EXHIBIT A
TO
SUBSCRIPTION AGREEMENT
FORM OF WARRANT
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO SUNWIN INTERNATIONAL
NEUTRACEUTICALS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.
SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC.
No. 2007- (1)
COMMON STOCK PURCHASE WARRANT
1. Issuance. In consideration of good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC., a Nevada corporation (the
"Company"), ______________________________ or registered assigns (the "Holder")
is hereby granted the right to purchase at any time, on or after the Issue Date
(as defined below) until 5:00 P.M., New York City time, on the date which the
last calendar of the month in which the fifth anniversary of the Issue Date
occurs (the "Expiration Date"), _________________ Thousand __________
(____________)(2) fully paid and nonassessable shares of the Company's Common
Stock, $0.001 par value per share (the "Common Stock"), at an initial exercise
price per share (the "Exercise Price") of $0.65 per share, subject to further
adjustment as set forth herein. This Warrant is being issued pursuant to the
terms of that certain Subscription Agreement, dated as of March __ 2007 (the
"Agreement"), to which the Company and Holder (or Holder's predecessor in
interest) are parties. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Agreement. This Warrant was originally
issued to the Holder of the Holder's predecessor in interest on _____________,
2007
(3) (the "Issue Date").
2. Exercise of Warrants.
2.1 General.
(a) This Warrant is exercisable in whole or in part
at any time and from time to time
commencing on the Issue Date. Such exercise shall be effectuated by submitting
to the Company (either by delivery to the Company or by facsimile transmission
as provided in Section 8 hereof) a completed and duly executed Notice of
Exercise (substantially in the form attached to this Warrant Certificate) as
provided in the Notice of Exercise (or revised by notice given by the Company as
contemplated by the Section headed "NOTICES" in the Agreement) or at the office
of its Warrant Agent (as provided hereinafter). The date such Notice of Exercise
is faxed to the Company shall be the "Exercise Date," provided that, if such
exercise represents the full exercise of the outstanding balance of the Warrant,
the Holder of this Warrant tenders this Warrant Certificate to the Company
within five (5) Trading Days (as defined below) thereafter. The term "Trading
Day" means any day during which the Principal Market shall be open for business.
The Notice of Exercise shall be executed by the Holder of this Warrant and shall
indicate (i) the number of shares then being purchased pursuant to such exercise
and (ii) if applicable (as provided below), whether the exercise is a cashless
exercise.
(b) The provisions of this Section 2.1(b) shall only
be applicable (i) (x) on or after the Required Effective Issue Date, and (y) if,
and only if, on the Exercise Date there is a Non-Registration Event as described
in Section 11 ofthe Agreement, and (ii) on the Automatic Exercise Date (as
defined below),whether or not there is a Non-Registration Event on such date.
If the Notice of Exercise form elects a "cashless" exercise, the Holder shall
thereby be entitled to receive a number of shares of Common Stock equal to (w)
the excess of the Current Market Value (as defined below) over the total cash
exercise price of the portion of the Warrant then being exercised, divided by
(x) the Market Price of the Common Stock. For the purposes of this Warrant, the
terms (x) "Current Market Value" shall mean an amount equal to the Market Price
of the Common Stock, multiplied by the number of shares of Common Stock
specified in the applicable Notice of Exercise, (y) "Market Price of the Common
Stock" shall mean the average Closing Price of the Common Stock for the three
(3) Trading Days ending on the Trading Day immediately prior to the Exercise
Date, and (z) "Closing Price" means the 4:00 P.M. closing bid price of the
Common Stock on the Principal Market on the relevant trading day(s), as
reported by Bloomberg LP (or if that service is not then reporting the relevant
information regarding the Common Stock, a comparable reporting service of
national reputation selected by the Holder and reasonably acceptable to the
Company) for the relevant date.
(c) If the Notice of Exercise form elects a "cash"
exercise (or if the cashless exercise referred to in the immediately
preceding paragraph (b) is not available in accordance with its terms), the
Exercise Price per share of Common Stock for the shares then being exercised
shall be payable, at the election of the Holder, in cash or by certified or
official bank check or by wire transfer in accordance with instructions provided
by the Company at the request of the Holder.
(d) Upon the appropriate payment, if any, of the
Exercise Price for the shares of Common Stock purchased, together with the
surrender of this Warrant Certificate (if required), the Holder shall be
entitled to receive a certificate or certificates for the shares of Common Stock
so purchased. The Company shall deliver such certificates representing the
Warrant Shares in accordance with the instructions of the Holder as provided in
the Notice of Exercise (the certificates delivered in such manner, the "Warrant
Share Certificates") within three (3) Trading Days (such third Trading Day, a
"Delivery Date") of (i) with respect to a "cashless exercise," the Exercise Date
or the Automatic Exercise Date, as the case may be, or, (ii) with respect to a
"cash" exercise, the later of the Exercise Date or the date the payment of the
Exercise Price for the relevant Warrant Shares is received by the Company.
(e) The Company understands that a delay in the
delivery of the Warrant Share Certificates by the Delivery Date could
result in economic loss to the Holder. As compensation to the Holder for such
loss, the Company agrees to pay late payment fees (as liquidated damages and not
as a penalty) to the Holder for late delivery of Warrant Share Certificates in
the amount of $100 per Trading Day after the Delivery Date for each $10,000 of
Exercise Price of the Warrant Shares subject to the delivery default. The
Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Furthermore, in addition to any other remedies
which may be available to the Holder, in the event that the Company fails for
any reason to effect delivery of the Warrant Share Certificates by the Delivery
Date, the Holder may revoke all or part of the relevant Warrant exercise by
delivery of a notice to such effect to the Company, whereupon the Company and
the Holder shall each be restored to their respective positions immediately
prior to the exercise of the relevant portion of this Warrant, except that the
liquidated damages described above shall be payable through the date notice of
revocation or rescission is given to the Company.
(f) In addition to any other rights available to the
Holder, if the Company fails to deliver to the Warrant Share Certificates
within seven (7) Trading Days after the Delivery Date and the Holder purchases
(in an open market transaction or otherwise) shares of common stock ("Bought
Shares") to deliver in satisfaction of a sale by the Holder of the shares of
Common Stock which the Holder was entitled to receive from the Company on
exercise of this Warrant (a "Buy-In"), then the Company shall pay in cash to the
Holder (in addition to any remedies available to or elected by the Holder) the
amount by which (A) the Holder's total purchase price (including brokerage
commissions, if any) for the Bought Shares exceeds (B) the Exercise Price for
such Warrant Shares, together with interest thereon at a rate of 15% per annum,
accruing until such amount and any accrued interest thereon is paid in full
(which amount shall be paid as liquidated damages and not as a penalty). For
example, if the Holder purchases shares of Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to $10,000 (based on the
Exercise Price) of Warrant Shares, the Company shall be required to pay the
Subscriber $1,000, plus interest. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In.
(g) The Holder shall be deemed to be the holder of the shares issuable to it in
accordance with the provisions of this Section 2.1 on the Exercise Date.
2.2 Limitation on Exercise. Notwithstanding the provisions
of this Warrant, the Agreement or of the other Transaction Agreements, in
no event (except (i) as specifically provided in this Warrant as an exception to
this provision, (ii) during the forty-five (45) day period prior to the
Expiration Date, or (iii) while there is outstanding a tender offer for any or
all of the shares of the Company's Common Stock) shall the Holder be entitled to
exercise this Warrant, or shall the Company have the obligation to issue shares
upon such exercise of all or any portion of this Warrant to the extent that,
after such exercise the sum of (1) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unexercised portion of the Warrants or other rights to purchase Common Stock or
through the ownership of the unconverted portion of convertible securities), and
(2) the number of shares of Common Stock issuable upon the exercise of the
Warrants with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its affiliates of more
than 4.99% of the outstanding shares of Common Stock (after taking into account
the shares to be issued to the Holder upon such exercise). For purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), except as otherwise provided in clause (1) of
such sentence. The Holder, by its acceptance of this Warrant, further agrees
that if the Holder transfers or assigns any of the Warrants to a party who or
which would not be considered such an affiliate, such assignment shall be made
subject to the transferee's or assignee's specific agreement to be bound by the
provisions of this Section 2.2 as if such transferee or assignee were the
original Holder hereof.
2.3 Automatic Exercise. If any portion of this Warrant remains unexercised
as of the Expiration Date and the Market Price of the Common Stock as of the
Expiration Date is greater than the applicable Exercise Price as of the
Expiration Date, then, without further action by the Holder, this Warrant shall
be deemed to have been exercised automatically on the date (the "Automatic
Exercise Date") which is the day immediately prior to the close of business on
the Expiration Date (or, in the event that the Expiration Date is not a Business
Day, the immediately preceding Business Day) as if the Holder had duly given a
Notice of Exercise for a "cashless" exercise as contemplated by Section 2.1(b)
hereof, and the Holder (or such other person or persons as directed by the
Holder) shall be treated for all purposes as the holder of record of such
Warrant Shares as of the close of business on such Automatic Exercise Date. This
Warrant shall be deemed to be surrendered to the Company on the Automatic
Exercise Date by virtue of this Section 2.3 without any action by the Holder.
2.4 Trustee for Warrant Holders. In the event that a qualified
bank or trust company shall have been appointed as trustee for the Holder of the
Warrants pursuant to Subsection 6.3, such bank or trust company shall have all
the powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to Section
2.1.
3. Reservation of Shares. The Company hereby agrees that, at
all times during the term of this Warrant, there shall be reserved for issuance
upon exercise of this Warrant, one hundred percent (100%) of the number of
shares of its Common Stock as shall be required for issuance of the Warrant
Shares for the then unexercised portion of this Warrant. For the purposes of
such calculations, the Company should assume that the outstanding portion of
this Warrants was exercisable in full at any time, without regard to any
restrictions which might limit the Holder's right to exercise all or any portion
of this Warrant held by the Holder.
4. Mutilation or Loss of Warrant. 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) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue
hereof, 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 this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
6. Protection Against Dilution and Other Adjustments.
6.1 Adjustment Mechanism. If an adjustment
of the Exercise Price is required pursuant to this Section 6 (other than
pursuant to Section 6.4), the Holder shall be entitled to purchase such number
of shares of Common Stock as will cause (i) (x) the total number of shares of
Common Stock Holder is entitled to purchase pursuant to this Warrant following
such adjustment, multiplied by (y) the adjusted Exercise Price per share, to
equal the result of (ii) (x) the dollar amount of the total number of shares of
Common Stock Holder is entitled to purchase before adjustment, multiplied by
(y) the total Exercise Price before adjustment.
6.2 Capital Adjustments. In case of any stock split or
reverse stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger orconsolidation (where the Company is not the
surviving entity), the provisions of this Section 6 shall be applied as if such
capital adjustment event had occurred immediately prior to the date of this
Warrant and the original Exercise Price had been fairly allocated to the stock
resulting from such capital adjustment; and in other respects the provisions of
this Section shall be applied in a fair, equitable and reasonable manner so as
to give effect, as nearly as may be, to the purposes hereof. A rights offering
to stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights. The Company will not effect any consolidation or
merger, unless prior to the consummation thereof, the successor or acquiring
entity (if other than the Company) and, if an entity different from the
successor or acquiring entity, the entity whose capital stock or assets the
holders of the Common Stock of the Company are entitled to receive as a result
of such consolidation or merger assumes by written instrument the obligations
under this Warrant (including under this Section 6) and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the holder may be entitled to
acquire.
6.3 Dissolution. In the event of any dissolution of
the Company following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution, shall at its
expense deliver or cause to be delivered the stock and other securities and
property (including cash, where applicable) receivable in accordance with
Section 6.2 by the Holder upon their exercise after the effective date of such
dissolution pursuant to this Section 6.3 to a bank or trust company (a
"Trustee") having its principal office in New York, NY, as trustee for the
Holder.
6.4 Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise
divests itself of a part of its business or operations or disposes all or of a
part of its assets in a transaction (the "Spin Off") in which the Company does
not receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then the Company shall cause (i) to be reserved
Spin Off Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder's unexercised Warrants outstanding on the
record date (the "Record Date") for determining the amount and number of Spin
Off Securities to be issued to security holders of the Company (the "Outstanding
Warrants") been exercised as of the close of business on the Trading Day
immediately before the Record Date (the "Reserved Spin Off Shares"), and (ii) to
be issued to the Holder on the exercise of all or any of the Outstanding
Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved
Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the
amount of the Outstanding Warrants then being exercised, and (II) the
denominator is the amount of the Outstanding Warrants.
6.5 Continuation of Terms. Upon any
reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 6, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable to
the Other Securities (as defined below) and property receivable on the exercise
of this Warrant after the consummation of such reorganization, consolidation or
merger or the effective date of dissolution following any such transfer, as the
case may be, and shall be binding upon the issuer of any Other Securities,
including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not
such person shall have expressly assumed the terms of this Warrant as provided
elsewhere in this Section 6. In the event this Warrant does not continue in
full force and effect after the consummation of the transaction described in
this Section 6, then only in such event will the Company's securities and
property (including cash, where applicable) receivable by the Holder of the
Warrants be delivered to the Trustee as contemplated by Section 6.3. The term
"Other Securities" refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the Holder of the Warrant at any time shall be entitled to receive, or shall
have received, on the exercise of the Warrant, in lieu of or in addition to
Common Stock, or which at any time shall be issuable or shall have been issued
in exchange for or in replacement of Common Stock or Other Securities pursuant
to Section 7 or otherwise.
6.6 Adjustment for Certain Transactions. Reference is
made to the provisions of Section 12 of the Agreement, the terms of which are
incorporated herein by reference. The Exercise Price shall be adjusted as
provided in the applicable provisions of said Section 12 of the Agreement.
7. Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock outstanding or deemed to be
outstanding, and (c) the Exercise Price and the number of shares of Common Stock
to be received upon exercise of this Warrant, in effect immediately prior to
such adjustment or readjustment and as adjusted or readjusted as provided in
this Warrant. The Company will forthwith mail a copy of each such certificate to
the Holder of the Warrant and any Warrant Agent of the Company (appointed
pursuant to Section 9 hereof).
8. Transfer to Comply with the Securities Act; Registration
Rights.
8.1 Transfer. This Warrant has not been registered
under the 1933 Act and has been issued to the Holder for investment
and not with a view to the distribution of either the Warrant or the Warrant
Shares. Neither this Warrant nor any of the Warrant Shares or any other security
issued or issuable upon exercise of this Warrant may be sold, transferred,
pledged or hypothecated in the absence of an effective registration statement
under the Act relating to such security or an opinion of counsel satisfactory
to the Company that registration is not required under the Act. Each certificate
for the Warrant, the Warrant Shares and any other security issued or issuable
upon exercise of this Warrant shall contain a legend on the face thereof, in
form and substance satisfactory to counsel for the Company, setting forth the
restrictions on transfer contained in this Section. Any such transfer shall be
accompanied by a transferor assignment substantially in the form of Exhibit B,
executed by the transferor and the transferee and submitted to the Company.
8.2 Registration Rights.
(a) Reference is made to the Rights Agreement. The
Company's obligations under Section 11 of the Agreement and the other terms and
conditions thereof with respect to the Warrant Shares, including, but not
necessarily limited to, the Company's commitment to file a registration
statement including the Warrant Shares, to have the registration of the Warrant
Shares completed and effective, and to maintain such registration, are
incorporated herein by reference.
(b) In addition to the registration rights referred
to in the preceding provisions of Section 8.2(a), effective after the
expiration of the effectiveness of the Registration Statement as contemplated by
the Agreement, the Holder shall have piggy-back registration rights with respect
to the Warrant Shares then held by the Holder or then subject to issuance upon
exercise of this Warrant (collectively, the "Remaining Warrant Shares"), subject
to the conditions set forth below. If, at any time after the Registration
Statement has ceased to be effective, the Company participates (whether
voluntarily or by reason of an obligation to a third party) in the registration
of any shares of the Company's stock (other than a registration on Form S-8 or
on Form S-4), the Company shall give written notice thereof to the Holder and
the Holder shall have the right, exercisable within ten (10) Trading Days after
receipt of such notice, to demand inclusion of all or a portion of the Holder's
Remaining Warrant Shares in such registration statement. If the Holder exercises
such election, the Remaining Warrant Shares so designated shall be included in
the registration statement at no cost or expense to the Holder (other than any
costs or commissions which would be borne by the Holder under the terms of the
Registration Rights Agreement). The Holder's rights under this Section 8 shall
expire at such time as the Holder can sell all of the Remaining Warrant Shares
under Rule 144 without volume or other restrictions or limit.
9. Warrant Agent.. The Company may, by written notice to the
Holder of the Warrant, appoint an agent (a "Warrant Agent") for the purpose of
issuing Common Stock on the exercise of this Warrant pursuant hereto, exchanging
this Warrant pursuant hereto, and replacing this Warrant pursuant hereto, or any
of the foregoing, and thereafter any such issuance, exchange or replacement, as
the case may be, shall be made at such office by such Warrant Agent.
10. Transfer on the Company's Books. Until this Warrant is
transferred on the books of the Company, the Company may treat the registered
holder hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.
11. Notices. Any notice required or permitted hereunder shall
be given in manner provided in the subsection headed "NOTICES" in the Agreement,
the terms of which are incorporated herein by reference.
12. Supplements and Amendments; Whole Agreement. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant contains the full understanding of the parties
hereto with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
13. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the County of New
York or the state courts of the State of New York sitting in the County of New
York in connection with any dispute arising under this Warrant and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens, to the bringing of any such proceeding
in such jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Holder in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
14. Remedies. The Company stipulates that the remedies at law
of the Holder of this Warrant in the event of any default or threatened default
by the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
15. Counterparts. This Warrant may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
16. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: _________________, 200__
SUNWIN INTERNATIONAL NEUTRACEUTICALS, INC.
By: ________________________________
-----------------------------------
(Print Name)
-----------------------------------
(Title)
Witness:
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(1)Insert unique sequential number for each issuance.
(2)Insert the number equal to the number of Purchased Shares for the Subscriber.
(3)Insert the Closing Date.