ZERCO SYSTEMS INTERNATIONAL, INC. WARRANT TO PURCHASE COMMON STOCK
EXHIBIT
4.1
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR EXEMPTION THERE
FROM.
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No. EW-00
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DATE:________________
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ZERCO
SYSTEMS INTERNATIONAL, INC.
WARRANT
TO PURCHASE COMMON STOCK
This certifies that ______________________________________
the holder of this Warrant (the “Warrantholder”), is entitled to purchase
from Zerco Systems International, Inc., a Delaware corporation (the “Company”),
at any time on or before 5:00 p.m., Eastern Standard Time, on the two-year
anniversary of the date hereof (or, if such day is not a Business Day, as
defined herein, at or before 5:00 p.m., Eastern Standard Time on the next
following Business Day), up to ______________ fully
paid and nonassessable shares of Common Stock of the Company at the Exercise
price (as defined below). The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment under certain conditions as
provided in Article III hereof.
ARTICLE
I
Section 1.01: Definition
of Terms: As used in this Warrant, the following capitalized
terms shall have the following respective meanings:
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(a)
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Business
Day: A day other than a Saturday, Sunday or other day on
which banks in the State of Ohio are authorized by law to remain
closed.
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(b)
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Common
Stock: Common Shares, no par value, of the
Company.
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(c)
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Common Stock
Equivalents: Securities that are convertible into or
exchangeable or exercisable for shares of Common
Stock.
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(d)
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Exercise Price:
The per share price for which the Warrantholder may purchase Warrant
Shares pursuant to this Warrant. The initial Exercise price is
$0.01. The Exercise Price may be adjusted from time to time
pursuant to Article III hereof.
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(e)
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Expiration
Date: 5:00 p.m., Eastern Standard Time, on the two-year
anniversary of the date hereof, or, if such day is not a Business Day, on
the next following Business Day.
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(f)
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Holder: A
holder of Warrant Shares.
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(g)
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Person: An
individual, partnership, joint venture, corporation, trust, unincorporated
organization or government or any department or agency
thereof.
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(h)
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SEC: The
Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.
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(i)
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Securities
Act: The Securities Act of 1933, as
amended.
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(j)
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Warrants: This
Warrant and all other warrants that may be issued in replacement of this
Warrant.
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(k)
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Warrantholder: The
Person to whom this Warrant is originally issued, any successor in
interest thereto, or any assignee or transferee thereof in whose name this
Warrant is registered upon the books maintained by the Company for that
purpose.
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(l)
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Warrant
Shares: Shares of Common Stock purchasable upon exercise
of the Warrants.
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ARTICLE
II
Duration
and Exercise of Warrant
Section 2:01: Duration of
Warrant. Subject to the terms contained herein, this Warrant
may be exercised at any time on or before 5:00 p.m., Eastern Standard Time, on
the Expiration Date. If this Warrant is not exercised at or before
5:00 p.m., Eastern Standard Time, on the Expiration Date, It shall become void
and all rights hereunder shall thereupon cease.
Section
2.02: Exercise of Warrant.
(a) Subject
to the terms and conditions set forth herein, the Warrantholder may exercise
this Warrant, in whole or in part, upon surrender of this Warrant with the
Subscription Form attached hereto duly executed, to the Company at its corporate
office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, together with payment in
full of the Exercise Price for each Warrant Share to be purchased in lawful
money of the United States, by certified check or bank draft payable to the
order of the Company in currency of the United States.
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(b) Upon
receipt of this Warrant with the Subscription Form duly executed and accompanied
by payment of the aggregate Exercise Price for the Warrant Shares for which this
Warrant is then being exercised, the Company will issue certificates to the
Warrantholder for the total number of Warrant Shares for which this Warrant is
being exercised in such denominations as are requested by the
Warrantholder.
(c) If
the Warrantholder shall exercise this Warrant with respect to less than all of
the Warrant Shares that may then be purchased under this Warrant, the Company
will execute a new warrant in the form of this Warrant for the balance of such
Warrant Shares and deliver such new warrant to the Warrantholder.
(d) The
Company covenants and agrees that it will pay, when due and payable, any and all
stock transfer and similar taxes that may be payable in respect of the issuance
of this Warrant or of any Warrant Shares; and (ii) the Warrant Shares shall be
deemed to be issued to the Warrantholder as the record owner of such Warrant
Shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment has b3een tendered for the purchase of such Warrant
Shares.
ARTICLE
III
Adjustment
of Number of Warrant Shares
Purchasable
and of Exercise Price
The
Exercise Price and the number and type of Warrant Shares shall be subject to
adjustment from time to time upon the happening of certain events described in
this Article III.
Section 3:01: Mechanical
Adjustments.
(a) If
at any time prior to the full exercise of this Warrant, the Company
shall: (i) pay a dividend or make a distribution on its shares of
Common Stock in shares of Common Stock; (ii) subdivide, reclassify or
recapitalize its outstanding shares of Common Stock into a greater number of
shares; or (iii) combine, reclassify or recapitalize its outstanding shares of
Common Stock into a smaller number of shares, the Exercise Price in effect at
the time of the record date of such dividend, subdivision, combination,
reclassification or recapitalization shall be proportionately adjusted so that
the Warrantholder shall be entitled to receive the aggregate number and type of
shares that, if this Warrant had been exercised in full immediately prior to
such time and the Warrant Shares had been converted in full, it would have been
owned upon such exercise and been entitled to receive upon such dividend,
subdivision, combination, reclassification or recapitalization. Such
adjustment shall be made successively whenever any event listed in this
paragraph 3:01(a) shall occur.
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(b) If
the Company shall sell or issue Common Stock (other than pursuant to a
transaction described in paragraph (a) above) or rights, options, warrants or
convertible or exchangeable securities, or options to purchase convertible or
exchangeable securities, entitling the holder of such instrument to subscribe
for or purchase shares of Common Stock (or Common Stock Equivalents), without
consideration or for a “consideration per share” (determined in the manner
described below) less than the then current Exercise Price of this Warrant, the
Exercise price shall be adjusted so that it shall equal the price determined by
multiplying the Exercise Price in effect immediately prior to the date of such
sale or issuance (which date, in the event of a distribution to shareholders,
shall be deemed to be the record date set by the Company to determine
shareholders entitled to participate in such distribution) by a fraction, the
numerator of which shall be (i) the number of shares of Common Stock outstanding
on the date of such sale or issuance, plus (ii) the number of additional shares
of Common Stock which the aggregate consideration received by the Company upon
such issuance or sale (plus the aggregate of any additional amount to be
received by the Company upon the exercise of such rights or warrants) would
purchase at the then current Exercise price, and the denominator of which shall
be (i) the number of shares of Common Stock outstanding on the date of such
issuance or sale, plus (ii) the number of additional shares of Common Stock
offered for subscription or purchase (or into which the Common Stock Equivalents
so offered are convertible.) Such adjustments shall be made
successively whenever such warrants or rights are issued. To the
extent that shares of Common Stock are not delivered (or Common Stock
Equivalents are not delivered) after the expiration of such rights or warrants,
the Exercise Price shall be readjusted to the Exercise Price that would then be
in effect had the adjustments made upon he issuance of such rights or warrants
been made upon the basis of delivery of only the number of shares of Common
Stock (or Common Stock Equivalents) actually delivered. For purposes
of this Section 3.01(b), the “consideration per share” of securities issued by
the Company shall be determined, in the case of rights, options, warrants and
convertible or exchangeable securities, or options to purchase convertible or
exchangeable securities, by dividing (x) the total amount received or receivable
by the Company in consideration of the sale or issuance of the rights, options,
warrants or convertible or exchangeable securities, or options to purchase
convertible or exchangeable securities, plus the total consideration payable to
the Company upon conversion, exchange or exercise thereof, by (y) the total
number of shares of Common Stock covered by such rights, options, warrants and
convertible or exchangeable securities.
(c) Whenever
the Exercise Price payable upon exercise of this Warrant is adjusted pursuant to
paragraph (a) or (b) of this Section 3.01, the Warrant Shares shall
simultaneously be adjusted by multiplying the number of Warrant Shares initially
issuable upon exercise of each Warrant by the Exercise Price in effect on the
date thereof and dividing the product so obtained by the Exercise Price, as
adjusted.
(d) No
adjustment in the Exercise Price shall be required unless such adjustment would
require an increase or decrease of at least one cent ($.01) in the Exercise
Price; provided, however, that any adjustments which by reason of this paragraph
(d) are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section
3.01 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
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(e) In
the event that at any time, as a result of any adjustment made pursuant to
paragraph (a) of this Section 3.01, the Warrantholder thereafter shall become
entitled to receive any securities of the Company other than shares of Common
Stock, thereafter the number of such other securities 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 paragraphs (a) to (d), inclusive, of
this Section 3.01.
Section 3.02: Notice of
Adjustment. Whenever the number of Warrant Shares or the
Exercise Price is adjusted as herein provided, the Company shall prepare and
deliver to the Warrantholder a certificate signed by its President, or any Vice
President, Treasurer or Secretary, setting forth the adjusted number of shares
purchasable upon the exercise of this Warrant and the Exercise Price of such
shares after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which such
adjustment was made.
Section 3.03: Preservation
of Purchase Rights Upon Merger, Consolidation, etc. As a
condition to any consolidation of the Company with or merger of the Company into
another corporation or any sale, lease or other transfer or conveyance to
another corporation of all or substantially all the property or assets of the
Company, the Company or such successor or purchasing corporation, as the case
may be, shall execute the Warrantholders an agreement granting the
Warrantholders the continuing right, upon payment of the Exercise Price in
effect immediately prior to such action, to purchase upon exercise of this
Warrant the kind and amount of shares and other securities and property which
such holder would have owned or have been entitled to receive after the
consummation of such consolidation, merger, sale, lease, transfer or conveyance
had this Warrant been exercised immediately prior to such
action. Such agreement shall provide for adjustments, which shall be
as nearly equivalent as may be practicable to the adjustment provided for in
this Article III. The provisions of this Section 3.03 shall similarly
apply to successive consolidations, mergers, sales, leases, transfers or
conveyances.
Section 3.04: Form of
Warrant After Adjustments. The form of this Warrant need
not be changed because of any adjustments in the Exercise Price or the number or
kind of the Warrant Shares, and Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated
in this Warrant as initially issued.
ARTICLE
IV
Other
Provisions Relating to Rights of Warrantholder
Section 4.01: No Rights as
Stockholders; Notice to Warrantholders. Nothing contained in
this Warrant shall be construed as conferring upon the Warrantholder or its
transferees the right to vote or to receive dividends or to consent or to
receive notice as a shareholder in respect of any meeting of shareholders for
the election of directors of the Company. If, however, at any time
prior to the expiration or exercise in full of the Warrants, any of the
following events shall occur:
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(a)
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The
Company shall offer to the holders of its Common Stock any additional
shares of Common Stock or Common Stock Equivalents or any right to
subscribe thereto;
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(b)
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A
dissolution, liquidation or winding up of the Company shall be proposed;
or
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(c)
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Any
consolidation of the Company with or merger of the Company into another
corporation or the sale, lease or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety
shall be proposed;
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then in
any one or more of such events, the Company shall give written notice of such
event to the Warrantholder at least 25 days prior to the date fixed as a record
date or the date of closing of the Company’s stock transfer books for the
determination of the shareholders entitled to receive such distribution, or
subscription rights, or for the determination of the shareholders entitled to
vote on such proposed merger, consolidation, sale, lease, conveyance,
dissolution, liquidation or winding up. Such notice shall specify
such record date or the date of closing of the stock transfer books, as the case
may be.
Section 4.02: Lost,
Stolen, Mutilated or Destroyed Warrants. If this Warrant is
lost, stolen, mutilated or destroyed, the Company shall, on such reasonable
terms as to indemnify or otherwise as it may in its discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as, and in substitution for, this
Warrant.
Section 4.03: Reservation of
Shares
(a) The
Company covenants and agrees that at all times it shall reserve and keep
available for the exercise of this Warrant such number of authorized shares of
Common Stock as are sufficient to permit the exercise in full of this
Warrant.
(b) The
Company covenants that all shares of Common Stock issued upon exercise of this
Warrant will be validly issued, fully paid, nonassessable and free of preemptive
rights.
ARTICLE
V
Treatment
of Warrantholder
Prior to due presentment for
registration of transfer of this Warrant, the Company may deem and treat the
Warrantholder as the absolute owner of this Warrant (notwithstanding any
notation of ownership or other writing hereon) for the purpose of any exercise
hereof and for all other purposes and the Company shall not be affected by any
notice to the contrary.
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ARTICLE
VI
Split-Up,
Combination, Exchange and transfer of Warrants
Section 6:01: Split-Up,
Combination, Exchange and Transfer of Warrants. Subject to and
limited by the provisions of Section: 6.02 hereof, this Warrant may be split up,
combined or exchanged for another Warrant or Warrants containing the same terms
and entitling the Warrantholder to purchase a like aggregate number of Warrant
Shares. If the Warrantholder desires to split up, combine or exchange
this Warrant, it shall make such request in writing delivered to the Company and
shall surrender to the Company this Warrant and any other Warrants to be so
split up, combined or exchanged. Upon any such surrender for a
split-up, combination or exchange, the Company shall execute and deliver to the
person entitled thereto a Warrant or Warrants, as the case may be, as so
requested. The Company shall not be required to effect any split-up,
combination or exchange which will result in the issuance of a Warrant entitling
the Warrantholder to purchase upon exercise a fraction of a share of Common
Stock or a fractional Warrant. The Warrantholder acknowledges that
the transfer of this Warrant to any other Person shall not be effected without
an opinion of counsel in form and substance reasonably satisfactory to Company
to the effect that registration of the same is not required.
Section 6:02: Purchase for
Investment. The Warrantholder is purchasing the Warrant for
its own account, for investment purposes and not with a view to, or for resale
in connection with, any distribution or public offering thereof within the
meaning of the Securities Act.
Section 6.03: Unregistered
Securities; Legend. The Warrantholder understands that neither
the Warrant nor the Warrant Shares have been registered under the Securities Act
and will be issued in reliance upon an exemption from the registration
requirements thereof. The Warrantholder acknowledges this Warrant
bears, and that the certificates representing the Warrant Shares shall each bear
such restrictive legends as are required by federal and state securities laws,
including a legend substantially as follows:
“The
securities represented by this certificate have not been registered under the
Securities Act of 1933 or any applicable state securities laws and may not be
offered for sale, sold, transferred or conveyed without registration or, if
required by the Company, an opinion of counsel in form and substance reasonably
satisfactory to the Company to the effect that such registration is not
required.”
Section 6.04: Status of
Warrantholder: The Warrantholder is an accredited investor, as
that term is defined in Rule 501 of Regulation D of the Securities
Act. The Warrantholder will furnish the Company such information as
the Company may reasonably request regarding its status as an accredited
investor.
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ARTICLE
VII
Representations
and Warranties of the Company; Other Matters
Section
7.01: Representations and Warranties. The Company
represents and warrants to and agrees with the Warrantholder that:
(a) the
Company has all requisite power and authority, corporate or otherwise, and has
taken all necessary action, to execute, deliver and perform its obligations
under the Warrant. This Warrant has been duly and validly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms. No authorization, approval, consent, order, license,
franchise, certificate or permit of or from any Person or regulatory authority
is required to be obtained by the Company in connection with the execution,
delivery or performance of this Warrant;
(b) none
of the execution, delivery or performance of the Company’s obligations under
this Warrant will conflict with, or result in a breach of any of the terms of
provisions of, or constitute a default under or violate any term of (i) the
articles of incorporation, as amended, or the code of regulations of the
Company; (ii) any indenture, mortgage, joint venture agreement, lease, sublease,
sales agreement or other agreement or instrument to which the Company is a party
or by which it or any of its properties is bound; or (iii) any law, rule,
regulation, judgment, order or decree of any government, governmental or
regulatory body or court, foreign or domestic, having jurisdiction over the
Company or any of its properties or assets; and
(c) the
Warrant Shares have been duly reserved for issuance upon exercise of the
Warrants and, when issued upon such exercise in accordance with the terms of
this Warrant, will be duly and validly issued, fully paid and nonassessable, and
the issuance of the Warrant Shares is not subject to any preemptive or similar
rights granted by the Company, and other Person or any statute.
Section 7.02: Expenses of
Transfer: The Company will from time to time promptly pay all
taxes and charges that may be imposed with respect to the issuance or delivery
of Warrant Shares upon the exercise of this Warrant by the
Warrantholder.
Section 7.03: Successors
and Assigns. All the covenants and provisions of this Warrant
by or for the benefit of the Company shall bind and inure to the benefit of its
successors and assigns hereunder.
Section 7.04: No
Inconsistent Agreements. The Company will not on or after the
date of this Warrant enter into any agreement with respect to its securities,
which is inconsistent with the rights granted to the Warrantholder or otherwise
conflicts with the provisions hereof.
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Section 7.05: Adjustments
Affecting Warrant Shares. The Company will not take any action
outside the ordinary course of business, or permit any change within its control
to occur outside the ordinary course of business, with respect to this Warrant
or the Warrant shares which is without a bona fide business
purpose.
Section 7.06: Amendments
and Waivers. The provisions of this Warrant, including,
without limitation, the provisions of this sentence, may not be amended,
modified or supplemented, and waiver or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of beneficial Holders of at least a majority of the outstanding Warrant
Shares. Holders shall be bound by any consent authorized by this
section whether or not certificates representing such Warrant Shares have been
marked to indicate such consent.
Section
7.07: Counterparts. This Warrant may be executed in
any number of separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
Section 7.08: Governing
Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
Section
7.09: Severability. in the event that any one or
more of the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and
of the remaining provisions contained herein shall not be affected or impaired
thereby.
Section
7.10: Integration/Entire Agreement. This Warrant is
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive statement of the agreement and understanding of the
parties hereto with respect to the subject matter contained
herein. This Warrant supersedes all prior agreements and
understandings between the parties with respect to such subject
matter.
Section 7.11: Attorney’s
Fees. In any action or proceeding brought to enforce any
provisions of this Warrant, the successful party shall be entitled to recover
attorneys’ fees and disbursements in addition to its costs and expenses and any
other available remedy.
Section
7.12: Notices. Notice or demand pursuant to this
Warrant to be given or made by the Warrantholder to or on the Company shall be
sufficiently given or made if sent by first class mail, postage prepaid,
addressed (until another address is designated in writing by the Company) as
follows:
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Zerco
Systems International, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Brookfield,
OH 44403
Attention: ▇▇▇▇
▇▇▇▇▇▇▇, CEO
Any notice or demand authorized by this
Warrant to be given or made by the Company to or on the Warrantholder or a
Holder of Warrant Shares shall be sufficiently given or made if sent by first
class mail, postage prepaid, to the Warrantholder or the Holder of Warrant
Shares at its last known address as it shall appear on the books of the
Company.
Section
7.13: Headings. The Articles headings in this
Warrant are for convenience only and are not part of this Warrant and shall not
affect the interpretation thereof.
IN WITNESS WHEREOF, this Warrant has
been duly executed by the Company as of ________________, 20__.
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ZERCO
SYSTEMS INTERNATIONAL, INC.
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By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇-▇▇▇▇▇▇▇,
C.E.O.
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Attest:
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Secretary
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SUBSCRIPTION
FORM
(To be
executed upon exercise of Warrant)
Zerco
Systems International, Inc.
The undersigned hereby irrevocably
elects to exercise the right of purchase represented by the within Warrant
Certificate for, and to purchase hereunder, shares of Common Stock, as provided
for therein, and tenders herewith payment of the purchase price
in full in the form of cash, a certified or official bank check in
the amount of $______.
Please issue a certificate or
certificates for such shares of Common Stock in the name of:
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Name:
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(Please
Print Name, Address and Social
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Security
Number)
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Signature:
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NOTE:
The above signature should correspond exactly with the name on the first
page of this Warrant Certificate or with the name of the assignee
appearing in the assignment form
below
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And if said number of shares shall not
be all the shares purchasable under the within Warrant Certificate, a new
Warrant Certificate is to be issued in the name of said undersigned for the
balance remaining of the shares purchasable there under.
Date:_______________________________
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