EXHIBIT 10.12
-------------
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION 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.
Earth Search Sciences, Inc.
COMMON STOCK PURCHASE WARRANT A
1. Issuance. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by Earth Search
Sciences, Inc., a Utah corporation (the "Company"), ALPHA VENTURE CAPITAL, INC.,
or registered assigns (the "Holder") is hereby granted the right to purchase at
any time commencing May 23, 2001 until 5:00 P.M., New York City time, on May 23,
2006 (the "Expiration Date"), One Million Five Hundred Thousand (1,500,000)
fully paid and nonassessable shares of the Company's Common Stock, par value
$0.001 per share (the "Common Stock") at an initial exercise price per share of
an amount equal to the lesser of (a) ninety-five percent (95%) of the average of
the five (5) closing bid prices following March 15, 2001 or (b) ninety-five
percent (95%) of the average of the five (5) closing bid prices following the
effective date of the registration statement covering the Warrant Shares (as
defined in Section 3 hereof) (the "Exercise Price"), subject to further
adjustment as set forth in Section 6 hereof.
2. Exercise of Warrants.
(a) This Warrant is exercisable in whole or in part at the
Exercise Price per share of Common Stock payable hereunder, payable in cash or
by certified or official bank check, or, if the resale of the Warrant Shares by
the holder is not then registered pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
(or, if after the registration statement covering the Warrant Shares is declared
effective, sales of the Warrant Shares may not be made thereunder for any
reason), by "cashless exercise," by means of tendering this Warrant to the
Company to receive a number of shares of Common Stock equal to the difference
between the Market Value of the shares of Common Stock issuable upon exercise of
this Warrant and the product of the number of shares issuable upon exercise and
the Exercise Price, divided by the Market Value Per Share. For example, if
Holder receives a warrant to purchase 1,500,000 shares of Common Stock at an
Exercise Price of $1.00 and decides to use the "cashless exercise" method to
exercise its option to purchase all 1,500,000 shares at a time when the
Company's Common Stock has a Market Value Per Share of $10.00, Holder would
receive 1,350,000 shares of Common Stock upon exercise. Upon surrender of this
Warrant with the annexed Notice of Exercise Form duly executed, together with
payment of the Exercise Price for the shares of Common Stock purchased, the
Holder shall be entitled to receive a certificate or certificates for the shares
of Common Stock so purchased. For the purposes of this Section 2, "Market Value"
shall be an amount equal to the average closing bid price of a share of Common
Stock for the ten (10) days preceding the Company's receipt of the Notice of
Exercise Form duly executed multiplied by the number of shares of Common Stock
to be issued upon surrender of this Warrant, and "Market Value Per Share" shall
be an amount equal to the average closing bid price of a share of Common Stock
for the ten (10) days preceding the Company's receipt of the duly executed
Notice of Exercise Form.
(b) For purposes of Rule 144 promulgated under the Securities
Act, it is intended, understood and acknowledged that the Warrant Shares issued
in a cashless exercise transaction shall be deemed to have been acquired by the
Holder and the holding period for the Warrant Shares shall be deemed to have
been commenced on the issue date.
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 such number of shares of its Common Stock as shall
be required for issuance upon exercise of this Warrant (the "Warrant Shares").
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.
6.1 Adjustment Mechanism. If an adjustment of the
Exercise Price is required pursuant to this Section 6, the Holder shall be
entitled to purchase such number of additional shares of Common Stock as will
cause (i) the total number of shares of Common Stock Holder is entitled to
purchase pursuant to this Warrant, multiplied by (ii) the adjusted purchase
price per share (the "Adjusted Exercise Price"), to equal (iii) the total number
of shares of Common Stock Holder is entitled to purchase before adjustment
multiplied by the Exercise Price before adjustment. For example, if Holder
receives a warrant to purchase 1,500,000 shares of Common Stock at an Exercise
Price of $1.00, and the Adjusted Exercise Price is $0.50, Holder will be
entitled to receive 3,000,000 shares of Common Stock.
6.2 Capital Adjustments. In case of any stock split
or reverse stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, 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 purchase price had been fairly
allocated to the stock resulting from such capital adjustment; and in other
respects the provisions
2
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.
6.3 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 if Holder had exercised its right to purchase all of the remaining Common
Stock available to Holder under this Warrant as of the close of business on the
trading day immediately before the record date (the "Outstanding Warrants") for
determining the amount of the number of Spin Off Securities to be issued to
security holders of the Company (the "Reserved Spin Off Shares"), and (ii) to be
issued to the Holder upon 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
Outstanding Warrants.
7. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage pre-paid, return receipt requested. Any such
notice shall be deemed given when so delivered personally, telegraphed, telexed
or sent by facsimile transmission, or, if mailed, two days after the date of
deposit in the United States mails, as follows:
If to the Company:
Earth Search Sciences, Inc.
0000 Xxxxxxx Xxxxxxx 00
Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Chief Financial Officer
If to the Holder:
Alpha Venture Capital, Inc.
Avarua Rarotonga
Xxxx Islands
Telephone No: (000) 000-0000
Facsimile No. (000) 000-0000
Attention: Xx. Xxxxx Xxxxxx, Director
Any party may designate another address or person for receipt of notices
hereunder by notice given to the other parties in accordance with this Section.
3
8. Liquidated Damages. If the Company fails to cause its
transfer agent to deliver to the Holder unlegended certificates representing the
Warrant Shares within ten (10) business days after the Date of Exercise, the
Company shall pay to such Holder, in cash, as liquidated damages and not as a
penalty, $1,000 for each day after such tenth (10th) business day until such
certificates are delivered. Nothing herein shall limit the Holder's right to
pursue actual damages for the Company's failure to deliver certificates
representing shares of Common Stock upon exercise within the period specified
herein and the Holder shall have the right to pursue all remedies available to
it at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief. The exercise of any such rights shall not
prohibit the Holder from seeking to enforce damages pursuant to any other
Section hereof or under applicable law.
9. 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.
10. Governing Law. This Warrant shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.
11. 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.
12. 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.
4
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
May 23, 2001.
Earth Search Sciences, Inc.
By: ______________________________
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer
ATTEST:
-------------------------------
5
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ______________, to purchase
__________shares of the Common Stock, par value $0.001 per share, of Earth
Search Sciences, Inc. and tenders herewith payment in accordance with Section 1
of said Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:______________________
By:__________________________________
CASH: $ __________________________
CASHLESS EXERCISE: _____________
6
