COMMON STOCK PURCHASE WARRANT NO.1 To Purchase Shares of Common Stock of ZONE MINING LIMITED
Exhibit
4.2
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”),
AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES AS PERMITTED BY LAW AND THE SECURITIES
PURCHASE
AGREEMENT PURSUANT TO WHICH THE SECURITIES WERE ISSUED.
COMMON
STOCK PURCHASE WARRANT
NO.1
To
Purchase Shares of Common Stock of
ZONE
MINING LIMITED
This
COMMON STOCK PURCHASE WARRANT (this “Warrant”)
certifies that, for value received, TRIDENT GROWTH FUND, L.P., a Delaware
limited partnership (the “Holder”),
is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof,
September 21, 2006 (the “Initial
Exercise Date”),
and
on or prior to the close of business on the fifth anniversary of the Initial
Exercise Date (the “Termination
Date”),
to
subscribe for and purchase from ZONE MINING LIMITED, a Nevada corporation (the
“Company”),
five
hundred thousand (500,000) shares of common stock, par value $.00001 per share
(or such lesser number of shares as shall be equal to one-half share for each
dollar advanced by the Holder to the Company pursuant to the Debentures), of
the
Company (the “Common
Stock”),
subject to adjustment herein (the “Warrant
Shares”)
as
provided below. In addition, in the event the first Qualifying Transaction
occurring after the Initial Exercise Date includes attached warrants for the
common stock of Company, Holder shall receive the same number of Warrants as
would be issued to a person receiving 500,000 shares of Common Stock in the
Qualifying Transaction (or such lesser number of shares as shall be equal to
one-half share for each dollar advanced by the Holder to the Company pursuant
to
the Debentures).
The
purchase price of one share of Common Stock under this Warrant shall be equal
to
the Exercise Price, as defined in Section 2(b), as adjusted.
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in that certain Securities Purchase Agreement (the “Purchase
Agreement”),
of
even date herewith, entered into by and among the Company and the
Holder.
1
Section
2. Exercise.
a) Exercise
of Warrant.
Exercise of the purchase rights represented by this Warrant may be made at
any
time or times on or after the Initial Exercise Date and on or before the
Termination Date (each, an “Exercise
Date”)
by
delivery to the Company of a duly executed facsimile copy of the Notice of
Exercise Form annexed hereto (or such other office or agency of the Company
as
it may designate by notice in writing to the registered Holder at the address
of
such Holder appearing on the books of the Company); provided,
however,
within
five Business Days of the date said Notice of Exercise is delivered to the
Company, the Holder shall have surrendered this Warrant to the Company and
the
Company shall have received payment of the aggregate Exercise Price of the
shares thereby purchased by wire transfer or cashier’s check drawn on a United
States bank.
b) Exercise
Price.
The
Exercise
Price
(so
called herein) of each share of Common Stock under this Warrant shall be equal
to the lesser of:
|
(i)
|
100%
of
the average price per share of the Common Stock and Common Stock
Equivalents sold to any Person in the Qualifying Transaction to be
consummated following the Initial Exercise Date (determined by dividing
the total number of shares of Common Stock issued plus shares issuable
under Common Stock Equivalents in such Qualifying Transaction, by
the
aggregate consideration received by the Company plus all consideration
to
be received upon exercise or conversion of all Common Stock
Equivalents issued in such Qualifying Transaction);
or
|
|
(ii)
|
$1.25
per share (post
the stock split described in Schedule 1.1 of the Purchase
Agreement).
|
c) Cashless
Exercise.
If at
any time after one year from the date of issuance of this Warrant there is
no
effective Registration Statement registering the resale of the Warrant Shares
by
the Holder, then this Warrant may also be exercised at such time by means of
a
“cashless exercise” in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient obtained
by
dividing [(A-B) (X)] by (A), where:
2
(A)
= the price of said Common Stock determined by reference
to the last reported sale price for the Common Stock on such day on the
principal securities exchange on which the Common Stock is listed or admitted
to
trading or if no such sale takes place on such date, the average of the closing
bid and asked prices thereof as officially reported, or, if not so listed or
admitted to trading on any securities exchange, the last sale price for the
Common Stock on the National Association of Securities Dealers national market
system on such date, or, if there shall have been no trading on such date or
if
the Common Stock shall not be listed on such system, the average of the closing
bid and asked prices in the over-the-counter market as furnished by any NASD
member firm selected from time to time by the Company for such purpose or,
if
the Common Stock is not traded, then such price as is reasonably determined
by
the Company’s Board of Directors (the “Market
Value”);
(B)
= the Exercise Price of this Warrant, as adjusted; and
(X)
= the number of Warrant Shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means of a cash exercise
rather than a cashless exercise.
Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall
be
automatically exercised via cashless exercise pursuant to this Section
2(c).
d) Exercise
Limitations.
The
Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect
to
such issuance after exercise, the Holder (together with the Holder’s
affiliates), as set forth on the applicable Notice of Exercise, would
beneficially own in excess of 4.99% (or as applicable, 9.99%) of the number
of
shares of the Common Stock outstanding immediately after giving effect to such
issuance. For purposes of the foregoing determination, the number of
shares of Common Stock beneficially owned by the Holder and its affiliates
shall
include the number of shares of Common Stock issuable upon such exercise of
this
Warrant less the number of shares of Common Stock which would be issuable upon
(A) exercise of the remaining, nonexercised portion of this Warrant and (B)
exercise or conversion of the unexercised or unconverted portion of any other
Securities (including, without limitation, any other Debentures or Warrants)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder. Except as set forth in
the preceding sentence, for purposes of this Section 2(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act. To
the
extent that the limitation contained in this Section 2(d) applies, the
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder) and of which a portion of this Warrant is
exercisable shall be in the sole discretion of such Holder. For purposes of
this
Section 2(d), in determining the number of outstanding shares of Common Stock,
the Holder may rely on the number of outstanding shares of Common Stock as
reflected in (x) Schedule
3.1(g)
to the
Purchase Agreement, (y) a more recent public announcement by the Company,
including the most recent annual or quarterly report of Form 10-KSB or 10-QSB
filed with the Commission; or (z) any other notice by the Company or the
Company’s transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of the Holder, the Company
shall within five Business Days confirm orally and in writing to the Holder
the
number of shares of Common Stock then outstanding. The provisions of this
Section 2(d) may be waived by the Holder upon, at the election of the Holder,
not less than 61 days’ prior notice to the Company, and the provisions of this
Section 2(d) shall continue to apply until such 61st day (or such later date,
as
determined by the Holder, as may be specified in such notice of
waiver).
3
e) Mechanics
of Exercise.
i. Authorization
of Warrant Shares.
The
Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the
purchase rights represented by this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges in
respect of the issuance thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issuance). The Company covenants that
during the period the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with
the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant. The Company will take all such reasonable action as may
be
necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements
of
the Trading Market upon which the Common Stock may be listed.
ii. Delivery
of Certificates Upon Exercise.
To the
extent permitted by applicable federal securities laws, certificates for shares
purchased hereunder shall be transmitted by the transfer agent of the Company
to
the Holder by crediting the account of the Holder’s prime broker with the
Depository Trust Company through its Deposit Withdrawal Agent Commission
(“DWAC”)
system
if the Company is a participant in such system and if the certificates may
be
issued without a restrictive legend in accordance with applicable federal
securities laws, and otherwise by physical delivery to the address specified
by
the Holder in the Notice of Exercise within five (5) Business Days from the
delivery to the Company of the Notice of Exercise Form, surrender of this
Warrant and payment of the aggregate Exercise Price as set forth above
(“Warrant
Share Delivery Date”).
This
Warrant shall be deemed to have been exercised on the date the Exercise Price
is
received by the Company. The Warrant Shares shall be deemed to have been issued,
and Holder or any other person so designated to be named therein shall be deemed
to have become a holder of record of such shares for all purposes, as of the
date the Warrant has been exercised by payment to the Company of the Exercise
Price and all taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(vii) prior to the issuance of such shares, have been paid.
4
iii. Delivery
of New Warrants Upon Exercise.
If this
Warrant shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Shares, deliver
to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iv. Rescission
Rights.
If the
Company fails to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant Shares pursuant to this
Section 2(d)(iv) by the Warrant Share Delivery Date, then the Holder will have
the right to rescind such exercise.
v. Failure
to Timely Deliver Certificates Upon Exercise.
In
addition to any other rights available to the Holder, if the Company or the
Company’s transfer agent fails to cause delivery to the Holder of a certificate
or certificates representing the Warrant Shares or if the Company or its
transfer agent fails to deliver such certificates without the restrictive legend
(if applicable) on or before the Warrant Share Delivery Date, the Company shall
pay to Purchaser, in cash, as partial liquidated damages and not as a penalty,
the greater of (i) $500 for each Business Day after the Warrant Share Delivery
Date until such certificate is delivered with an appropriate legend or without
a
restrictive legend, as the case may be; and (ii) the difference in the Market
Value of the Warrant Shares on the Warrant Share Delivery Date and the date
such
shares are actually received by the Holder. Nothing herein shall limit
Purchaser’s right to pursue all equitable remedies for the Company’s failure to
deliver certificates representing any Securities as required herein, including,
without limitation, a decree of specific performance and/or injunctive relief.
vi. No
Fractional Shares or Scrip.
No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. As to any fraction of a share which Holder would
otherwise be entitled to purchase upon such exercise, the Company shall round
such fractional share up to the next whole number.
vii. Charges,
Taxes and Expenses.
Issuance of certificates for Warrant Shares shall be made without charge to
the
Holder for any issue or transfer tax or other incidental expense in respect
of
the issuance of such certificate, all of which taxes and expenses shall be
paid
by the Company, and such certificates shall be issued in the name of the Holder
or in such name or names as may be directed by the Holder; provided,
however,
that in
the event certificates for Warrant Shares are to be issued in a name other
than
the name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
5
viii. Closing
of Books.
The
Company will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
Section
3. Certain
Adjustments.
a) Stock
Dividends and Splits.
Except
for the forward split of stock described in Schedule 1.1 of the Purchase
Agreement, if the Company, at any time while this Warrant is outstanding: (A)
pays a stock dividend or otherwise make a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock, (B) subdivides outstanding shares of Common
Stock into a larger number of shares, (C) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (D) issues by reclassification of shares of the Common Stock any shares
of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares
of
Common Stock (excluding treasury shares, if any) outstanding before such event
and of which the denominator shall be the number of shares of Common Stock
outstanding after such event and the number of shares issuable upon exercise
of
this Warrant shall be proportionately adjusted. Any adjustment made pursuant
to
this Section 3(a) shall become effective immediately after the record date
for
the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date
in
the case of a subdivision, combination or re-classification.
b) Subsequent
Equity Sales.
Subject
to Section 3(e) below, if the Company at any time while this Warrant is
outstanding, shall offer, sell, grant any option to purchase or offer, sell
or
grant any right to reprice its securities, or otherwise dispose of or issue
any
Common Stock or Common Stock Equivalents entitling any Person to acquire shares
of Common Stock, at a price per share less than the then Exercise Price (such
lower price, the “Base
Share Price”
and
such issuances collectively, a “Dilutive
Issuance”),
as
adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which is issued
in
connection with such issuance, be entitled to receive shares of Common Stock
at
an effective price per share which is less than the Exercise Price, such
issuance shall be deemed to have occurred for less than the Exercise Price),
then, the Exercise Price shall be reduced to equal the Base Share Price. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. The Company shall notify the Holder in writing, no later than the
Business Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this section, indicating therein the applicable issuance
price, or of applicable reset price, exchange price, conversion price and other
pricing terms (such notice the “Dilutive
Issuance Notice”).
For
purposes of clarification, whether or not the Company provides a Dilutive
Issuance Notice pursuant to this Section 3(b), upon the occurrence of any
Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
entitled to receive Warrant Shares based upon the Base Share Price regardless
of
whether the Holder accurately refers to the Base Share Price in the Notice
of
Exercise.
6
c) Pro
Rata Distributions.
If the
Company, at any time prior to the Termination Date, shall distribute to all
holders of Common Stock (and not to Holders of the Warrants) evidences of its
indebtedness or assets or rights or warrants to subscribe for or purchase any
security other than the Common Stock (which shall be subject to Section 3(b)),
then in each such case the Exercise Price shall be adjusted by multiplying
the
Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by a
fraction of which the denominator shall be the closing bid price of the Common
Stock on the then principal Trading Market determined as of the record date
mentioned above (if the closing bid price of the Common Stock on the then
principal Trading Market shall then be determinable and otherwise the fair
market value per share as determined by the Board of Directors in good faith,
and of which the numerator shall be such closing bid price of the Common Stock
on the then principal Trading Market on such record date less the then per
share
fair market value at such record date of the portion of such assets or evidence
of indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In either case
the
adjustments shall be described in a statement provided to the Holders of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
d) Fundamental
Transaction.
If, at
any time while this Warrant is outstanding, there occurs a Fundamental
Transaction, then, upon any subsequent conversion of this Warrant, the Holder
shall have the right to receive, for each Warrant Share that would have been
issuable upon such exercise absent such Fundamental Transaction (a) upon
exercise of this Warrant, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Alternate Consideration receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a Holder of the number of shares of Common Stock for which this Warrant
is
exercisable immediately prior to such event or (b) if the Company is acquired
in
an all cash transaction, cash equal to the value of this Warrant as determined
by the difference between the applicable Exercise Price and the amount of cash
paid per share to the shareholders of the Company (the “Alternate
Consideration”).
For
purposes of any such exercise, the determination of the Exercise Price shall
be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration
it
receives upon any exercise of this Warrant following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions,
any
successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new warrant consistent with the foregoing provisions
and evidencing the Holder’s right to exercise such warrant into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this Section 3(d) and insuring
that this Warrant (or any such replacement security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental
Transaction.
7
e) Exempt
Issuance.
Notwithstanding the foregoing, no adjustments, Alternate Consideration, nor
notices shall be made, paid, or issued under this Section 3 in respect of an
Exempt Issuance.
f) Calculations.
All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. The number of shares of Common
Stock outstanding at any given time shall not includes shares of Common Stock
owned or held by or for the account of the Company, and the description of
any
such shares of Common Stock shall be considered on issue or sale of Common
Stock. For purposes of this Section 3, the number of shares of Common Stock
deemed to be issued and outstanding as of a given date shall be the sum of
the
number of shares of Common Stock (excluding treasury shares, if any) issued
and
outstanding.
g) Voluntary
Adjustment By Company.
The
Company may at any time during the term of this Warrant reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate
by
the Board of Directors of the Company.
h) Intentionally
Omitted.
i) Notice
to Holders.
i. Adjustment
to Exercise Price.
Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company
shall promptly mail to each Holder a notice setting forth the Exercise Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment. If the Company issues a variable rate security, despite the
prohibition thereon in the Purchase Agreement, the Company shall be deemed
to
have issued Common Stock or Common Stock Equivalents at the lowest possible
conversion or exercise price at which such securities may be converted or
exercised in the case of a Variable Rate Transaction (as defined in the Purchase
Agreement), or the lowest possible adjustment price in the case of an MFN
Transaction. The term “MFN
Transaction”
shall
mean a transaction in which the Company issues or sells any securities in a
capital raising transaction or series of related transactions which grants
to an
investor the right to receive additional shares based upon future transactions
of the Company on terms more favorable than those granted to such investor
in
such offering.
8
ii. Notice
to Allow Exercise by ▇▇▇▇▇▇.
If (A)
the Company shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash dividend on
or
a redemption of the Common Stock; (C) the Company shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be required in connection
with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of
the
assets of the Company, of any compulsory share exchange whereby the Common
Stock
is converted into other securities, cash or property; (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding
up of
the affairs of the Company; then, in each case, the Company shall cause to
be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date
on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date
as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined
or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record
shall
be entitled to exchange their shares of the Common Stock for securities, cash
or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided,
however
that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. The Holder is entitled to exercise this Warrant during the
20-day period commencing the date of such notice to the effective date of the
event triggering such notice.
Section
4. Transfer
of Warrant.
a) Transferability.
Subject
to compliance with any applicable securities laws and the conditions set forth
in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of the
Purchase Agreement, this Warrant and all rights hereunder are transferable,
in
whole or in part, upon surrender of this Warrant at the principal office of
the
Company, together with a written assignment of this Warrant substantially in
the
form attached hereto duly executed by the Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled. A Warrant, if properly assigned, may be exercised by a new holder
for
the purchase of Warrant Shares without having a new Warrant issued.
9
b) New
Warrants.
This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
c) Warrant
Register.
The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant
Register”),
in
the name of the record Holder hereof from time to time. The Company may deem
and
treat the registered Holder of this Warrant as the absolute owner hereof for
the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
d) Transfer
Restrictions.
If,
at the
time
of
the surrender of this Warrant in connection with any transfer of this Warrant,
the transfer of this Warrant shall not be registered pursuant to an effective
registration
statement under the Securities Act
and
under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer (i) that the Holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be in form, substance and scope customary for opinions
of
counsel in comparable transactions) to the effect that such transfer may be
made
without
registration under
the
Securities Act and under applicable state securities or blue sky laws, (ii)
that
the holder or transferee execute and deliver to the Company an investment letter
in form and substance acceptable to the Company and (iii) that the transferee
be
an “accredited
investor” as defined in Rule 501(a) of Regulation D promulgated under the
Securities Act or a qualified institutional buyer as defined in Rule 144A(a)
under the Securities Act.
Section
5. Covenants.
[Intentionally deleted].
Section
6. Miscellaneous.
a) Title
to Warrant.
Prior
to the Termination Date and subject to compliance with applicable laws and
Section 4 of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by
the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed. The
transferee shall sign an investment letter in form and substance reasonably
satisfactory to the Company.
10
b) No
Rights as Shareholder Until Exercise.
This
Warrant does not entitle the Holder to any voting rights or other rights as
a
shareholder of the Company prior to the exercise hereof. Upon the surrender
of
this Warrant and the payment of the aggregate Exercise Price (or by means of
a
cashless exercise), the Warrant Shares so purchased shall be and be deemed
to be
issued to such Holder as the record owner of such shares as of the close of
business on the later of the date of such surrender or payment.
c) Loss,
Theft, Destruction or Mutilation of Warrant.
The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of any bond),
and upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such Warrant or
stock certificate.
d) Saturdays,
Sundays, Holidays, etc.
If the
last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall be a Saturday, Sunday or a legal holiday,
then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.
e) Authorized
Shares.
The
Company covenants that during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise
of
any purchase rights under this Warrant. The Company further covenants that
its
issuance of this Warrant shall constitute full authority to its officers who
are
charged with the duty of executing stock certificates to execute and issue
the
necessary certificates for the Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action
as
may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be listed.
Except
and to the extent as waived or consented to by the Holder, the Company shall
not
by any action, including, without limitation, amending its articles of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this
Warrant, but will at all times in good faith assist in the carrying out of
all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value,
(b)
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of this Warrant, and (c) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to enable
the Company to perform its obligations under this Warrant.
11
Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
f) Jurisdiction.
All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.
g) Restrictions.
The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.
h) Expenses.
If the
Company willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the Company shall
pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys’ fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts
due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
i) Notices.
Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
j) Limitation
of Liability.
No
provision hereof, in the absence of any affirmative action by Holder to exercise
this Warrant or purchase Warrant Shares, and no enumeration herein of the rights
or privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
k) Remedies.
Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
the
provisions of this Warrant and hereby agrees to waive the defense in any action
for specific performance that a remedy at law would be adequate.
l) Successors
and Assigns.
Subject
to applicable securities laws, this Warrant and the rights and obligations
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant and shall be enforceable by any such Holder
or
holder of Warrant Shares.
12
m) Amendment
and Waiver.
This
Warrant may be modified or amended only with the written consent of the Company
and the Holder. No course of dealing or any delay or failure to exercise any
right hereunder on the part of Holder shall operate as a waiver of such right
or
otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the
fact that all rights hereunder terminate on the Termination Date.
n) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
o) Headings.
The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
p) Registration
Rights.
The
Holder has certain rights with respect to the registration of the Warrant Shares
upon exercise of this Warrant, such rights being specifically set forth in
the
Purchase Agreement entered into by and between Holder and the Company on the
date hereof.
[Signature
Page Follows]
13
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be executed by its officer thereunto duly
authorized as of the date first written above.
| ZONE MINING LIMITED | ||
| |
|
|
| Date: | By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ |
|
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title:
President
|
||
14
NOTICE
OF EXERCISE
TO: ZONE
MINING LIMITED
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of Zone Mining
Limited pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together
with
all applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
[
]
in lawful money of the United States; or
[
]
the cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the
name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following:
_______________________________
_______________________________
_______________________________
(4) Accredited
Investor.
The
undersigned, and, if applicable, the person or entity identified in subsection
3
above, is an “accredited investor” as defined in Regulation D promulgated under
the Securities Act of 1933, as amended.
[SIGNATURE
OF HOLDER]
Name
of
Investing Entity:
_____________________________________________________________
Signature
of Authorized Signatory of Investing Entity:
_______________________________________
Name
of
Authorized Signatory:
_________________________________________________________
Title
of
Authorized Signatory:
__________________________________________________________
Date:
_____________________________________________________________________________
15
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this
form
and supply required information.
Do
not
use this form to exercise the warrant.)
FOR
VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
|
Holder’s
Signature:
|
_____________________________
|
|
Holder’s
Address:
|
_____________________________
|
|
_____________________________
|
Signature
Guaranteed: ___________________________________________
NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.
16