EXHIBIT 4.1
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE
OPINION OF COUNSEL FOR THE COMPANY, IS AVAILABLE.
Void after 5:00 P.M. New York City time on the last day of the Exercise Period,
as defined in the Warrant
COMMON STOCK PURCHASE WARRANT
OF
THE SAGEMARK COMPANIES LTD.
This is to certify that, FOR VALUE RECEIVED, ________________________
(the "Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from The Sagemark Companies Ltd., a New York corporation (the
"Company"), at an exercise price per share of Four Dollars ($4.00), subject to
adjustment as provided in this Warrant (the "Warrant Exercise Price")
___________________ (______) shares of common stock, par value $0.01 per share
(the "Common Stock"). The shares of Common Stock deliverable upon such exercise,
and as adjusted from time to time, are hereinafter sometimes referred to as the
"Warrant Shares."
1. ISSUANCE OF WARRANT. This Warrant is being issued pursuant to
that certain Subscription Agreement dated as of November 29, 2004 between the
Company and the Holder (the "Subscription Agreement"). Capitalized terms used
but not otherwise defined herein shall have the meanings ascribed thereto in the
Subscription Agreement or the Memorandum (hereinafter defined). In addition, the
following terms shall have the meanings set forth below:
"Closing Price" means, as of any date, the last trading price
for the Common Stock as reported by the NASDAQ OTC Bulletin Board, or other
principal exchange or electronic trading system on which the shares of Common
Stock are quoted or traded.
"Common Stock Purchase Price," shall mean a price equal to 70%
of the Closing Price of the shares of Common Stock on the OTC Bulletin Board on
the last trading day immediately prior to the initial closing of the Placement
(the "Initial Closing") or any subsequent closing of the Placement (each, a
"Subsequent Closing" and together with the Initial Closing, each, a "Closing"
and collectively, the "Closings"), with a floor on the Common Stock Purchase
Price of Two Dollars ($2.00) and a ceiling on the Common Stock Purchase Price of
Two Dollars and Forty Cents ($2.40). If one or more Subsequent Closings occurs,
the Common Stock Purchase Price, for purposes of each of such Subsequent
Closings, shall be adjusted to equal the (i) lowest Common Stock Purchase Price
determined at any prior Closing or (ii) the Common Stock Purchase Price
determined for any Subsequent Closing.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities, which are convertible into or exchangeable,
with or without payment of additional consideration in cash and/or property, for
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shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.
"Exercise Period" shall mean the period commencing on the date
hereof and ending at 5:00 p.m., Eastern Time on November 28, 2009.
"Memorandum" shall mean the Company's Confidential Private
Placement Memorandum dated as of October 14, 2004 (as amended or supplemented,
and together with all exhibits attached thereto).
"Permitted Issuances" shall mean (i) Common Stock issued
pursuant to a stock split or subdivision, (ii) Common Stock issuable or issued
to employees, consultants, officers, directors, or advisors of the Company
directly or pursuant to a stock purchase plan or other compensation arrangement
approved by the Board of Directors of the Company which are issued at fair
market value at the date of issuance, (iii) capital stock, debt instruments
convertible into capital stock or warrants or options to purchase capital stock
issued in connection with bona fide acquisitions, mergers, or purchases,
corporate partnering agreements, joint ventures or financing of positron
emission tomography diagnostic imaging centers pursuant to any contract in
existence on the date hereof, or similar transactions, the terms of which are
approved by the Board of Directors of the Company, and (iv) Common Stock issued
or issuable upon exercise or conversion of any warrants, options or any other
securities exercisable or exchangeable for, or convertible into shares of Common
Stock outstanding as of November 29, 2004.
"Placement" means the private placement by the Company of up
to $6,000,000 worth of Units consisting of shares of the Company's Common Stock
and Warrants, including this Warrant.
"Redemption Conditions" means each of the following conditions
to a redemption of this Warrant by the Company : (i) the shares of Common Stock
have had an average Closing Price at or above Six Dollars and Fifty Cents
($6.50) per share (as adjusted for any stock splits, combinations or other
recapitalizations) for 20 consecutive trading days ending on the date of the
Redemption Notice (hereinafter defined) (the "Redemption Measuring Period"), and
(ii) the resale of the shares of Common Stock issuable upon exercise of this
Warrant is registered with the Securities and Exchange Commission (the "SEC")
for resale to the public under an effective registration statement and all such
shares remain registered thereafter until redemption.
"Securities Act" means the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.
2. EXERCISE OF WARRANT. This Warrant may be exercised in whole or
in part at any time or from time to time from the date hereof until the end of
the Exercise Period by presentation and surrender of this Warrant to the Company
at its principal office, or at the office of its stock transfer agent, if any,
with the Purchase Form annexed hereto duly executed and accompanied by payment
of the Warrant Exercise Price for the number of shares of Common Stock specified
in such form. If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of the Holder to purchase the balance of the
shares of Common Stock purchasable hereunder. Upon receipt by the Company of
this Warrant at its office, or by the stock transfer agent of the Company at its
office, in proper form for exercise, the Holder shall be deemed to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then actually be delivered to the Holder. As soon as practicable after each
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exercise of this Warrant, in whole or in part, and in any event within seven (7)
days thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Holder hereof or, subject to Section 11 hereof, as the Holder (upon payment
by the Holder of any applicable transfer taxes) may direct, a certificate or
certificates (with appropriate restrictive legends, as applicable) for the
number of duly authorized, validly issued, fully paid and non-assessable shares
of Common Stock to which the Holder shall be entitled upon exercise. All
issuances of Common Stock pursuant to the exercise of this Warrant shall be
rounded (up or down as the case may be) to the nearest whole share.
3. RESERVATION OF SHARES/FRACTIONAL SHARES. The Company hereby
agrees that at all times there shall be reserved for issuance and/or delivery
upon exercise of this Warrant such number of shares of Common Stock as shall be
required for issuance and delivery upon exercise of this Warrant. No fractional
shares or script representing fractional shares shall be issued upon the
exercise of this Warrant. Instead, the Company will round up to the nearest
whole share.
4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This
Warrant is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Warrant to the Company for other Warrants of
different denominations entitling the Holder thereof to purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder. Upon
surrender of this Warrant to the Company or at the office of its stock transfer
agent, if any, with the Assignment Form annexed hereto duly executed and funds
sufficient to pay any applicable transfer tax, the Company shall, without
charge, execute and deliver a new Warrant in the name of the assignee named in
such instrument of assignment and this Warrant shall promptly be canceled. This
Warrant may be divided or combined with other Warrants which carry the same
rights upon presentation of this Warrant at the office of the Company or at the
office of its stock transfer agent, if any, together with a written notice
specifying the names and denominations in which new Warrants are to be issued
and signed by the Holder hereof. The term "Warrant" as used herein includes any
Warrants into which this Warrant may be divided or for which it may be
exchanged. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, (and, in the case of
loss, theft or destruction, of reasonably satisfactory indemnification), and
upon surrender and cancellation of this Warrant, the Company will execute and
deliver a new Warrant of like tenor. Any such new Warrant executed and delivered
shall constitute an additional contractual obligation on the part of the
Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated
shall be at any time enforceable by anyone.
5. RIGHTS AND OBLIGATIONS OF THE HOLDER. The Holder shall not, by
virtue of this Warrant, be entitled to any rights of a stockholder of the
Company, either at law or equity, and the rights of the Holder are limited to
those expressed in this Warrant and are not enforceable against the Company
except to the extent set forth herein. In addition, no provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no enumeration herein of the rights or privileges of the Holder hereof shall
give rise to any liability of such 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.
6. ANTI-DILUTION PROVISIONS.
The Warrant Exercise Price in effect at any time and the
number and kind of securities purchasable upon exercise of each Warrant, shall
be subject to adjustment as follows. The Company shall give each Holder notice
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of any event described below which requires an adjustment pursuant to this
Section 6 at the time of such event:
(a) Stock Dividends, Subdivisions and Combinations. If
at any time the Company shall:
(i) take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend payable in, or
other distribution of, shares of Common Stock,
(ii) subdivide or reclassify its outstanding
shares of Common Stock into a larger number of shares of Common Stock, or
(iii) combine or reclassify its outstanding shares
of Common Stock into a smaller number of shares of Common Stock or otherwise
effect a reverse stock split, then:
(A) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event, or the record date therefor,
whichever is earlier, would own or be entitled to receive after the happening of
such event, and (B) the Warrant Exercise Price shall be adjusted to equal: (x)
the Warrant Exercise Price immediately prior to such event multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (y) the number of shares for
which this Warrant is exercisable immediately after such adjustment.
(b) Certain Other Distributions and Adjustments.
(i) If at any time the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(A) cash,
(B) any evidences of its indebtedness, any
shares of its capital stock or any other securities or property of any nature
whatsoever (other than Convertible Securities or shares of Common Stock), or
(C) any warrants or other rights to
subscribe for or purchase any evidences of its indebtedness, any shares of its
stock or any other securities or property of any nature whatsoever (other than
Convertible Securities or shares of Common Stock), the Holder shall be entitled
to receive such dividend or distribution as if the Holder had exercised this
Warrant.
(ii) A reclassification of the Common Stock
(other than a change in par value, or from par value to no par value or from no
par value to par value) into shares of Common Stock and shares of any other
class of stock shall be deemed a distribution by the Company to the holders of
its Common Stock of such shares of such other class of stock and in such event
the Holder shall be entitled to receive such distribution as if the Holder had
exercised this Warrant and, if the outstanding shares of Common Stock shall be
changed into a larger or smaller number of shares of Common Stock as a part of
such reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the meaning
of Section 6(a).
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(c) Issuance of Additional Shares of Common Stock.
(i) Except in connection with Permitted
Issuances, if, at any time prior to the first anniversary of the Final Closing
(as defined in the Subscription Agreement), the Company shall issue or sell any
shares of Common Stock (or other securities convertible into Common Stock) for
no consideration or for consideration in an amount per share of Common Stock (or
other securities convertible into Common Stock) less than the lowest Common
Stock Purchase Price calculated for any Closing (the "Discounted Price," each
such sale or issuance, a "Discounted Price Transaction" and the number of shares
sold or issued in such Discounted Price Transaction the "Discounted Sale
Volume"), the Warrant Exercise Price then in effect shall immediately, and
without any further action by the Company or the Holder required, be adjusted,
concurrently with such issuance, to a price equal to the Discounted Price.
(ii) Except in connection with Permitted
Issuances, if, at any time after the first anniversary of the Final Closing the
Company shall issue or sell any shares of Common Stock (or other securities
convertible into Common Stock) in a Discounted Price Transaction, then (A) the
Warrant Exercise Price then in effect shall be adjusted (or further adjusted as
the case may be) to a price determined by multiplying the Warrant Exercise Price
in effect immediately prior to such event by a fraction, of which the numerator
shall be the sum of money raised in the Placement plus the sum of money raised
in all Subsequent Discounted Price Transactions, and of which the denominator
shall be the sum of money raised in the Placement plus the sum of money equal to
the product of the cumulative Discounted Sale Volumes of all Discounted Price
Transactions and such Common Stock Purchase Price, and (B) the number of shares
of Common Stock for which this Warrant is exercisable shall be adjusted to equal
the product obtained by multiplying the Warrant Exercise Price in effect
immediately prior to such Discounted Price Transaction by the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to such
Discounted Price Transaction and dividing the product thereof by the Warrant
Exercise Price resulting from the adjustment made pursuant to clause (A) above.
(iii) The provisions of paragraph (i) and (ii) of
this Section 6(c) shall not apply to any issuance of shares of Common Stock for
which an adjustment is provided under Section 6(a) or 6(b). No adjustment of the
number of shares of Common Stock for which this Warrant shall be exercisable
shall be made under paragraph (i) of this Section 6(c) upon the issuance of any
shares of Common Stock which are issued pursuant to the exercise of any warrants
or other subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such warrants or
other rights or upon the issuance of such Convertible Securities (or upon the
issuance of any warrant or other rights therefor) pursuant to Section 6(d).
(d) Issuance of Warrants or Other Rights.
(ii) If at any time the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or shall in any manner (whether directly or by
assumption in a merger in which the Company is the surviving corporation) issue
or sell, any warrants or other rights to subscribe for or purchase any shares of
Common Stock or any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such warrants or
other rights or upon conversion or exchange of such Convertible Securities shall
be less than the Common Stock Purchase Price, then the number of shares for
which this Warrant is exercisable and the Warrant Exercise Price shall be
adjusted as provided in Section 6(c)(i) or (ii) hereof (depending upon the time
at which such record is taken) on the basis that the maximum number of shares of
Common Stock issuable pursuant to all such warrants or other rights or necessary
to effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall be deemed to
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have received all the consideration payable therefor, if any, as of the date of
issuance of such warrants or other rights. No further adjustment of the Warrant
Exercise Price(s) shall be made upon the actual issue of such Common Stock or of
such Convertible Securities upon exercise of such warrants or other rights or
upon the actual issuance of such Common Stock upon such conversion or exchange
of such Convertible Securities.
(iii) If at any time the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or shall in any manner (whether directly or by
assumption in a merger in which the Company is the surviving corporation) issue
or sell, any warrants or other rights to subscribe for or purchase any shares of
Common Stock or any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such warrants or
other rights or upon conversion or exchange of such Convertible Securities shall
be equal to or more than the Common Stock Purchase Price, but less than the
Warrant Exercise Price, then the Warrant Exercise Price shall be adjusted
downward to match the exercise price of such new warrants or other rights.
(e) Superseding Adjustment. If at any time after any
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Warrant Exercise Price(s) shall have been made pursuant to
Section 6(d) as the result of any issuance of warrants, rights or Convertible
Securities,
(i) such warrants or rights, or the right of
conversion or exchange in such other Convertible Securities, shall expire, and
all or a portion of such warrants or rights, or the right of conversion or
exchange with respect to all or a portion of such other Convertible Securities,
as the case may be, shall not have been exercised, or
(ii) the consideration per share for which shares
of Common Stock are issuable pursuant to such warrants or rights, or the terms
of such other Convertible Securities, shall be increased solely by virtue of
provisions therein contained for an automatic increase in such consideration per
share upon the occurrence of a specified date or event, then for each
outstanding Warrant such previous adjustment shall be rescinded and annulled and
the shares of Common Stock which were deemed to have been issued by virtue of
the computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation made
in connection with the adjustment so rescinded and annulled shall no longer be
deemed to have been issued by virtue of such computation. Thereupon, a
re-computation shall be made of the effect of such rights or options or other
Convertible Securities on the basis of:
(A) treating the number of shares of Common
Stock or other property, if any, theretofore actually issued or issuable
pursuant to the previous exercise of any such warrants or rights or any such
right of conversion or exchange, as having been issued on the date or dates of
any such exercise and for the consideration actually received and receivable
therefor, and
(B) treating any such warrants or rights or
any such other Convertible Securities which then remain outstanding as having
been granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock or other property are
issuable under such warrants or rights or other convertible Securities;
whereupon a new adjustment of the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Exercise Price(s) shall be made,
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which new adjustment shall supersede the previous adjustment so rescinded and
annulled.
(f) No adjustment in the Warrant Exercise Price shall be
required unless such adjustment would require an increase or decrease of at
least One Cent ($0.01) in such price; provided, however, that any adjustments
which by reason of this Section 6(f) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 6(f) shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
(g) The Company may retain a firm of independent public
accountants of recognized standing selected by the Board (who may be the regular
accountants employed by the Company) to make any computation required by this
Section 6.
(h) In the event that at any time, as a result of an
adjustment made pursuant to Section 6(a), (b) or (c) of this Warrant, the Holder
of any Warrant thereafter shall become entitled to receive any shares of the
Company's capital stock, other than Common Stock, thereafter the number of such
other shares so receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Sections 6(a) through (h), inclusive, of this Warrant.
(i) Notwithstanding the foregoing, no adjustment pursuant
to this Section 6 shall be effected due to, or as a result of, any Permitted
Issuances.
7. REDEMPTION.
(a) Redemption Option. Upon the satisfaction of the
Redemption Conditions, the Company may, at the option of its Board of Directors
at any time following the Final Closing redeem all (but not less than all) of
the Warrants, out of funds legally available therefor by paying the Redemption
Price (as hereafter defined) in cash for each Warrant then redeemed.
(b) Redemption Price. The Redemption Price under this
Section 7 shall be Five Cents ($.05) per Warrant Share, subject to adjustment
for any stock split, stock dividend, recapitalization, combination or adjustment
after the date hereof.
(c) Notice. Notice of any proposed redemption of the
Warrants pursuant to this Section 7 shall be given by the Company by sending by
certified mail, postage prepaid, a copy of such notice (the "Redemption Notice")
at least 30 days prior to the date on which it proposes to redeem the Warrants
(the "Redemption Date") to the holders of the Warrants including the Holder or
any subsequent holder(s) of record of this Warrant, at their respective
addresses appearing on the books of the Company or given by such holder(s) to
the Company for the purposes of notice, or if no such address appears or is
given, at the principal office of the Company. Such notice shall state the
Redemption Date to which such notice relates, the number of Warrants to be
redeemed from all holders thereof and from the Holder of this Warrant, the
Redemption Price per Warrant, the record date for purposes of such redemption
and the date on which such holders' right to exercise the Warrants will
terminate, and shall call upon the Holders to surrender to the Company on said
Redemption Date at the place designated in the notice such holder's certificate
or certificates representing the Warrants to be redeemed unless exercised prior
to such date.
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(d) Payment. On the Redemption Date, the funds legally
available for redemption of the Warrants shall be used to redeem the Warrants
from the holders thereof at the Redemption Price and the Company shall be
obligated to pay the holder(s) the Redemption Price of the Warrants to the
extent they have not been exercised as of such date.
(e) Redemption Procedures. On or after a Redemption Date,
the Holder shall surrender this Warrant to the Company, or its agent, at the
place designated in the aforesaid notice and shall thereupon be entitled to
receive payment of the Redemption Price therefor. Upon payment of the Redemption
Price each surrendered Warrant shall be cancelled.
(f) Termination of Rights. Notwithstanding that the
Warrants so called for redemption shall not have been surrendered, from and
after the Redemption Date, all rights of the Holder of this Warrant and all
other holders of Warrants shall forthwith cease and terminate, except for right
of the Holder to receive payment of the Redemption Price upon surrender of this
Warrant.
8. OFFICER'S CERTIFICATE. Whenever the Warrant Exercise Price(s)
shall be adjusted as required by the provisions of Section 6 of this Warrant,
the Company shall forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office and with its stock transfer agent, if any, an
officer's certificate showing the adjusted Warrant Exercise Price(s) and the
adjusted number of shares of Common Stock issuable upon exercise of this
Warrant, determined as herein provided, setting forth in reasonable detail the
facts requiring such adjustment, including a statement of the number of
additional shares of Common Stock, if any, and such other facts as shall be
necessary to show the reason for and the manner of computing such adjustment.
Each such officer's certificate shall be forwarded to the Holder in the manner
provided in Section 13 hereof.
9. NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (a) if the Company shall pay any dividend or make any distribution
upon Common Stock, or (b) if the Company shall offer to the holders of Common
Stock for subscription or purchase by them any share of any class or any other
rights, or (c) if any capital reorganization of the Company, reclassification of
the capital stock of the Company, consolidation or merger of the Company with or
into another entity, tender offer transaction for the Company's Common Stock,
sale, lease or transfer of all or substantially all of the property and assets
of the Company, or voluntary or involuntary dissolution, liquidation or winding
up of the Company shall be effected, or (d) if the Company shall file a
registration statement under the Securities Act, on any form other than on Form
S-4 or S-8 or any successor form, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least ten (10) days prior to
the date specified in clauses (a), (b), (c) or (d), as the case may be, of this
Section 9 a notice containing a brief description of the proposed action and
stating the date on which (i) a record is to be taken for the purpose of such
dividend, distribution or rights, or (ii) such reclassification, reorganization,
consolidation, merger, tender offer transaction, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any is to be fixed,
as of which the holders of Common Stock or other securities shall receive cash
or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up, or
(iii) such registration statement is to be filed with the SEC.
10. RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing or surviving corporation and which
does not result in any reclassification, capital reorganization or other change
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of outstanding shares of Common Stock of the class issuable upon exercise of
this Warrant) or in case of any sale, lease or conveyance of all or
substantially all of the assets of the Company, the Company shall, as a
condition precedent to such transaction, cause effective provisions to be made
so that (i) the Holder shall have the right thereafter by exercising this
Warrant, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such reclassification, capital reorganization and
other change, consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock which could have been purchased upon exercise
of this Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance, and (ii) the successor or acquiring
entity shall expressly assume the due and punctual observance and performance of
each covenant and condition of this Warrant to be performed and observed by the
Company and all obligations and liabilities hereunder (including but not limited
to the provisions of Section 6 regarding the increase in the number of Warrant
Shares potentially issuable hereunder). Any such provision shall include
provision for adjustments which shall be as nearly equivalent as possible to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section 10 shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances. In the event that in connection
with any such capital reorganization or reclassification, consolidation, merger,
sale or conveyance, additional shares of Common Stock shall be issued in
exchange, conversion, substitution or payment, in whole in part, for a security
of the Company other than Common Stock, any such issue shall be treated as an
issuance of Common Stock covered by the provisions of Section 6 of this Warrant.
11. TRANSFER TO COMPLY WITH THE SECURITIES ACT. This Warrant, the
Warrant Shares or any other security issued or issuable upon the exercise of
this Warrant may not be sold or otherwise disposed of except as follows:
(a) to a person who, in the opinion of counsel for the
Company, is a person to whom this Warrant or Warrant Shares may legally be
transferred without registration and without the delivery of a current
prospectus under the Securities Act with respect thereto and then only against
receipt by the Cmpany of an agreement of such person to comply with the
provisions of this Section 11 with respect to any resale or other disposition of
such securities, which agreement shall be satisfactory in form and substance to
the Company and its counsel; or
(b) to any person upon delivery of a prospectus then
meeting the requirements of the Securities Act relating to such securities and
the offering thereof for such sale or disposition.
12. GOVERNING LAW; JURISDICTION. The corporate laws of the State
of New York shall govern all issues concerning the relative rights of the
Company and its stockholders. All issues concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed in accordance with the internal laws of the State of New York without
giving effect to the principles of conflicts of law thereof. The parties hereto
agree that venue in any and all actions and proceedings related to the subject
matter of this Warrant shall be in the state and federal courts in and for New
York, New York, which courts shall have exclusive jurisdiction for such purpose,
and the parties hereto irrevocably submit to the exclusive jurisdiction of such
courts and irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding. Service of process may be made in
any manner recognized by such courts. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
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13. NOTICES. Except as provided in Section 7(c) hereof, any and
all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 p.m. (New York City time) on a Business Day, (b) the
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Agreement later than 6:30 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date, (c) the Business Day following the
date of mailing, if sent by nationally recognized overnight courier service, or
(d) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be as follows:
If to the Company: The Sagemark Companies Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Gusrae Kaplan & ▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holder To the Address Set Forth In the Records of
the Company
With copies to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Company, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. 10038
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
14. PAYMENT OF TAXES. The Company will pay the cost of all
applicable documentary stamp taxes, if any, attributable to the issuance of
shares of Common Stock underlying this Warrant upon exercise of this Warrant;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the registration of any
certificate for shares of Common Stock underlying this Warrant in a name other
that of the Holder. The Holder is responsible for all other tax liability that
may arise as a result of holding or transferring this Warrant or receiving
shares of Common Stock underlying this Warrant upon exercise hereof.
15. INCONSISTENCIES. To the extent there are any inconsistencies
between the terms and provisions of this Warrant and the terms and provisions of
the Subscription Agreement or the Memorandum, the terms and provisions of this
Warrant shall govern and be controlling.
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IN WITNESS WHEREOF, this Warrant has been duly executed as of
_________________.
THE SAGEMARK COMPANIES LTD.
By:
--------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and
Chief Executive Officer
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EXHIBIT A
FORM OF EXERCISE NOTICE
[To be executed only upon exercise of Warrant]
To THE SAGEMARK COMPANIES, LTD.:
The undersigned registered holder of the within Warrant hereby
irrevocably exercises the Warrant pursuant to Section 2 of the Warrant with
respect to __________(1) shares of the Common Stock, at an exercise price per
share of Common Stock of $____, which the holder would be entitled to receive
upon the cash exercise hereof, and requests that the certificates for the shares
be issued in the name of, and delivered to, whose address is:
Dated: _______________
________________________________________
Print or Type Name
________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of Warrant)
________________________________________
(Street Address)
________________________________________
(City) (State) (Zip Code)
_______________________
(1) Insert here the number of shares called for on the face of this Warrant (or,
in the case of a partial exercise, the portion thereof as to which this Warrant
is being exercised), in either case without making any adjustment of shares of
Common Stock or any other stock or other securities or property or cash which,
pursuant to the adjustment provisions of this Warrant, may be delivered upon
exercise. In the case of a partial exercise, a new Warrant or Warrants will be
issued and delivered, representing the unconverted portion of the Warrant, to
the holder surrendering the Warrant.
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PURCHASE FORM
-------------
Dated: _______________, 20_____
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing _____ shares of Common Stock and hereby
makes payment of $___________ in payment of the stated exercise price thereof.
Schedule 1 attached hereto specifies the Warrant Shares from which the shares of
Common Stock are being purchased and the Warrant Exercise Price(s) for such
shares.
______________________________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name:____________________________________________
(Please typewrite or print in block letters)
Signature:_______________________________________
Social Security or Employer Identification No.:_________________________
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ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, _______________________________________ hereby
sells, assigns and transfer unto:
Name:_______________________________________________
(Please typewrite or print in block letters)
Address:_____________________________________________
Social Security or Employer Identification No.:__________________________
The right to purchase Common Stock represented by this Warrant to the extent of
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint _________ as attorney to transfer the same on the books
of the Company with full power of substitution.
Dated: _________________
Signature:___________________________
Signature Guaranteed:
___________________________________
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