (c) if not quoted as
described in clause (b), the mean between the high bid and low asked quotations
for the Warrant Shares as reported by NASDAQ or any similar successor
organization, as reported by any member firm of the New York Stock Exchange
selected by the Corporation. If such security is quoted on a national
securities or central market system in lieu of a market or quotation system
described above, the closing price shall be determined in the manner set forth
in clause (a) of the preceding sentence if bid and asked quotations are reported
but actual transactions are not, and in the manner set forth in clause (b) of
the preceding sentence if actual transactions are reported."Options" means
rights, options or warrants to subscribe for, purchase or otherwise acquire
either Common Stock or Convertible Securities."Other Securities" means any
capital stock (other than Common Stock) and any other securities of the
Corporation or any other person (corporate or otherwise) which the Holder at any
time shall be entitled to receive, or shall have received, upon the exercise or
partial exercise of this Warrant, in lieu of or in addition to shares of Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of shares of Common Stock or Other Securities
pursuant to Section 3 or otherwise."Significant Corporate Event" means any sale,
transfer or lease of all or substantially all of the Corporation's assets, a
merger or consolidation involving the Corporation, the repurchase by the
Corporation of more than 10% of the Corporation's capital stock, liquidation or
dissolution of the Corporation.
Section 5. Representations, Warranties and Covenants as to Stock.
The Corporation represents and warrants to the Holder that (i) all shares of
Common Stock which may be issued upon the exercise of this Warrant will, upon
issuance, be duly authorized, validly issued, fully paid and nonassessable, with
no personal liability attaching to the ownership thereof, and free from all
taxes, liens and charges with respect to the issuance thereof (ii) the
Corporation is duly organized, validly existing and in good standing under the
laws of the State of Nevada, has all requisite power to carry on its business as
presently being conducted, and is qualified to do business and is in good
standing in every jurisdiction in which the failure so to qualify or to be in
good standing could have a material adverse effect on the Corporation, (iii) the
Corporation has all requisite power and authority to execute and deliver this
Warrant and to perform its obligations hereunder, (iv) this Warrant has been
duly authorized by all necessary corporate action on the part of the
Corporation, has been duly executed and delivered by the Corporation and
constitutes the valid and legally binding obligation of the Corporation
enforceable in accordance with its terms, (v) the execution, delivery and
performance of this Warrant by the Corporation have not violated and shall not
violate any law, rule or regulation to which the Corporation is subject, the
certificate of incorporation or by-laws of the Corporation or any material
agreement to which the Corporation is a party or by which it is bound, (vi) the
authorized capital stock of the Corporation consists of 100 million and (vii)
except as set forth on Schedule 5 hereto, there are no outstanding warrants,
options, agreements, convertible securities or other commitments pursuant to
which the Corporation is or may become obligated to issue or sell any shares of
its capital stock or other securities,and no preemptive rights or similar rights
to purchase or otherwise acquire shares of the capital stock or other securities
of the Corporation exist. The Corporation covenants to the Holder that it will
(a) from time to time take all such action as may be required to assure that the
stated or par value per share of the Common Stock isat all times no greater than
the then effective Exercise Price and (b) not amend or modify any provision of
its Articles of Incorporation or by-laws in any manner that would adversely
affect in any way the powers, preferences or relative participating, optional or
other special rights of the Common Stock or the rights of the Holder of any
Warrants. The Corporation further covenants and agrees that the Corporation will
take all such action as may be required to assure that the Corporation shall at
all times have authorized and reserved, free from preemptive rights,a sufficient
number of shares of its Common Stock to provide for the exercise of this Warrant
in full. If any shares of Common Stock reserved for the purpose of issuance upon
the exercise of this Warrant require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon exercise, then the Corporation shall at its
expense in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be.
Section 6. Purchase Rights.
If at any time the Corporation grants, issues or sells any Options, Convertible
Securities, Other Securities or any shares of any capital stock, or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of Common Stock (the Purchase Rights), then the Holder shall be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of
this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the person or the record holders of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights. For the
avoidance of doubt, the foregoing is intended to include, without limitation, a
preemption right in favor of the Holder with respect to any issuance of equity
securities by the Corporation by which the Holder will have the right, but not
the obligation, to maintain its respective proportionate share of ownership
interest inthe Corporation through the purchase of additional shares in the new
issuance on the terms and conditions in such issuance. The terms of this
Section 6 shall expire at the end of the Exercise Period.
Section 7. No Shareholder Rights.
This Warrant shall not entitle the Holder to any voting rights or other rights
as a shareholder of the Corporation.
Section 8. Restrictions on Transfer.
Subject to applicable securities laws
this Warrant, the Warrant Shares and all rights hereunder are transferable to
any Affiliate of the Holder, in whole or in part, and from time to time, upon
(i) surrender of this Warrant properly endorsed, and (ii) delivery of a notice
of transfer in the form of Exhibit B by the Holder of its duly authorized
attorney at the office of the Corporation, the Corporation will at its expense
issue to or upon the order of the Holder a new Warrant or Warrants of like tenor
in the name of such Holder or as such Holder may direct. Each transferee and
holder of this Warrant, by accepting or holding the same, consents that this
Warrant, when endorsed, in blank, shall be deemed negotiable, and, when so
endorsed, the holder hereof shall be treated by the Corporation and all other
persons dealing with this Warrant as the absolute owner hereof for any purposes
and as the person entitled to exercise the rights represented by this Warrant,
or to the transfer hereof on the books of the Corporation, any notice to the
contrary notwithstanding; provided, however, that until each such transfer is
recorded on such books, the Corporation may treat the registered holder hereof
as the owner hereof for all purposes. Until such time as it is no longer
required under the Act, the certificates representing the Warrant Shares shall
bear the following legend:"The shares of Stock represented by this certificate
have not been registered under the Securities Act of 1933, as amended
(the "Act"), and may not be sold or transferred in the absence of an effective
registration statement under the Act or an opinion of counsel in form
satisfactory to the Corporation that such registration is not required under
the Act."
Section 9. Lost, Stolen, Mutilated or Destroyed Warrant.
If this Warrant is lost, stolen, mutilated or destroyed, the Corporation shall
at its expense (upon delivery of an indemnity agreement reasonably satisfactory
in the Corporation and, in the case of a mutilated Warrant, surrender thereof),
issue a new Warrant of like denomination and tenor as the Warrant so lost,
stolen, mutilated or destroyed. Any such new Warrant shall constitute an
original contractual obligation of the Corporation, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
Section 10. Notices.
All notices or other communications which are required or permitted hereunder
shall be in writing and sufficient if delivered personally or sent by recognized
overnight courier, prepaid, addressed as follows:
If to the Corporation, to: Cal-Bay International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, CEO
Facsimile Number: ▇▇▇-▇▇▇-▇▇▇▇
If to the Holder, at:
Professional Offshore Opportunity Fund Limited
Professional Traders Management, LLC
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith.
Section 11. Remedies.
The Corporation stipulates that the remedies at law of the Holder of thisWarrant
in the event of a default or threatened default by the Corporation in the
performance of or compliance with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest extent permitted by law,
such terms may be specifically enforced bya decree for the specific performance
of any agreement contained herein or byan injunction against a violation of any
of the terms hereof or otherwise.
Section 12. Successors and Assigns.
This Warrant and the rights evidenced hereby shall inure to the benefit of and
be binding upon the successors and assigns of the Corporation, the Holder
hereof and (to the extent provided herein) the holders of Warrant Shares issued
pursuant hereto, and shall be enforceable by any such Holder or holders.
Section 13. Modification and Severability.
If, in any action before any court or agency legally empowered to enforce any
provision contained herein, any provision hereof is found to be unenforceable,
then such provision shall be deemed modified to the extent necessary to make it
enforceable by such court or agency. If any such provision is not enforceable
as set forth in the preceding sentence, the unenforceability of such provision
shall not affect the other provisions of this Warrant, but this Warrant shall
be construed as if such unenforceable provision had never been contained
herein.
Section 14. Governing Law.
The construction, validity, interpretation and enforcement of this Warrant
shall be governed by the laws of the State of New York (without giving effect
to any laws or rules relating to conflicts of laws that would cause the
application of the laws of any jurisdiction other than the State of New York).
Section 15. Headings.
The headings of the various sections contained in
this Warrant have been inserted for convenience of reference only and should not
be deemed to be a part of this ▇▇▇▇▇▇▇.▇▇ WITNESS WHEREOF, the Corporation has
caused this Warrant to be executed by its duly authorized officer as of the date
first written above.
CAL-BAY INTERNATIONAL, INC.
By: \S\▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Title: President, Cal Bay International, Inc.
EXHIBIT A
FORM OF NOTICE OF ELECTION TO EXERCISE
[To be executed only upon exercise
of the Warrant to which this form is attached]
To CAL-BAY INTERNATIONAL, INC.:
The undersigned, the holder of the Warrant to which this form is attached,
hereby irrevocably elects to exercise the right represented by such Warrant to
purchase shares of Common Stock of CAL-BAY INTERNATIONAL, INC., and herewith
either [circle (a) or (b)]: (a) tenders the aggregate payment of $_________ in
the form of cash, wire transfer funds, check or (b)elects to exercise its right
to acquire the Common Stock without any payment of funds as provided in Section
2 of the Warrant. The undersigned requests that a certificate for such shares
be issued in the name of , whose address is__________________, and
that such certificate be delivered to
______________________, whose address is ____________________________________.
If such number of shares is less than all of the shares purchasable under the
Warrant, the undersigned requests that a new Warrant, of like tenor as the
Warrant to which this form is attached, representing the right to purchase the
remaining balance of the shares purchasable under such current Warrant be
registered in the name of __________________,
whose address is ___________________________________,
and that such new Warrant be delivered to
__________________, whose address is _______________________________________.
Signature:
(Signature must conform in all respects to the name of the holder of the
Warrant as specified on the face of the Warrant)
Date:
EXHIBIT B
FORM OF NOTICE OF TRANSFER
[To be executed only upon transfer
of the Warrant to which this form is attached]
For value received, the undersigned hereby sells, assigns and transfers unto
______________________ all of the rights represented by the Warrant to which
this form is attached to purchase _________________________ shares of Common
Stock of CAL-BAY INTERNATIONAL, INC.(the "Corporation"),to which such Warrant
relates, and appoints ______________________ as its attorney to transfer such
right on the books of the Corporation, with full power of substitution in the
premises.
Signature:
(Signature must conform in all respects to the name of the holder of the
Warrant as specified on the face of the Warrant)
Address:
Date:
Signed in the presence of: