WARRANT EXTENSION AGREEMENT
Exhibit 10.2
THIS WARRANT EXTENSION AGREEMENT (the “Extension
Agreement”) is dated as of March 8, 2010, by and between Prevention
Xxxxxxxxx.xxx, a Nevada corporation, with a principal address at 000 Xxxx
00xx
Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000 (the “Company”) and Xxxxx Xxxxxxxxx, an
individual with an address at 0000 X. Xxxxxxxx Xxxx., Xxx Xxxxx, XX 00000
(“Xxxxxxxxx”).
RECITAL
WHEREAS, Paragon Capital LP, a
Delaware limited partnership (“Paragon”), was the holder of a warrant to
purchase up to 10,000,000 shares of the common stock, par value $0.001 per share
(the “Common Stock”) of the Company, in the form attached hereto as Exhibit A (the
“Warrant”), capitalized terms not otherwise defined herein having their
respective meanings as set forth in the Warrant; and
WHEREAS, in accordance with
the terms and conditions of the Warrant and pursuant to the terms and conditions
of that certain agreement by and between the Company, Xxxxxxxxx and Paragon,
dated March 8, 2010, in the form attached hereto as Exhibit B (the
“Agreement”), Paragon has sold, transferred and assigned the Warrant to
Xxxxxxxxx; and
WHEREAS, in accordance with
the terms of the Agreement the Company has agreed to extend the Expiration Date
of the Warrant by an additional two years.
AGREEMENT
NOW, THEREFORE, for and in
consideration of the premises and the mutual covenants contained herein, and for
other good and valuable consideration, the receipt, adequacy and legal
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. The
Expiration Date is extended from three years from April 30, 2008 (the “Closing
Date”) to five years after the Closing Date or, if such date falls on a day
other than a Business Day or on which trading does not take place on the
Principal Market (a "Holiday"), the next date that is not a
Holiday.
2. Section
9 of the Warrant shall be amended so that notice that is required to be given
under the Warrant shall be delivered in writing to the parties as
follows:
| If to the Company: | Prevention Xxxxxxxxx.xxx |
| c/o Paragon Capital LP | |
| 000 Xxxx 00xx Xxxxxx | |
| 00xx Xxxxx | |
| Xxx Xxxx, 00000 |
| If to Xxxxxxxxx: | Xxxxx Xxxxxxxxx |
| 0000 X. Xxxxxxxx Xxxx. | |
| Xxx Xxxxx, XX 00000 |
All other provisions of Section 9 of the Warrant shall remain
unchanged.
3. This
Extension Agreement shall be binding upon and inure to the benefit of the
parties, their successors and assigns. This Extension Agreement and the rights
hereunder are personal to the parties and shall not be transferred, assigned,
sublicensed, pledged or otherwise encumbered by either party, whether
voluntarily, involuntarily, by operation of law or otherwise.
4. In
the event that one or more of the provisions contained in this Extension
Agreement shall for any reason be held unenforceable, such unenforceability
shall not affect any other provision of this Extension Agreement, but this
Extension Agreement shall then be construed as if such unenforceable provision
or provisions had never been contained herein. This Extension
Agreement shall be governed under the laws of the State of New York, without
reference to choice of laws or rules.
5. In
all other respects, the Warrant shall remain unchanged and in full force and
effect.
This
Extension Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original hereof, but all of which together shall
constitute one and the same instrument.
IN
WITNESS WHEREOF, the parties hereto have caused this Extension Agreement to be
executed as of the date first written above.
| PREVENTION XXXXXXXXX.XXX | |||
|
|
By:
|
/s/ Xxxx X. Xxxxxxxxx | |
| Xxxx X. Xxxxxxxxx | |||
| Chief Executive Officer | |||
| By: | /s/ Xxxxx Xxxxxxxxx | ||
| Xxxxx Xxxxxxxxx | |||
Exhibit
A
Form
of Warrant
Exhibit A to
Warrant Extension
EXHIBIT
1
NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
(I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
PREVENTION
XXXXXXXXX.XXX
Warrant
to Purchase Common Stock
Warrant
No.: A-1
Number of
Shares of Common Stock: 10,000,000
Date of
Issuance: April 30, 2008
PREVENTION
XXXXXXXXX.XXX, a Nevada corporation (the "Company"), hereby certifies that, for
$10,000, the receipt and sufficiency of which are hereby acknowledged, Paragon
Capital LP and/or its affiliates and/or designees, the registered holder hereof
or its permitted assigns (the "Holder"), is entitled, subject to the terms set
forth below, to purchase from the Company, at the Exercise Price (as defined
below) then in effect, upon surrender of this Warrant, to purchase Common Stock
(including any warrants to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the "Warrant"), at any time or times on or after the date
hereof, but not after 11:59 p.m., New York time, on the Expiration Date (as
defined below), 10,000,000 fully paid nonassessable shares of Common Stock (as
defined below) (the "Warrant Shares"). Except as otherwise defined herein,
capitalized terms in this Warrant shall have the meanings set forth in Section
17. This Warrant is the Warrant to purchase Common Stock issued pursuant to a
Consulting Agreement dated as of April 30, 2008 (the "Closing Date"), by and
between the Company and the Holder (the "Agreement").
Section
1. Exercise of Warrant.
(a)
Mechanics of Exercise. Subject to the terms and conditions hereof (including,
without limitation, the limitations set forth in Section 1(f)), this Warrant may
be exercised by the Holder on any day on or after the date hereof, in whole or
in part, by (i) delivery of a written notice, in the form attached hereto as
Exhibit A (the "Exercise Notice"), of the Holder's election to exercise this
Warrant and (ii) (A) payment to the Company of an amount equal to the
applicable Exercise Price multiplied by the number of Warrant Shares as to which
this Warrant is being exercised (the "Aggregate Exercise Price") in cash or wire
transfer of immediately available funds or (B) by notifying the Company that
this Warrant is being exercised pursuant to a Cashless Exercise (as defined in
Section 1(d)). The Holder shall not be required to deliver the original Warrant
in order to effect an exercise hereunder. Execution and delivery of the Exercise
Notice with respect to less than all of the Warrant Shares shall have the same
effect as cancellation of the original Warrant and issuance of a new Warrant
evidencing the right to purchase the remaining number of Warrant Shares. On or
before the first Business Day following the date on which the Company has
received each of the Exercise Notice and the Aggregate Exercise Price (or notice
of a Cashless Exercise) (the "Exercise Delivery Documents"), the Company shall
transmit an acknowledgment of confirmation of receipt of the Exercise Delivery
Documents to the Holder and the
Company's
transfer agent (the "Transfer Agent"). On or before the third Business Day
following the date on which the Company has received all of the Exercise
Delivery Documents, the Company shall (X) issue and deliver to the address
specified in the Exercise Notice, a certificate, registered in the name of the
holder of this Warrant or its designee, for the number of shares of Common Stock
to which the holder of this Warrant is entitled pursuant to such exercise, or
(Y) provided that the Transfer Agent is participating in the Depository Trust
Company ("DTC") Fast Automated Securities Transfer Program, upon the request of
the Holder, credit such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder's or its designee's
balance account with DTC through its Deposit Withdrawal Agent Commission system.
Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in
clause (ii)(A) above or notification to the Company of a Cashless Exercise
referred to in Section 1(d), the Holder shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date of delivery
of the certificates evidencing such Warrant Shares. If this Warrant is submitted
in connection with any exercise pursuant to this Section 1(a) and the number of
Warrant Shares represented by this Warrant submitted for exercise is greater
than the number of Warrant Shares being acquired upon an exercise, then the
Company shall as soon as practicable and in no event later than three Business
Days after any exercise and at its own expense, issue a new Warrant (in
accordance with Section 8(d)) representing the right to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised. No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock to be
issued shall be rounded up to the nearest whole number. The Company shall pay
any and all taxes which may be payable with respect to the issuance and delivery
of Warrant Shares upon exercise of this Warrant.
(b)
Exercise Price. For purposes of this Warrant, "Exercise Price" means $0.01,
subject to adjustment as provided herein.
(c)
Company's Failure to Timely Deliver Securities. If the Company shall fail for
any reason or for no reason to issue to the Holder within three Business Days of
receipt of the Exercise Delivery Documents, a certificate for the number of
shares of Common Stock to which the Holder is entitled and register such shares
of Common Stock on the Company's share register or to credit the Holder's
balance account with DTC for such number of shares of Common Stock to which the
Holder is entitled upon the Holder's exercise of this Warrant, and if
on or after such Business Day the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of shares of Common Stock issuable upon such exercise that
the Holder anticipated receiving from the Company, then the Company shall,
within three Business Days after the Holder's request and in the Holder's
discretion, either (i) pay cash to the Holder in an amount equal to the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased (the "Buy-In Price"), at which point the Company's
obligation to deliver such certificate (and to issue such shares of Common
Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such shares of Common Stock
and pay cash to the Holder in an amount equal to the excess (if any) of the
Buy-In Price over the product of (A) such number of shares of Common Stock,
times (B) the Closing Bid Price on the date of exercise.
(d)
Cashless Exercise. Notwithstanding anything contained herein to the contrary,
for one year from issuance the Holder may, in its sole discretion, exercise this
Warrant in whole or in part and, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in payment of the
Aggregate Exercise Price (a "Cash Exercise"), elect instead to receive upon such
exercise the "Net Number" of shares of Common Stock determined according to the
following formula (a "Cashless Exercise"):
(A x B) - (A x C)
Net
Number =
-------------------------
B
For
purposes of the foregoing formula:
A
= the total number of Warrant Shares with respect to which this Warrant is then
being exercised.
B
= the Closing Sale Price of the shares of Common Stock (as reported by
Bloomberg) on the date immediately preceding the date of the Exercise
Notice.
C
= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.
(e)
Disputes. In the case of a dispute as to the determination of the Exercise Price
or the arithmetic calculation of the Warrant Shares, the Company shall promptly
issue to the Holder the number of Warrant Shares that are not disputed and
resolve such dispute in accordance with Section 14.
(f)
Limitations on Exercise; Beneficial Ownership. The Holder shall not have any
restriction on exercise of this Warrant except that the Holder shall not
exercise this Warrant unless and until there is
enough authorized Common Stock available
to satisfy the number of shares of Common Stock that is to be issued to the
Holder upon exercise of this Warrant.
Section
2. Adjustment of Exercise Price and Number of Warrant Shares. The Exercise Price
and the number of Warrant Shares shall be adjusted from time to time as
follows:
(a)
Adjustment upon Subdivision or Combination of shares of Common Stock. If the
Company at any time on or after the Closing Date subdivides (by any stock split,
stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased. If
the Company at any time on or after the Closing Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any adjustment under
this Section 2(b) shall become effective at the close of business on the date
the subdivision or combination becomes effective.
(b)
Other Events. If any event occurs of the type contemplated by the provisions of
this Section 2 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with equity features), then the Company's Board of
Directors will make an appropriate adjustment in the Exercise Price so as to
protect the rights of the Holder; provided that no such adjustment pursuant to
this Section 2(c) will increase the Exercise Price or decrease the number of
Warrant Shares as otherwise determined pursuant to this Section 2.
Section
3. Rights upon Distribution of Assets. If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (a "Distribution"), at any time after the issuance of this
Warrant, then, in each such case:
(a)
any Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of shares of Common Stock
entitled to receive the Distribution shall be reduced, effective as of the close
of business on such record date, to a price determined by multiplying such
Exercise Price by a fraction of which (i) the numerator shall be the Closing Bid
Price of the shares of Common Stock on the trading day immediately preceding
such record date minus the value of the Distribution (as determined in good
faith by the Holder and approved by the Company's Board of Directors) applicable
to one share of Common Stock, and (ii) the denominator shall be the Closing Bid
Price of the shares of Common Stock on the trading day immediately preceding
such record date; and
(b)
the number of Warrant Shares shall be increased to a number of shares equal to
the number of shares of Common Stock obtainable immediately prior to the close
of business on the record date fixed for the determination of holders of Common
Stock entitled to receive the Distribution multiplied by the reciprocal of the
fraction set forth in the immediately preceding paragraph (a); provided that in
the event that the Distribution is of shares of or common stock ("Other Shares
of Common Stock") of a company whose common shares are traded on a national
securities exchange or a national automated quotation system, then the Holder
may elect to receive a warrant to purchase Other Shares of Common Stock, the
terms of which shall be identical to those of this Warrant, except that such
warrant shall be exercisable into the number of shares of Other Shares of Common
Stock that would have been payable to the Holder pursuant to the Distribution
had the Holder exercised this Warrant immediately prior to such record date and
with an aggregate exercise price equal to the product of the amount by which the
exercise price of this Warrant was decreased with respect to the Distribution
pursuant to the terms of the immediately preceding paragraph (a), and the number
of Warrant Shares calculated in accordance with the first part of this paragraph
(b).
Section
4. Purchase Rights; Fundamental Transactions.
(a)
Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if
at any time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of shares of Common Stock (the
"Purchase Rights"), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
(b)
Fundamental Transactions. If the Company enters into or is party to a
Fundamental Transaction, then the Holder shall have the right to either (A)
purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the Warrant Shares immediately theretofore issuable
upon exercise of the Warrant, such shares of stock, securities or assets
(including cash) as would have been issuable or payable with respect to or in
exchange for a number of Warrant Shares equal to the number of Warrant Shares
immediately theretofore issuable upon exercise of the Warrant, had such
Fundamental Transaction not taken place or (B) require the repurchase of this
Warrant for a purchase price, payable in cash within five Business Days after
such request, equal to the Black Scholes Value of the remaining unexercised
portion of this Warrant on the date of such request. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity and Holder to comply with the
provisions of this Section 4(b). The provisions of this Section shall apply
similarly and equally to successive Fundamental Transactions and shall be
applied without regard to any limitations on the exercise of this
Warrant.
Section
5. Noncircumvention. The Company hereby covenants and agrees that the Company
will not, by amendment of its Articles of Incorporation, Bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, 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, and will at all times in good faith carry out all the
provisions of this Warrant and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect,
(ii)
shall take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (iii) shall, so long as this
Warrant is outstanding, take all action necessary to reserve and keep available
out of its authorized and unissued shares of Common Stock, solely for the
purpose of effecting the exercise of this Warrant, the number of shares of
Common Stock as shall from time to time be necessary to effect the exercise of
this Warrant then outstanding (without regard to any limitations on
exercise).
Section
6. Reservation of Authorized Shares.
(a)
Initial Reservation. Within 60 days of a written demand by the Holder, the
Company shall reserve out of its authorized and unissued Common Stock the number
of shares of Common Stock needed to satisfy a full exercise of this Warrant and
provide to the Holder evidence thereof in form and substance satisfactory to the
Holder.
(b)
Ongoing Reservation. So long as this Warrant is outstanding, the Company shall
take all actions necessary to reserve and keep available out of its authorized
and unissued Common Stock, solely for the purpose of effecting the exercise of
this Warrant, the number of shares of Common Stock as shall at all times after
60 days from a written demand by the Holder and from time to time thereafter as
necessary to effect the exercise of this Warrant; provided that at no time shall
the number of shares of Common Stock so reserved be less than the number of
shares required to be reserved by Section 6(a) hereof (without regard to any
limitations on conversions) (the "Required Reserve Amount").
(c)
Insufficient Authorized Shares. If, at any time after 60 days of a written
demand by the Holder while this Warrant remain outstanding the Company does not
have a sufficient number of authorized and unreserved shares of Common Stock to
satisfy its obligation to reserve for issuance upon the exercise of
this Warrant at least a number of shares of Common Stock equal to the Required
Reserve Amount (an "Authorized Share Failure"), then the Company shall
immediately take all action necessary to increase the Company's
authorized shares of Common Stock to an amount sufficient to allow the Company
to reserve the Required Reserve Amount for this Warrant. Without limiting the
generality of the foregoing sentence, as soon as practicable after the date of
the occurrence of an Authorized Share Failure, but in no event later than 60
days after the occurrence of such Authorized Share Failure, the Company shall
hold a meeting of its stockholders for the approval of an increase in the number
of authorized shares of Common Stock. In connection with such meeting, the
Company shall provide each stockholder with a proxy statement and shall use its
best efforts to solicit its stockholders' approval of such increase in
authorized shares of Common Stock and to cause its Board of Directors to
recommend to the stockholders that they approve such proposal.
Section
7. Warrant Holder not Deemed a Stockholder. Except as otherwise specifically
provided herein, the Holder, solely in such Person's capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or be deemed
the holder of share capital of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in such
Person's capacity as the Holder of this Warrant, any of the rights of a
shareholder of the Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Warrant Shares which such Person is then entitled
to receive upon the due exercise of this Warrant. In addition, nothing contained
in this Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a
shareholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 7, the Company
shall provide the Holder with copies of the same notices and other information
given to the shareholders of the Company generally, contemporaneously with the
giving thereof to the shareholders.
Section
8. Reissuance of Warrants.
(a)
Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Warrant (in accordance with
Section 8(d)), registered as the Holder may request.
(b)
Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
and, in the case of mutilation, upon surrender and cancellation of this Warrant,
the Company shall execute and deliver to the Holder a new Warrant (in accordance
with Section 8(d)).
(c)
Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants (in accordance with Section 8(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, that no Warrants for fractional shares of
Common Stock shall be given.
(d)
Issuance of New Warrants. Whenever the Company is required to issue a new
Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of
like tenor with this Warrant, (ii) shall represent, as indicated on the face of
such new Warrant, the right to purchase the Warrant Shares then underlying this
Warrant (or in the case of a new Warrant being issued pursuant to Section 8(a)
or Section 8(c), the Warrant Shares designated by the
Holder which, when added to the number of shares of Common
Stock underlying the other new Warrants issued in connection with
such issuance, does not exceed the number of Warrant Shares
then underlying this Warrant), (iii) shall have
an issuance date, as indicated on the face of
such new Warrant which is the same as the
Closing Date, and (iv) shall have
the same rights and conditions as
this Warrant.
Section
9. Notices. Whenever notice is required to be given under this Warrant, unless
otherwise provided herein, such notice shall be given in accordance with Section
7 of the Agreement. The Company shall provide the Holder with prompt written
notice of all actions taken pursuant to this Warrant, including in reasonable
detail a description of such action and the reason therefor. Without limiting
the generality of the foregoing, the Company will give written notice to the
Holder (i) immediately upon any adjustment of the Exercise Price, setting forth
in reasonable detail, and certifying, the calculation of such adjustment and
(ii) at least fifteen days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or distribution upon
the shares of Common Stock, (B) with respect to any grants, issuances or sales
of any Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property to holders of shares of Common Stock or (C) for
determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be
made known to the public prior to or in conjunction with such notice being
provided to the Holder.
Section
10. Amendment and Waiver. Except as otherwise provided herein, the provisions of
this Warrant may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the prior written consent of the Holder;
provided that no such action may increase the Exercise Price of this Warrant or
decrease the number of shares or class of stock obtainable upon exercise of this
Warrant.
Section
11. Severability. If any provision of this Warrant or the application thereof
becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of the terms of this Warrant will continue in
full force and effect.
Section
12. Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Warrant and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
ANY TRANSACTION CONTEMPLATED HEREBY.
Section
13. Construction; Headings. This Warrant shall be deemed to be jointly drafted
by the Company and the Holder and shall not be construed against any person as
the drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Warrant.
Section
14. Dispute Resolution. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall submit the disputed determinations or arithmetic calculations within two
Business Days of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to the Holder. If the Holder and the Company are unable to
agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within one Business Day of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within one Business Day submit (a) the disputed determination of the Exercise
Price to an independent, reputable investment bank selected by the Holder and
approved by the Company or (b) the disputed arithmetic calculation of the
Warrant Shares to an independent, reputable accounting firm selected by the
Holder and approved by the Company. The Company shall cause, at its expense, the
investment bank or the accounting firm, as the case may be, to perform the
determinations or calculations and notify the Company and the Holder of the
results no later than five Business Days from the date it receives the disputed
determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.
Section
15. Remedies, Other Obligations, Breaches and Injunctive Relief. The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein
shall limit the right of the Holder to seek actual damages for any failure by
the Company to comply with the terms of this Warrant. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Holder and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the holder of this Warrant shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.
Section
16. Transfer. This Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company.
Section
17. Certain Definitions. For purposes of this
Warrant, the following terms shall have the following meanings:
"Affiliate"
means, as to any Person, any other Person which directly or indirectly controls,
is controlled by, or is under common control with such Person. For purposes of
this definition, "control" of a Person includes (A) the power, direct or
indirect, (i) to vote or direct the voting of 10% or more of the outstanding
shares of Voting Stock of such Person, or (ii) to direct or cause the direction
of the management and policies of such Person (whether by ownership of Capital
Stock, by contract or otherwise) or (B) the ownership of Capital Stock or other
securities representing 10% or more of the total economic interests of such
Person; provided, that the Holder shall be deemed to be an Affiliate of the
Company.
"Aggregate
Exercise Price" has the meaning set forth in Section 1(a).
"Approved
Stock Plan" means any employee benefit plan which has been approved by the Board
of Directors of the Company, pursuant to which the Company's securities may be
issued to any employee, officer or director for services provided to the
Company.
"Authorized Share Failure" has
the meaning set forth in Section 6(b).
"Black
Scholes Value" means the value of this Warrant based on the Black and Scholes
Option Pricing Model obtained from the "OV" function on Bloomberg determined as
of the day immediately following the public announcement of the applicable
Fundamental Transaction and reflecting (i) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term
of this Warrant as of such date of request is 2.5% and (ii) an expected
volatility equal to 60%.
"Bloomberg"
means Bloomberg Financial Markets.
"Business
Day" means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York, New York are authorized or required by law to
remain closed.
"Buy-In
Price" has the meaning set forth in Section 1(c).
"Capital
Stock" means and includes, with respect to any Person (a) any and all shares,
interests, participations or other equivalents of or interests in (however
designated) corporate stock, including shares of preferred or preference stock
of such Person, (b) all partnership interests (whether general or limited) in
such Person which is a partnership, (c) all membership interests or limited
liability company interests in such Person which is a limited liability company,
(d) any interest or participation that confers on a Person the right to receive
a share of the profits and/or losses of, or distributions of assets of such
Person, and (e) all equity or ownership interests in such Person of any other
type, and any and all warrants, rights or options to purchase any of the
foregoing.
"Cash
Exercise" has the meaning set forth in Section 1(d).
"Cashless
Exercise" has the meaning set forth in Section 1(d).
"Closing
Bid Price" and "Closing Sale Price" means, for any security as of any date, the
last closing bid price and last closing trade price, respectively, for such
security on the Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the
closing bid price or the closing trade price, as the case may be, then the last
bid price or last trade price, respectively, of such security prior to 4:00:00
p.m., New York time, as reported by Bloomberg, or, if the Principal Market is
not the principal securities exchange or trading market for such security, the
last closing bid price or last trade price, respectively, of such security on
the principal securities exchange or trading market where such security is
listed or traded as reported by Bloomberg, or if the foregoing do not apply, the
last closing bid price or last trade price, respectively, of such security in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the bid
prices, or the ask prices, respectively, of any market makers for such security
as reported in the "pink sheets" by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price
cannot be calculated for a security on a particular date on any of the foregoing
bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of
such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved
in the same manner as the disputes described in Section 14. All such
determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during the applicable calculation
period.
"Closing
Date" has the meaning set forth in the preamble to this Warrant.
"Common
Stock" means (i) the Company's shares of common stock, $0.001 par value per
share, and (ii) any share capital into which such common stock shall have been
changed or any share capital resulting from a reclassification of such common
stock.
"Company"
has the meaning set forth in the preamble to this Warrant.
"Convertible
Securities" means any stock or securities (other than Options) directly or
indirectly convertible into or exercisable or exchangeable for shares of Common
Stock.
"Dilutive
Issuance" has the meaning set forth in Section 2(a).
"Distribution"
has the meaning set forth in Section 3.
"DTC"
has the meaning set forth in Section 1(a).
"Excluded
Security" means any Common Stock issued or issuable: (i) in connection with any
Approved Stock Plan; (ii) upon conversion of any Preferred Stock or this
exercise of the Warrant; and (iii) upon conversion of any Options or Convertible
Securities which are outstanding on the day immediately preceding the Closing
Date, provided that the terms of each such Options or Convertible Securities are
not amended, modified or changed on or after the Closing Date.
"Exercise
Delivery Documents" has the meaning set forth in Section 1(a).
"Exercise
Price" has the meaning set forth in Section 1(b).
"Exercise
Notice" has the meaning set forth in Section 1(a).
"Expiration
Date" means the date three year after the Closing Date or, if such date falls on
a day other than a Business Day or on which trading does not take place on the
Principal Market (a "Holiday"), the next date that is not a
Holiday.
"Fundamental
Transaction" means that the Company shall, directly or indirectly, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Person, or (ii) sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company to another Person, or (iii) allow another
Person to make a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of either the outstanding shares of Common Stock
(not including any shares of Common Stock held by the Person or Persons making
or party to, or associated or affiliated with the Persons making or party to,
such purchase, tender or exchange offer), or (iv) consummate a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than the 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase
agreement or other business combination), or (v) reorganize, recapitalize or
reclassify its Common Stock.
"Holder"
has the meaning set forth in the preamble to this Warrant.
"New
Issuance Price" has the meaning set forth in Section 2(a).
"Maximum
Percentage" has the meaning set forth in Section 1(f).
"Consulting
Agreement" has the meaning set forth in the preamble to this
Warrant.
"Options"
means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.
"Other
Shares of Common Stock" has the meaning set forth in Section 3(b).
"Person"
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.
"Principal
Market" means the NASD OTC Bulletin Board.
"Purchase
Rights" has the meaning set forth in Section 4(a).
"Registration
Rights Agreement" means that certain Registration Rights Agreement, dated as of
even date herewith, by and among the Company and the Holder.
"Required
Reserve Amount" has the meaning set forth in Section 6(a).
"Transfer
Agent" has the meaning set forth in Section 1(a).
"Valuation
Event" has the meaning set forth in Section 2(a)(iv).
"Voting
Stock" means, with respect to any Person, the Capital Stock of such Person of
any class or classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of members of the Board of
Directors (or Persons performing similar functions) of such Person.
"Warrant"
has the meaning set forth in the preamble to this Warrant.
"Warrant
Shares" has the meaning set forth in the preamble to this Warrant.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to
be duly executed as of the Date of Issuance set out above.
PREVENTION
XXXXXXXXX.XXX
By: /s/ Xxxx X.
Xxxxxxxxx
Name:
Xxxx X.
Xxxxxxxxx
Title: CEO
EXHIBIT
A
EXERCISE
NOTICE
TO BE
EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT
TO PURCHASE COMMON STOCK
PREVENTION
XXXXXXXXX.XXX
The
undersigned holder hereby exercises the right to purchase _________________ of
the shares of Common Stock ("Warrant Shares") of PREVENTION XXXXXXXXX.XXX, a
Nevada corporation (the "Company"), evidenced by the attached Warrant to
Purchase Common Stock (the "Warrant"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the
Warrant.
1.
Form of Exercise Price. The Holder intends that payment of
the Exercise Price shall be made as:
____________
a "Cash Exercise" with respect to _________________ Warrant Shares;
and/or
____________
a "Cashless Exercise" with respect to ____________ Warrant Shares.
2.
Payment of Exercise Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the
Warrant.
3.
Delivery of Warrant Shares. The Company shall deliver to the holder __________
Warrant Shares in accordance with the terms of the Warrant.
Date:
_______________ __, ______
________________________________
Name
of Holder
By:______________________________
Name:____________________________
Title:___________________________
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs OTR to issue
the above indicated number of shares of Common Stock in accordance with the
Transfer Agent Instructions from the Company and acknowledged and agreed to by
OTR.
PREVENTION
XXXXXXXXX.XXX
By:
__________________________
Name:
Xxxx X. Xxxxxxxxx
Title: CEO
Exhibit
B
Form
of Agreement
AGREEMENT
AGREEMENT
dated March 8, 2010, by and between Xxxxx Xxxxxxxxx, with an address at 0000 X.
Xxxxxxxx Xxxx., Xxx Xxxxx, XX 00000 (“Xxxxxxxxx”), Paragon Capital LP, with an
address at 000 Xxxx 00xx Xx.,
00xx
Xxxxx, Xxx Xxxx, XX 00000 (“Paragon”) and Prevention Xxxxxxxxx.xxx, a Nevada
corporation (“PVNC”) to complete matters relating to the acquisition of common
stock of PVNC by Paragon (the “Agreement”).
WHEREAS,
the parties entered into a letter agreement dated December 28, 2007 (the
“Original Letter Agreement”), which Original Letter Agreement served as Schedule
A to that certain Stock Purchase Agreement, effective December 31, 2007, by and
between Paragon and PVNC, pursuant to which Paragon acquired a majority of the
issued and outstanding shares of common stock of PVNC, and which Original Letter
Agreement was amended by subsequent letter agreements, including letter
agreements dated August 12, 2008 (the “August 2008 Letter”) and October 31, 2008
(the Original Letter Agreement, together with all subsequent letter agreements,
collectively, the “Letter Agreement”); and
WHEREAS,
the parties subsequently entered into an Agreement and Release, dated February
5, 2008 (the “Agreement and Release”); and
WHEREAS,
the parties desire to fully satisfy all outstanding conditions and issues
between them as relates to the Letter Agreement and any other agreement between
or among Xxxxxxxxx, PVNC and Paragon.
NOW,
THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and between the parties hereto,
in consideration of the mutual covenants and premises set forth herein (the form
and adequacy of such consideration being hereby acknowledged), that any and all
matters between Xxxxxxxxx, on the one hand, and Paragon and/or PVNC, on the
other hand, are satisfied upon the following terms and conditions:
|
1.
|
Upon
the execution and delivery hereof, PVNC shall deliver to Xxxxxxxxx the sum
of sixty-five thousand dollars
($65,000).
|
|
2.
|
Upon
the execution and delivery hereof, and solely as an accommodation to PVNC,
Paragon shall sell, transfer and assign to Xxxxxxxxx warrants (the
“Warrants”) with an exercise price of $0.01 per share to purchase ten
million (10,000,000) shares of PVNC common stock, par value $.01 per share
(“Common Stock”), which Warrants are included in Exhibit I to this
Agreement. PVNC agrees to recognize Xxxxxxxxx as the record owner of the
Warrants upon such transfer.
|
|
3.
|
PVNC
also agrees to amend the term of the Warrant to extend the expiration date
thereof by an additional two years.
|
|
4.
|
In
consideration of the foregoing, Xxxxxxxxx relinquishes in all respects any
right he may have had under the Letter Agreement or otherwise to receive
four million (4,000,000) warrants to purchase Common
Stock.
|
|
5.
|
Xxxxxxxxx
acknowledges that upon performance of Paragon and PVNC’s obligations
hereunder, all obligations of Paragon and PVNC to Xxxxxxxxx in the Letter
Agreement, the Agreement and Release, and any other agreement between
Xxxxxxxxx and either or both of PVNC and Paragon have been satisfied in
all respects.
|
|
6.
|
Xxxxxxxxx’x
indemnification obligations contained in Section 7 of the Agreement and
Release shall continue in full force and effect and are incorporated by
reference herein as if a part
hereof.
|
|
7.
|
Section
3 of the August 2008 Letter is hereby replaced with the following
language:
|
“The
Company agrees that the $400,000 amount to be paid to Xxxxxxxxx shall be made
through the issuance of 1,600,000 shares of common stock (the “Xxxxxxxxx
Shares”).”
No
agreements between Xxxxxxxxx, Paragon and PVNC subsequent to the August 2008
Letter shall alter the sentence above in form or substance.
|
8.
|
The
parties agree that the Xxxxxxxxx Shares have been properly delivered to
Xxxxxxxxx as per Section 3 of the August 2008 Letter and that Xxxxxxxxx is
not entitled to receive any other shares of Common Stock from PVNC or
Paragon except for shares of Common Stock deliverable to Xxxxxxxxx by PVNC
upon exercise of the Warrants.
|
|
9.
|
The
parties agree that the Xxxxxxxxx Shares are subject to adjustment for
stock splits, reverse stock splits, stock dividends, combinations,
recapitalizations or otherwise.
|
|
10.
|
All
shares of Common Stock owned by Xxxxxxxxx and acquired pursuant to this
Agreement (including shares of Common Stock issuable upon exercise of the
Warrants) shall have piggyback registration rights for six months starting
on the date of this Agreement. PVNC agrees to use its
commercially reasonable best efforts to cause the restrictive legend on
such shares of Common Stock to be removed at such time as such shares are
able to be publicly sold with no restrictions with regard to prospectus
delivery, holding period, affiliate status, any requirement for PVNC to
remain current in its periodic SEC filings or
otherwise.
|
|
11.
|
In
consideration of the obligations and duties assumed hereunder by PVNC and
Paragon, Xxxxxxxxx and any related party hereby release and discharge PVNC
and Paragon, and their heirs, executors, administrators, successors,
assigns, and each and every one of their present or former subsidiaries,
affiliates, directors, shareholders, officers, employees, attorneys,
agents, members, managers, general and limited partners and affiliates
thereof and representatives (collectively, “Related PVNC/Paragon Persons”)
from any and all actions, causes of action, claims, suits, debts, dues,
sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses,
damages, judgments, executions, and demands whatsoever, in law, admiralty
or equity which Xxxxxxxxx and any related party ever had, now has or
hereafter can, shall or may have against PVNC, Paragon and Related
PVNC/Paragon Persons, that arose by reason of any matter, cause or event
whatsoever from the beginning of the world to the day of the date of this
Agreement, other than with respect to the obligations of Paragon and PVNC
under this Agreement.
|
|
12.
|
This
Agreement shall be binding upon and inure to the benefit of the
parties and their respective executors, administrators, legal
representatives, heirs, and permitted successors, transferees, and
assigns.
|
|
13.
|
This
Agreement shall be governed by the laws of the State of New York, without
regard to conflict of law rules thereof. Any litigation with
respect to this Agreement shall be properly venued only in a federal or
state court situated in the City of New York. The losing party
in any cause of action shall be responsible for paying the reasonable
attorneys fees and expenses of the winning party within one month of a
court decision.
|
|
14.
|
This
Agreement, the Letter Agreement and the Agreement and Release contain the
entire understanding and agreement by and between the parties with respect
to the subject matter hereof, and supersede any prior understandings, oral
or written, between the parties with respect to the subject matter
hereof. Any inconsistency between the terms of this Agreement
and the terms of the Letter Agreement or the Agreement and Release shall
be resolved in favor of this
Agreement.
|
|
15.
|
This
Agreement may not be modified or amended in any way except by written
agreement signed by all the parties
hereto.
|
|
16.
|
The
parties agree that this Agreement has been jointly drafted by them with
the assistance of counsel selected by them, and that this Agreement shall
not be construed in favor of, or against, any of the parties
hereto.
|
|
17.
|
Failure
by a party hereto to exercise any of its rights hereunder shall not be
construed as a waiver of such right(s), unless such waiver is in a writing
signed by the party to be charged.
|
|
18.
|
The
provisions of this Agreement shall be deemed severable, so that if any
provision shall be determined to be illegal or unenforceable, the
remaining provisions hereof shall be enforced in
full.
|
|
19.
|
This
Agreement may be executed in counterparts all of which, when taken
together, shall constitute the entire
Agreement.
|
|
20.
|
Each
of the parties hereto shall hereafter, at the request of any other party,
execute and deliver such further documents and agreements, and do such
further acts and things as may be reasonably necessary or expedient to
carry out the provisions of this
Agreement.
|
[THE
REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties hereby have executed this Agreement as of the date
first above written.
PARAGON
CAPITAL LP
By:
Paragon Capital Advisors LLC
General
Partner
By:/s/ Xxxx X.
Xxxxxxxxx
Xxxx
X. Xxxxxxxxx, Managing Member
PREVENTION
XXXXXXXXX.XXX
By:/s/ Xxxx X.
Xxxxxxxxx
Xxxx
X. Xxxxxxxxx, President
And
Chief Executive Officer
/s/ Xxxxx
Xxxxxxxxx
XXXXX
XXXXXXXXX
STATE OF
NEW
YORK )
) ss.:
COUNTY OF
NEW
YORK )
On this
____ day of February, 2010, before me personally came Xxxx X. Xxxxxxxxx, to me
known, who, being by me duly sworn, did depose and say that he is the President
of Prevention Xxxxxxxxx.xxx, the corporation described in and which executed the
above instrument, and the Managing Member of Paragon Capital Advisors
LLC which is the General Partner of Paragon Capital LP, the limited partnership
described in and which executed the above instrument and that he signed his name
thereto by authority of said corporation and limited partnership,
respectively.
______________________
Notary
Public
STATE OF
______________ )
)ss.:
COUNTY OF
_____________ )
On this
____ day of February, 2010, before me personally came Xxxxx Xxxxxxxxx, to me
known, who, being by me duly sworn, did depose and say that he did sign his name
to the above instrument.
____________________
Notary
Public
