Void after 5:30 P.M. New York City time on March 7, 2011 SERIES A COMMON STOCK PURCHASE WARRANT (subject to mandatory exercise as provided in Section 10 of this Warrant) OF NATURALNANO, INC.
Exhibit
4.3
|
WA-[
]
|
Warrant
to Purchase
**
**
Shares
of Common Stock
|
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR SUCH SHARES OF COMMON STOCK
MAY
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
ISSUING CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Void
after 5:30 P.M. New York City time on March 7, 2011
SERIES
A COMMON STOCK PURCHASE WARRANT
(subject
to mandatory exercise as provided in Section 10 of this
Warrant)
OF
NATURALNANO,
INC.
This
is
to certify that, FOR VALUE RECEIVED, [ ]., or registered assigns (“Holder”), is
entitled to purchase, on the terms and subject to the provisions of this
Warrant, from NaturalNano, Inc., a Nevada corporation (the “Company”), at an
exercise price (the “Exercise Price”) of twenty two cents ($0.22) per share, [ ]
shares of common stock, par value $.001 per share (“Common Stock”), of the
Company at any time during the period (the “Exercise Period”) commencing on the
date of this Warrant and ending at 5:30 P.M. New York City time, on March 7,
2011; provided, however, that if such date is a day on which banking
institutions in the State of New York are authorized by law to close, then
on
the next succeeding day which such banks are not authorized to close. The number
of shares of Common Stock to be issued upon the exercise or conversion of this
Warrant and the price to be paid for a share of Common Stock may be adjusted
from time to time in the manner set forth in this Warrant. The shares of Common
Stock deliverable upon such exercise or conversion, and as adjusted from time
to
time, are hereinafter sometimes referred to as “Warrant Shares,” and the
exercise price for the purchase of a share of Common Stock pursuant to this
Warrant in effect at any time, as the same may be adjusted from time to time,
is
hereinafter sometimes referred to as the “Exercise Price.” This Warrant was
issued pursuant to a Loan and Security Agreement (the “Loan Agreement”) dated
March 7, 2007, between the Company, the initial holder of this Warrant and
the
other investors named therein, and the holder of this Warrant is entitled to
the
benefits of the Loan Agreement and the Registration Rights Agreement, as defined
in the Loan Agreement. The date of the initial issuance of this Warrant is
the
Closing Date under the Loan Agreement. Reference in this Warrant to “all of the
Warrants” or words of like import shall relate to all of the Series A Common
Stock Purchase Warrants issued pursuant to the Loan Agreement.
1. Exercise
of Warrant.
(a) This
Warrant may be exercised in whole at any time or in part from time to time
during the Exercise Period by presentation and surrender hereof 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 Exercise Price for the number of shares of Common Stock specified in
such
form. Payment of the Exercise Price may be made either by check (subject to
collection) or wire transfer in the amount of the Exercise Price. If this
Warrant should be exercised in part only, whether pursuant to this Section
1(a)
or pursuant to Section 1(b) of this Warrant, the Company shall, upon surrender
of this Warrant for cancellation, execute and deliver a new Warrant evidencing
the rights of the Holder hereof to purchase the balance of the shares of Common
Stock purchasable hereunder. The holder of this Warrant shall not be required
to
physically deliver this Warrant upon exercise of this Warrant pursuant to this
Section 1(a) or on conversion of this Warrant as provided in Section 1(b) of
this Warrant. 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, or upon delivery of the notice of conversion or exercise without
delivery of this Warrant, 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 be actually
delivered to the Holder.
(b) In
lieu
of exercising this Warrant by payment of the Exercise Price pursuant to Section
1(a) of this Warrant, and subject to the limitations provisions of Section
1(c)
of this Warrant, the Holder shall have the right, on notice to the Company,
to
convert this Warrant, in whole or in part to the extent that this Warrant has
not been exercised pursuant to said Section 1(a) of this Warrant or converted
pursuant to this Section 1(b), for the number of shares of Common Stock equal
to
a fraction of the number of shares of Common Stock as to which this Warrant
is
being converted, the numerator of which is excess of the Current Market Value
(as defined below) per share over the total cash exercise price per share,
and
the denominator of which is the Market Price of the Common Stock as of the
trading day immediately prior to the Conversion Date. For the purpose of this
Warrant, the terms (x) “Current Market Value” shall be the last sales per share
of the Common Stock (as reported by Bloomberg, L.P. or, if the Common Stock
is
traded on the Nasdaq Stock Market or the New York or American Stock Exchange,
as
reported by such market or exchange) as of the trading day immediately prior
to
the Conversion Date, and (y) “Market Price of the Common Stock” shall be the
average of the low bid price per share of the Common Stock (as reported by
Bloomberg L.P. or, if the Common Stock is traded on the Nasdaq Stock Market
or
the New York or American Stock Exchange, as reported by such market or exchange)
for the five trading days prior to the Conversion Date. The Conversion Date
shall mean, the date on which the Holder gives the Company notice of conversion
by hand delivery or telecopier. In the event that Bloomberg, L.P. shall not
provide such information, the information shall be provided by a person or
entity that regularly provides price and volume information that is selected
by
the Holders of a majority of the Warrants then outstanding, based on the number
of shares of Common Stock issuable upon exercise of the Warrants. The parties
understand and agree that, for purposes of Rule 144 of the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
“Securities Act”), if the holder converts the Warrant pursuant to this Section
1(b), its holding period will commence on the Closing Date, as defined in the
Loan Agreement.
(c) The
holder of this Warrant may
not
make
a
cashless exercise pursuant
to Section 1(b) of this Warrant (i) during the twelve months following the
initial issuance of this Warrant and (ii) thereafter if the sale by the Holder
of the Warrant Shares is covered by
an
effective registration statement.
(d) The
Holder shall not be entitled to exercise or convert this Warrants to the extent
that, on the date of such conversion or exercise, the sum of (i) the number
of
shares of Common Stock beneficially owned by the Holder and its Affiliates,
as
defined in the Loan Agreement, on such date plus (ii) the number of shares
of
Common Stock issuable upon exercise or conversion of this Warrant would result
in the Holder and its Affiliates beneficially owning more than 4.99% of the
outstanding shares of Common Stock of the Company, except as expressly provided
in Section 1(e) of this Agreement. For the purposes of the provision to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act of 1934, as amended, and
Regulation 13d-3 of the Commission thereunder. This limitation shall not affect
the ability of the Investor to exercise or convert the warrants in a manner
which would result in the Company having issued in the aggregate shares of
Common Stock in excess of the 4.99% limitation as long as the Holder does not,
at any one time as a result of such conversion or exercise, beneficially own
more than such percentage. Under conditions set forth in the Loan Agreement
and
in Section 10(a)(i) of this Warrant, the reference in this Section 1(d) to
4.99%
shall mean 9.99%. The limitation set forth in this Section 1(d) is referred
to
as the “4.99% Limitation.” The 4.99% Limitation may not be waived, modified or
amended and any attempted waiver, modification or amendment of the 4.99%
Limitation shall be void.
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(e) The
4.99%
Limitation shall terminate upon the close of business on the business day
immediately preceding the date fixed for consummation of any transaction
resulting in a Change of Control of the Company. A “Change in Control” means a
consolidation or merger of the Company with or into another company or entity
in
which the Company is not the surviving entity or the sale of all or
substantially all of the assets of the Company to another company or entity
not
controlled by the then existing stockholders of the Company in a transaction
or
series of transactions. Upon the occurrence of a Change of Control, the Company
shall promptly send written notice thereof, by hand delivery or by overnight
delivery, to the Holder.
2. Reservation
and Delivery of Shares.
(a) The
Company hereby agrees that at all times there shall be reserved for issuance
upon exercise of this Warrant such number of shares of Common Stock as shall
be
required for issuance and delivery upon exercise or conversion of this Warrant
and that it shall not increase the par value of the Common Stock.
(b) Except
as
otherwise set forth herein, upon delivery of a completed Purchase Form
accompanied, if the exercise is not a cashless exercise, by payment of the
Exercise Price, not later than three (3) business days after the Exercise Date
(such third day being the “Delivery Date”), the Company shall deliver to the
Holder a certificate or certificates which, after the effective date of a
registration statement covering the shares of Common Stock issuable upon
exercise of this Warrant (the “Effective Date”), shall be free of restrictive
legends and trading restrictions (other than those required by the Securities
Act) representing the number of shares of Common Stock being acquired upon
such
exercise. After the Effective Date, the Company shall, upon request of the
Holder, deliver any certificate or certificates required to be delivered by
the
Company under this Section 2(b) electronically through the Depository Trust
Company or another established clearing company performing similar functions
if
the Company’s transfer agent has the ability to deliver shares of Common Stock
in such manner. If in the case of any exercise of this Warrant such certificate
or certificates are not delivered to or as directed by the applicable Holder
by
the second day after the Delivery Date, the Holder shall be entitled to elect
by
written notice to the Company at any time on or before its receipt of such
certificate or certificates thereafter, to rescind such conversion, in which
event the conversion shall be deemed void ab initio.
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(c) The
Company’s obligations to issue and deliver the Common Stock upon exercise of
this Warrant in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or
any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
such
shares. In the event the Holder shall elect to exercise this Warrant in whole
or
in part, the Company may not refuse to effect such exercise based on any claim
that the Holder or any one associated or affiliated with the Holder of has
been
engaged in any violation of law, agreement or for any other reason unless an
injunction from a court, on notice, restraining and or enjoining such exercise
shall have been sought and obtained and the Company posts a surety bond for
the
benefit of the Holder in the amount of 150% of the Value, which is subject
to
the injunction, which bond shall remain in effect until the completion of
arbitration or litigation of the dispute and the proceeds of which shall be
payable to the Holder to the extent it obtains judgment. In the absence of
an
injunction precluding the same, the Company shall issue the Common Stock upon
a
properly executed Purchase Form. If the Company fails to deliver to the Holder
such certificate or certificates pursuant to this Section 2(b) within two
trading days of the Delivery Date applicable to such exercise, the Company
shall
pay to the Holder, in cash, as liquidated damages and not as a penalty, for
each
$5,000 of Value of the Warrant being exercised, $50 per trading day (increasing
to $100 per trading day three (3) trading days after such damages begin to
accrue and increasing to $200 per trading day six (6) trading days after such
damages begin to accrue) for each trading day after the Delivery Date until
such
certificates are delivered. Nothing herein shall limit a Holder’s right to
pursue actual damages for the Company’s failure to deliver certificates
representing shares of Common Stock upon exercise within the period specified
herein and such Holder shall have the right to pursue all remedies available
to
it hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.
(d) If
the
Company fails to deliver to the Holder such certificate or certificates pursuant
to this Section 2(b) by the Delivery Date, and if after such Delivery Date
the
Holder purchases (in an open market transaction or otherwise) Common Stock
to
deliver in satisfaction of a sale by such Holder of the Common Stock which
the
Holder was entitled to receive upon the exercise relating to such Delivery
Date
(a “Buy-In”),
then
the Company shall pay in cash to the Holder the amount by which (a) the Holder’s
total purchase price (including brokerage commissions, if any) for the Common
Stock so purchased exceeds (i) the product of (x) the aggregate number of shares
of Common Stock that such Holder was entitled to receive from the exercise
at
issue multiplied by (y) the price at which the sell order giving rise to such
purchase obligation was executed. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect
to
an attempted exercise of this Warrant with respect to which the aggregate sale
price giving rise to such purchase obligation is $10,000, under the immediately
preceding sentence the Company shall be required to pay the Holder $1,000.
The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In, together with applicable confirmations
and other evidence reasonably requested by the Borrowers. Nothing in this
Section 2(d) shall limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation, a decree
of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of Common Stock
upon
exercise of this Warrant pursuant to its terms.
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3. Fractional
Shares.
No
fractional shares or script representing fractional shares shall be issued
upon
the exercise of this Warrant. With respect to any fraction of a share called
for
upon any exercise or conversion of this Warrant, the Company shall round the
number of shares of Common Stock to be issued to the next higher integral number
of shares
4. Exchange,
Transfer, Assignment or Loss of Warrant.
This
Warrant is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company or at the office of its stock
transfer agent, if any, 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. Subject to the provisions of Section 11
of
this Warrant, 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 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 hereof 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 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, if mutilated, 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
of the Holder.
The
Holder shall not, by virtue of this Warrant, be entitled to any rights of a
stockholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant, the Loan Agreement and
the
Registration Rights Agreement and are not enforceable against the Company except
to the extent set forth herein and therein.
6. Adjustments
To Exercise Price.
The
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:
(a) In
case
the Company shall, subsequent to the date of the initial issuance of this
Warrant, (i) pay a dividend or make a distribution on its shares of Common
Stock
in shares of Common Stock, (ii) subdivide or reclassify its outstanding Common
Stock into a greater number of shares or otherwise effect a stock split or
distribution, or (iii) combine or reclassify its outstanding Common Stock into
a
smaller number of shares or otherwise effect a reverse split, then,
in
each such event, the Exercise Price shall, simultaneously with the happening
of
such event, be adjusted by multiplying the then Exercise Price by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Exercise Price then in effect.
The
Exercise Price, as so adjusted, shall be readjusted in the same manner upon
the
happening of any successive event or events described herein in this
Section 6. The number of shares of Common Stock that the Holder of this
Warrant shall thereafter, on the exercise hereof as provided in Section 1,
be entitled to receive shall be adjusted to a number determined by multiplying
the number of shares of Common Stock that would otherwise (but for the
provisions of this Section 6(a)) be issuable on such exercise by a fraction
of which (a) the numerator is the Exercise Price that would otherwise (but
for the provisions of this Section 6(a)) be in effect, and (b) the
denominator is the Exercise Price in effect on the date of such exercise (prior
to any adjustment pursuant to Section 6(f) of this Warrant).
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(b) In
case
the Company shall, subsequent to the date of the initial issuance of this
Warrant, distribute to all holders of Common Stock evidences of its indebtedness
or assets (excluding (x) cash dividends or distributions paid out of current
earnings and (y) dividends or distributions referred to in Section 6(a) of
this
Warrant), then in each such case the Exercise Price in effect thereafter shall
be determined by multiplying the Exercise Price in effect immediately prior
thereto by a fraction, of which the numerator shall be the total number of
shares of Common Stock outstanding multiplied by the Current Market Price per
share of Common Stock, less the fair market value (as determined by the
Company’s Board of Directors) of said assets or evidences of indebtedness so
distributed or of such rights or warrants, and of which the denominator shall
be
the total number of shares of Common Stock outstanding multiplied by such
Current Market Price per share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed. Such adjustment shall be
made
whenever any such distribution is made and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such distribution.
(c) If,
while
this Warrant is outstanding, the Company sells or otherwise issues any
Convertible Securities, shares of Common Stock, or shares of any class of
capital stock at a price per share of Common Stock, or with a conversion right
or exercise price to acquire Common Stock at a price per share of Common Stock
(other than (x) an Exempt Issuance, as defined in the Loan Agreement, or (y)
an
issuance covered by Section 6(a) or 6(b) of this Warrant), that is less than
the
Exercise Price in
effect
at the time of such sale (such lower price being referred to as the “Lower
Price”), the Exercise Price shall be reduced to an adjusted Exercise Price which
is equal to the Lower Price. Such
adjustment shall be made successively whenever any such sale or other issuance
at a Lower Price is made. The term “Convertible Security” shall mean any debt or
equity security or instrument upon the conversion or exercise of which shares
of
Common Stock may be issued.
(i)
For
purposes of this Section 6(c), the price at which such shares of Common Stock
are issued shall be the consideration paid for the Common Stock or the price
at
which the Company agrees to issue shares of Common Stock. The price at which
any
Convertible Security is issued shall be the amount received for the issuance
of
the Convertible Security plus the minimum amount of additional consideration
which is payable upon exercise or conversion of the Convertible Security. If
the
Company issues securities as a unit, regardless of whether such issuance is
defined as a unit, a separate computation shall be made with respect to (x)
shares of Common Stock and convertible securities (based on the maximum number
of shares of Common Stock which may be issued upon conversion, including
conversion of interest or dividends, but excluding warrants, rights and options)
and (y) warrants, options or rights, with a separate computation being made
as
to each warrant, option or right which is issued. If warrants, options or rights
are issued, the Company shall not be deemed to have received any consideration
for the issuance of the shares upon exercise of the warrant, option or right
other than the lowest exercise price provided therein. If the Company has an
agreement which provides for the issuance of shares at a fixed price or a
formula price with a maximum price, the Company shall be deemed to have issued
securities at such maximum price regardless of whether any securities are
actually sold, and any issuance of securities below such maximum price shall,
if
such price is a Lower Price, be a sale which results in an adjustment pursuant
to this Section 2(c).
(ii)
By
way of example, if the Company issues for $1,000,000 securities consisting
of
500,000 shares of Common Stock and a convertible note for $1,000,000 with a
conversion price of $.40 and warrants to purchase 1,000,000 shares of Common
Stock at $.40, the Lower Price would be determined by dividing the total
consideration paid for the Common Stock and the note ($1,000,000) by the number
of shares of Common Stock issued (3,000,000 shares, representing the 500,000
shares issued at closing plus the 2,500,000 shares issuable upon conversion
of
the note), which would result in Lower Price of $.333, which would become the
adjusted Exercise Price of this Warrant. If, in the same example, the exercise
price of the warrant were $.30 per share, the Lower Price would be $.30, which
would become the adjusted Exercise Price. If, in either case, the conversion
price of all or any part of the convertible notes or the exercise price of
all
or any of the warrants were subsequently reduced, a further adjustment would
be
made.
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(iii)
Any
stock or convertible securities (other than warrants or options which shall
be
valued at the lowest stated exercise price thereof) issued for services that
are
not Exempt Issuances shall, for purposes of this Warrant, be valued at the
par
value thereof unless such issuance is made with the prior written approved
of
the Investors, as defined in the Loan Agreement, in which event the securities
shall be valued in the manner as set forth in the Investors’
approval.
(d) In
case
the Company shall, subsequent to the date of initial issuance of this Warrant,
issue rights or warrants to all holders of its Common Stock entitling them
to
subscribe for or purchase shares of Common Stock (or securities convertible
into
Common Stock) at a price (or having a conversion price per share) less than
the
Current Market Price per share of Common Stock for the record date mentioned
below, if issuance does not result in an adjustment pursuant to Section 6(c)
of
this Warrant, the Exercise Price shall be adjusted to an adjusted Exercise
equal
to the price determined by multiplying the Exercise Price in effect immediately
prior to the date of such issuance by a fraction, of which the numerator shall
be the number of shares of Common Stock outstanding on the record date mentioned
below plus the number of additional shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock so offered (or
the
aggregate conversion price of the convertible securities so offered) would
purchase at such Current Market Price per share of the Common Stock, and of
which the denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock offered
for subscription or purchased (or into which the convertible securities so
offered are convertible). Such adjustment shall be made successively whenever
such rights or warrants are issued and shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
rights or warrants; and shall be effective regardless of whether such rights
are
exercised or expire in whole or in part unexercised. The provisions of this
Section 6(d) are in addition to the provisions of Section 6(c) and any
adjustment pursuant to this Section 6(d) shall be made after the application
of
Section 6(c).
(e) Subject
to the provisions of Section 6(a) of this Warrant, whenever the Exercise Price
payable upon exercise of each Warrant is adjusted pursuant to this Section
6,
the number of shares of Common Stock issuable upon exercise or conversion of
this Warrant shall simultaneously be adjusted by multiplying the number of
shares of Common Stock issuable upon exercise of each Warrant in effect on
immediately prior to the adjustment by the Exercise Price then in effect and
dividing the product so obtained by the Exercise Price, as adjusted. In no
event
shall the Exercise Price per share be less than the par value per share, and,
if
any adjustment made pursuant to said Section 6 would result in an Exercise
Price
which would be less than the par value per share, then, in such event, the
Exercise Price per share shall be the par value per share; provided, however,
that the limitation contained in this sentence shall not affect the number
of
shares of Common Stock issuable upon exercise or conversion of this
Warrant.
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(f) In
the
event that at any time, as a result of an adjustment made pursuant to this
Section 6, the Holder of any Warrant thereafter shall become entitled to receive
any shares of the Company, other than Common Stock, thereafter the number of
such other shares so receivable upon exercise of any 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
this
Section 6.
(g) Irrespective
of any adjustments in the Exercise Price or the number or kind of shares
purchasable upon exercise of Warrants, Warrants theretofore or thereafter issued
may continue to express the same price and number and kind of shares as are
stated in this and similar Warrants initially issued by the
Company.
7. Officer’s
Certificate.
Whenever the Exercise Price 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
Exercise Price and the adjusted number of shares of Common Stock issuable upon
exercise of each 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 made available at all
reasonable times for inspection by the Holder, and the Company shall, forthwith
after each such adjustment, mail, by certified mail, return receipt requested
and by telecopier and e-mail, a copy of such certificate to the Holder at the
Holder’s address set forth in the Company’s Warrant Register.
8. 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 (other than a regular cash dividend
payable out of retained earnings) 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 corporation, sale, lease or transfer of all
or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding
up
of the Company shall be effected, then in any such case, the Company shall
cause
to be mailed by certified mail, return receipt requested, to the Holder, at
least fifteen days prior to the date specified in clauses (i) and (ii), as
the
case may be, of this Section 8 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, 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.
9. 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 in which
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Warrant) or in
case
of any sale, lease or conveyance to another corporation of the property of
the
Company as an entirety, the Company shall, as a condition precedent to such
transaction, cause effective provisions to be made so that 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 might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance.
Any
such provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Section 9 shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares
of
Common Stock and to successive consolidations, mergers, sales or conveyances.
Notwithstanding the foregoing, in the event that, as a result of any merger,
consolidation, sale of assets or similar transaction, all of the holders of
Common Stock receive and are entitled to receive no consideration other than
cash in respect of their shares of Common Stock, then, at the effective time
of
the transaction, the rights to purchase Common Stock pursuant to the Warrants
shall terminate, and the holders of the Warrants shall, notwithstanding any
other provisions of this Warrant, receive in respect of each Warrant to purchase
one (1) share of Common Stock, upon presentation of the Warrant Certificate,
the
amount by which the consideration per share of Common Stock payable to the
holders of Common Stock at such effective time exceeds the Exercise Price in
effect on such effective date, without giving effect to the transaction;
provided, however, that if such transaction would, but for this Section 9,
result in a reduction in the Exercise Price pursuant to Section 6(c) of this
Warrant, the Exercise Price shall be reduced to reflect that transaction. In
the
event that, in such a transaction, the value of the consideration to be received
per share of Common Stock is equal to or less than the Exercise Price, the
Warrants shall automatically terminate and no consideration will be paid with
respect thereof.
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10. Mandatory
Exercise.
(a) i)The
Company shall have the right at any time, on not less than forty five (45)
days
written notice, to require the Holder to exercise the outstanding Warrants,
if,
and only if, the Market Price of the Common Stock shall equal or exceed the
“Target Price” and the “Trading Volume” shall equal or exceed the “Target
Volume” on any consecutive twenty (20) trading days ending on the trading day
prior to the date that the Company delivers notice of mandatory exercise. Notice
of mandatory exercise shall be mailed by first class mail, postage prepaid,
and
sent by telecopier or e-mail, and shall be deemed given on the date of receipt
of the notice by the Holder, provided that receipt is acknowledged. The Company
must require that all Warrants be exercised if it requires any Warrants to
be
exercised; provided, however, that if exercise pursuant to this Section 10(a)(i)
would result in a violation of the 4.99% Limitation (provided, however, that
for
purposes of this Section 10, the references to 4.99% shall be deemed to be
9.99%), the Company shall not have the right to require exercise of the Holders’
Warrants to the extent that the exercise of the Warrants would result in such
a
violation. In such event, the Company may subsequently exercise its right to
require exercise of the remaining Warrants held by the Holder at such future
time as, and to the extent that, such exercise would not result in a violation
of the 4.99% Limitation.
(ii)
As
used in this Section 10, the following terms shall have the meanings set forth
below:
(A) “Mandatory
Exercise Date” shall mean the date by which the Warrants are required to be
exercised, as set forth in the notice of mandatory exercise from the Company
to
the Holders of the Warrants, subject to Section 10(b)(ii) of this
Warrant.
(B) “Market
Price” shall mean the closing price of the Common Stock (as reported by
Bloomberg L.P. or, if the Common Stock is traded on the Nasdaq Stock Market
or
the New York or American Stock Exchange, as reported by such market or
exchange).
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(C) “Target
Price” shall mean seventy five cents ($.75); which price shall be subject to
adjustment for events described in Section 6(a) of this Warrant.
(D) “Trading
Volume” shall mean the trading volume in the Common Stock (as reported by
Bloomberg L.P. or the Nasdaq Stock Market or the New York or American Stock
Exchange, as the case may be).
(E) “Target
Volume” shall mean one hundred fifty thousand (150,000) shares.
(b) Notwithstanding
any other provision of this Section 10:
(i)
The
Company may only exercise the right of required exercise pursuant to Section
10(a)(i) of this Warrant if a registration statement covering the sale by the
Holder of the shares of Common Stock issuable upon exercise of this Warrant
is
current and effective and, based on the date of the prospectus forming a part
of
the registration statement and the age of the financial statements contained
in
the registration statement, the registration statement can be used by the Holder
in connection with the sale of the Common Stock for at least three months after
the Mandatory Exercise Date without the need to file a post-effective amendment
to update the registration statement, and there shall not have occurred any
material event concerning the Company or its Affiliates for which disclosure
would be necessary in order that the information contained in the registration
statement is true and correct in all material respects and does not omit any
information necessary to make the information contained therein not misleading.
The redemption notice shall include the certificate of the Borrowers’ respective
chief executive officers as to the matters set forth in this Section
10(b)(i).
(ii)
In
the event that, at any time subsequent to the date on which the Company gives
notice of mandatory exercise and before the Mandatory Exercise Date, the shares
of Common Stock issuable upon exercise of the Warrants are not subject to a
current and effective registration statement, the Company’s right to require
exercise of the Warrants shall be suspended with respect to all Warrants that
have not then been exercised or converted and such notice of mandatory exercise
shall be deemed to have been withdrawn; provided, however, that the Holder’s
right to convert the Warrant as provided in Section 1(b) of this Warrant shall
continue for the balance of the Exercise Period. Nothing in the preceding
sentence shall be construed to prohibit or restrict the Company from thereafter
requiring mandatory exercise of the Warrants in the manner provided for, and
subject to the provisions of, this Section 10.
(c) The
notice of mandatory exercise shall specify (i) the Mandatory Exercise Date,
(ii)
the representation required by Section 10(b)(i) of this Warrant, and (iii)
the
number of Warrants with respect to which mandatory exercise is being demanded
if
exercise of less than all of the Warrants is being demanded. No failure to
mail
such notice or any defect therein or in the mailing thereof shall affect the
validity of the demand for mandatory exercise except as to a Holder (a) to
whom
notice was not mailed or (b) whose notice was defective. An affidavit of the
Chief Financial Officer of the Company that notice of mandatory exercise has
been mailed shall, in the absence of fraud, be prima facie evidence of the
facts
stated therein.
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(d) The
Holder’s obligation to exercise this Warrant in accordance with the terms of
this Section 10 are absolute and unconditional, irrespective of any action
or
inaction by the Company to enforce the same.
11. Transfer
to Company with the Securities Act.
(a) The
Holder of this Warrant shall be entitled to the benefits of the Registration
Rights Agreement.
(b) This
Warrant or the Warrant Shares or any other security issued or issuable upon
exercise of this Warrant may not be sold or otherwise disposed of except
pursuant to an effective registration statement under the Securities Act, or
an
exemption from the registration requirements of such Act.
| Dated as of March 7, 2007 | NATURALNANO, INC. | |
| |
|
|
| By: | ||
| Name: |
|
|
| Title: | ||
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PURCHASE
FORM
Dated:
,
20
| ______ |
The
undersigned hereby irrevocably exercises this Warrant to the extent
of
purchasing _______ shares of Common Stock and hereby makes payment
of
$____________ in payment of the Exercise Price
therefor.
|
| ______ |
The
undersigned hereby irrevocably converts this Warrant pursuant to
the
cashless conversion provisions of Section 1(b) of this Warrant with
respect to _______ shares of Common
Stock.
|
INSTRUCTIONS
FOR REGISTRATION OF STOCK
Name:______________________________________________________________________________________________________________________________________
(Please
typewrite or print in block letters)
Signature:___________________________________________
Social
Security or Employer Identification No.________________________
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 __________________ attorney to transfer
the
same on the books of the Company with full power of substitution.
Dated:
,
20
Signature_________________________________________
Signature
Medallion Guaranteed:
_________________________________________________
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