Unassociated Document


    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER
      THE SECURITIES LAWS OF APPLICABLE STATES. THESE SECURITIES ARE SUBJECT TO
      RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
      EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
      PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE
      THAT
      THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
      INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
      OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
      ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
      STATE SECURITIES LAWS.

     

    WARRANT
      TO PURCHASE COMMON STOCK

     

    OF

     

    ARIEL
      WAY, INC.

     

    Issued
      on
      September 26, 2005 (“Issue
      Date”)

    Void
      after September 25, 2015 (“Expiration
      Date”)

     

    This
      certifies that in consideration of the execution of that certain Promissory
      Note
      (the “Promissory
      Note”),
      dated
      as of September 26, 2005, as amended, by and between Ariel Way, Inc., a Florida
      corporation (the “Company”),
      with
      principal offices at 8000 Towers Crescent Drive, Suite 1220, Vienna, VA 22182,
      and Mrs. Eva Dunhem, an individual living at address 7901 Ariel Way, McLean,
      Virginia 22102 (“Mrs.
      Dunhem”)
      is
      entitled, subject to the terms and conditions of this Warrant, to purchase
      from
      the Company at any time during the Exercise Period (as defined below) and with
      vesting as defined below, up to Two Hundred Thousand (200,000) shares (the
      “Number
      of Warrant Shares”)
      of
      Warrant Stock (as defined below) at a price per share equal to the Warrant
      Price
      (as defined below), upon surrender of this Warrant at the principal offices
      of
      the Company, together with a duly executed subscription form in the form
      attached hereto as Exhibit 1
      and
      simultaneous payment of the full Warrant Price for the shares of Warrant Stock
      so purchased in lawful money of the United States. The Warrant Price and the
      number and character of shares of Warrant Stock purchasable under this Warrant
      are subject to adjustment as provided herein. The shares underlying the warrants
      shall entitle the Warrant Holder to one-time “piggyback” registration
      rights.

     

    1.  DEFINITIONS.
      The
      following definitions shall apply for purposes of this Warrant:

     

    1.1  “Company”
means
      the “Company”
as
      defined above and includes any corporation which shall succeed to or assume
      the
      obligations of the Company under this Warrant.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.2  “Exercise
      Period”
means
      the period (A) commencing on the Issue Date and (B) ending at 5:00 p.m. Eastern
      Standard Time on the Expiration Date (as defined on the first page of this
      Warrant, and as subject to adjustment as provided herein).

     

    1.3  “SEC”
means
      the U.S. Securities and Exchange Commission.

     

    1.4  “Warrant”
means
      this Warrant and any warrant(s) delivered in substitution or exchange therefor,
      as provided herein.

     

    1.5  “Warrant
      Holder”
means
      any person who shall at the time be the registered holder of this
      Warrant.

     

    1.6  “Warrant
      Price”
means
      $0.030 per share. The Warrant Price is subject to adjustment as provided
      herein.

     

    1.7  “Warrant
      Stock”
means
      the Common Stock of the Company, $0.001 par value per share. The number and
      character of shares of Warrant Stock are subject to adjustment as provided
      herein and the term “Warrant
      Stock”
shall
      include stock and other securities and property at any time receivable or
      issuable upon exercise of this Warrant in accordance with its
      terms.

     

    2.  EXERCISE.

     

    2.1  Method
      of Exercise.
      Subject
      to the terms and conditions of this Warrant, the Warrant Holder may exercise
      this Warrant in whole or in part, at any time or from time to time, on any
      business day during the Exercise Period, for up to that number of shares of
      Warrant Stock that has vested pursuant to Section 2.2
      below by
      surrendering this Warrant at the principal offices of the Company, with the
      subscription form attached hereto duly executed by the Warrant Holder, and
      payment
      of an amount equal to the product
      obtained by multiplying (i) the number of shares of Warrant Stock to be
      purchased by the Warrant Holder by (ii) the Warrant Price or adjusted
      Warrant Price therefor, if applicable, as determined in accordance with the
      terms hereof or cancellation of indebtedness of the Company to the Warrant
      Holder of the same equal amount at the option of the Warrant Holder.
The
      Warrant Holder shall also have a “cash-less” exercise option such that
      exercising certain number of shares of Warrant Stock and the sales proceeds
      from
      the sale of such shares shall provide for the payment to the Company of an
      amount equal to the total warrant purchase price as defined above.

     

    2.2  Vesting
      and Exercisability of Warrant.
      This
      Warrant for Two
      Hundred
      Thousand (200,000) Warrant Shares will vest immediately. 

     

    2.3  Form
      of Payment.
      Payment
      may be made by (i) a check payable to the Company’s order, (ii) wire
      transfer of funds to the Company, (iii) cancellation of indebtedness of the
      Company to the Warrant Holder, or (iv) any combination of the
      foregoing.

     

    2.4  Partial
      Exercise. Upon
      a
      partial exercise of this Warrant, this Warrant shall be surrendered by the
      Warrant Holder and replaced with a new Warrant of like tenor in which the Number
      of Shares shall be reduced by the number of shares of Warrant Stock purchased
      upon such exercise.

     

    
      
         

      

      
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    2.5  No
      Fractional Shares.
      No
      fractional shares may be issued upon any exercise of this Warrant, and any
      fractions shall be rounded down to the nearest whole number of shares. If upon
      any exercise of this Warrant a fraction of a share results, the Company will
      pay
      the cash value of any such fractional share, calculated on the basis of the
      Warrant Price.

     

    2.6  Restrictions
      on Exercise.
      This
      Warrant may not be exercised if the issuance of the Warrant Stock upon such
      exercise would constitute a violation of any applicable federal or state
      securities laws or other laws or regulations. As a condition to the exercise
      of
      this Warrant, the Warrant Holder shall execute the subscription form attached
      hereto as Exhibit 1,
      confirming and acknowledging that the representations and warranties of the
      Warrant Holder set forth in Section 5
      are true
      and correct as of the date of exercise.

     

    3.  ISSUANCE
      OF STOCK.
      This
      Warrant shall be deemed to have been exercised immediately prior to the close
      of
      business on the date of its surrender for exercise as provided above, and the
      person entitled to receive the shares of Warrant Stock issuable upon such
      exercise shall be treated for all purposes as the holder of record of such
      shares as of the close of business on such date. As soon as practicable on
      or
      after such date, the Company shall issue and deliver to the person or persons
      entitled to receive the same a certificate or certificates for the number of
      whole shares of Warrant Stock issuable upon such exercise.

     

    4.  ADJUSTMENT
      PROVISIONS.
      The
      number and character of shares of Warrant Stock issuable upon exercise of this
      Warrant (or any shares of stock or other securities or property at the time
      receivable or issuable upon exercise of this Warrant) and the Warrant Price
      therefor, are subject to adjustment upon the occurrence of the following events
      between the date this Warrant is issued and the date it is
      exercised:

     

    4.1  Adjustment
      for Stock Splits and Stock Dividends.
      The
      Warrant Price of this Warrant and the Number of Shares of Warrant Stock issuable
      upon exercise of this Warrant (or any shares of stock or other securities at
      the
      time issuable upon exercise of this Warrant) shall each be proportionally
      adjusted to reflect any stock dividend, stock split or reverse stock split,
      or
      other similar event affecting the number of outstanding shares of Warrant Stock
      (or such other stock or securities). 

     

    4.2  Adjustment
      for Other Dividends and Distributions.
      In case
      the Company shall make or issue, or shall fix a record date for the
      determination of eligible holders entitled to receive, a dividend or other
      distribution payable respect to the Warrant Stock that is payable in
      (a) securities of the Company (other than issuances with respect to which
      adjustment is made under Sections 4.1
      or
4.3)
      or
      (b) assets (other than cash dividends paid or payable solely out of
      retained earnings), then, and in each such case, the Warrant Holder, upon
      exercise of this Warrant at any time after the consummation, effective date
      or
      record date of such event, shall receive, in addition to the shares of Warrant
      Stock issuable upon such exercise prior to such date, the securities or such
      other assets of the Company to which the Warrant Holder would have been entitled
      upon such date if the Warrant Holder had exercised this Warrant immediately
      prior thereto (all subject to further adjustment as provided in this
      Warrant).

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    4.3  Adjustment
      for Reorganization, Consolidation, Merger.
      In case
      of any recapitalization or reorganization of the Company after the date of
      this
      Warrant, or in case, after such date, the Company shall consolidate with or
      merge into another corporation, then, and in each such case, the Warrant Holder,
      upon the exercise of this Warrant (as provided in Section 2),
      at any
      time after the consummation of such recapitalization, reorganization,
      consolidation or merger, shall be entitled to receive, in lieu of the stock
      or
      other securities and property receivable upon the exercise of this Warrant
      prior
      to such consummation, the stock or other securities or property to which the
      Warrant Holder would have been entitled upon the consummation of such
      recapitalization, reorganization, consolidation or merger if the Warrant Holder
      had exercised this Warrant immediately prior thereto, all subject to further
      adjustment as provided in this Warrant, and the successor or purchasing
      corporation in such reorganization, consolidation or merger (if other than
      the
      Company) shall duly execute and deliver to the Warrant Holder a supplement
      hereto acknowledging such corporation’s obligations under this Warrant; and in
      each such case, the terms of this Warrant shall be applicable to the shares
      of
      stock or other securities or property receivable upon the exercise of this
      Warrant after the consummation of such reorganization, consolidation or
      merger.

     

    4.4  Conversion
      of Stock.
      In case
      all the authorized Common Stock of the Company is converted, pursuant to the
      Company’s Certificate of Incorporation, into other securities or property, or
      the Common Stock otherwise ceases to exist, then, in such case, the Warrant
      Holder, upon exercise of this Warrant at any time after the date on which the
      Common Stock is so converted or ceases to exist (the “Termination
      Date”),
      shall
      receive, in lieu of the number of shares of Common Stock that would have been
      issuable upon such exercise immediately prior to the Termination Date (the
      “Former
      Number of Shares of Warrant Stock”),
      the
      stock and other securities and property which the Warrant Holder would have
      been
      entitled to receive upon the Termination Date if the Warrant Holder had
      exercised this Warrant with respect to the Former Number of Shares of Warrant
      Stock immediately prior to the Termination Date (all subject to further
      adjustment as provided in this Warrant).

     

    4.5  Notice
      of Adjustments.
      The
      Company shall promptly give written notice of each adjustment or readjustment
      of
      the Warrant Price or the number of shares of Warrant Stock or other securities
      issuable upon exercise of this Warrant. The notice shall describe the adjustment
      or readjustment and show in reasonable detail the facts on which the adjustment
      or readjustment is based.

     

    4.6  No
      Change Necessary.
      The
      form of this Warrant need not be changed because of any adjustment in the
      Warrant Price or in the number of shares of Warrant Stock issuable upon its
      exercise.

     

    4.7  Reservation
      of Stock.
      If at
      any time the number of shares of Warrant Stock or other securities issuable
      upon
      exercise of this Warrant shall not be sufficient to effect the exercise of
      this
      Warrant, the Company will take such corporate action as may, in the opinion
      of
      its counsel, be necessary to increase its authorized but unissued shares of
      Warrant Stock or other securities issuable upon exercise of this Warrant as
      shall be sufficient for such purpose.

     

    5.  REPRESENTATIONS
      AND WARRANTIES OF WARRANT HOLDER.
      Warrant
      Holder represents and warrants to the Company as follows:

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    5.1  Purchase
      for Own Account for Investment.
      Warrant
      Holder is purchasing the Warrant Stock for Warrant Holder’s own account for
      investment purposes only and not with a view to, or for sale in connection
      with,
      a distribution of the Warrant Stock within the meaning of the Securities Act
      of
      1933, as amended (the “1933
      Act”).
      Warrant Holder has no present intention of selling or otherwise disposing of
      all
      or any portion of the Warrant Stock and no one other than Warrant Holder has
      any
      beneficial ownership of any of the Warrant Stock.

     

    5.2  Access
      to Information.
      Warrant
      Holder has had access to all information regarding the Company and its present
      and prospective business, assets, liabilities and financial condition that
      Warrant Holder reasonably considers important in making the decision to purchase
      the Warrant Stock, and Warrant Holder has had ample opportunity to ask questions
      of the Company’s representatives concerning such matters and this
      investment.

     

    5.3  Understanding
      of Risks.
      Warrant
      Holder is fully aware of: (a) the highly speculative nature of the
      investment in the Warrant Stock; (b) the financial hazards involved;
      (c) the lack of liquidity of the Warrant Stock and the restrictions on
      transferability of the Warrant Stock (e.g.,
      that
      Warrant Holder may not be able to sell or dispose of the Warrant Stock or use
      them as collateral for loans); (d) the qualifications and backgrounds of the
      management of the Company; and (e) the tax consequences of investment in the
      Warrant Stock.

     

    5.4  Warrant
      Holder’s Qualifications.
      Warrant
      Holder has a preexisting personal or business relationship with the Company
      and/or certain of its officers and/or directors of a nature and duration
      sufficient to make Warrant Holder aware of the character, business acumen and
      general business and financial circumstances of the Company and/or such officers
      and directors. By reason of Warrant Holder’s business or financial experience,
      Warrant Holder is capable of evaluating the merits and risks of this investment,
      has the ability to protect Warrant Holder’s own interests in this transaction
      and is financially capable of bearing a total loss of this
      investment.

     

    5.5  No
      General Solicitation.
      At no
      time was Warrant Holder presented with or solicited by any publicly issued
      or
      circulated newspaper, mail, radio, television or other form of general
      advertising or solicitation in connection with the offer, sale and purchase
      of
      the Warrant Stock.

     

    5.6  Compliance
      with Securities Laws.
      Warrant
      Holder understands and acknowledges that, in reliance upon the representations
      and warranties made by Warrant Holder herein, the Warrant Stock are not
      being registered with the SEC under the 1933 Act, but instead are being issued
      under an exemption or exemptions from the registration and qualification
      requirements of the 1933 Act which impose certain restrictions on Warrant
      Holder’s ability to transfer the Warrant Stock.

     

    5.7  Restrictions
      on Transfer.
      Warrant
      Holder understands that Warrant Holder may not transfer any Warrant Stock unless
      such Warrant Stock is registered under the 1933 Act or other applicable state
      securities laws or unless, in the opinion of counsel to the Company, exemptions
      from such registration and qualification requirements are available. Warrant
      Holder understands that only the Company may file a registration statement
      with
      the SEC. Warrant Holder has also been advised that exemptions from registration
      and qualification may not be available or may not permit Warrant Holder to
      transfer all or any of the Warrant Stock in the amounts or at the times proposed
      by Warrant Holder.

     

    
      
         

      

      
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    5.8  Legends.
      It is
      understood that the certificates evidencing the Warrant Stock and the Common
      Stock issuable upon exercise thereof, will bear the legend set forth
      below:

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY OTHER
      JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
      AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
      ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR
      EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO
      BEAR
      THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE
      ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
      SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER
      OR
      RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
      LAWS.

     

    6.  NO
      RIGHTS OR LIABILITIES AS STOCKHOLDER.
      This
      Warrant does not by itself entitle the Warrant Holder to any voting rights
      or
      other rights as a shareholder of the Company. In the absence of affirmative
      action by the Warrant Holder to purchase Warrant Stock by exercise of this
      Warrant, no provisions of this Warrant, and no enumeration herein of the rights
      or privileges of the Warrant Holder, shall cause the Warrant Holder to be a
      shareholder of the Company for any purpose.

     

    7.  NO
      IMPAIRMENT.
      The
      Company will not, by amendment of its Certificate of Incorporation or Bylaws,
      or
      through reorganization, consolidation, merger, dissolution, issue or sale of
      securities, sale of assets or any other voluntary action, willfully 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 action as may be necessary or appropriate in
      order
      to protect the rights of the holder against wrongful impairment. Without
      limiting the generality of the foregoing, the Company will take all such action
      as may be necessary or appropriate in order that the Company may duly and
      validly issue fully paid and nonassessable shares of Warrant Stock upon the
      exercise of this Warrant.

     

    8.  ATTORNEYS’
      FEES.
      In
      the
      event any party is required to engage the services of any attorneys for the
      purpose of enforcing this Warrant, or any provision thereof, the prevailing
      party shall be entitled to recover its reasonable expenses and costs in
      enforcing this Warrant, including attorneys’ fees.

     

    9.  TRANSFER.
      Neither
      this Warrant nor any rights hereunder may be assigned, conveyed or transferred,
      in whole or in part, without the Company’s prior written consent, which the
      Company may withhold in its sole discretion. The rights and obligations of
      the
      Company and the Warrant Holder under this Warrant shall be binding upon and
      benefit their respective permitted successors, assigns, heirs, administrators
      and transferees.

     

    
      
         

      

      
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    10.  GOVERNING
      LAW.
      This
      Warrant shall be governed by and construed under the internal laws of the State
      of Florida as applied to agreements among Florida residents entered into and
      to
      be performed entirely within Florida, without reference to principles of
      conflict of laws or choice of laws.

     

    11.  HEADINGS.
      The
      headings and captions used in this Warrant are used only for convenience and
      are
      not to be considered in construing or interpreting this Warrant. All references
      in this Warrant to sections and exhibits shall, unless otherwise provided,
      refer
      to sections hereof and exhibits attached hereto, all of which exhibits are
      incorporated herein by this reference.

     

    12.  NOTICES.
      Unless
      otherwise provided, any notice required or permitted under this Agreement shall
      be given in writing and shall be deemed effectively given (i) at the time
      of personal delivery, if delivery is in person; (ii) one (1) business day
      after deposit with an express overnight courier for United States deliveries,
      or
      two (2) business days after such deposit for deliveries outside of the United
      States, with proof of delivery from the courier requested; or (iii) three
      (3) business days after deposit in the United States mail by certified mail
      (return receipt requested) for United States deliveries when addressed to the
      party to be notified at the address indicated for such party in the first
      paragraph of this Warrant or, in the case of the Company, at 8000 Towers
      Crescent Drive, Suite 1220, Vienna, VA 22182, or at such other address as any
      party or the Company may designate by giving ten (10) days’ advance written
      notice to all other parties.

     

    13.  AMENDMENT;
      WAIVER. Any
      term
      of this Warrant may be amended, and the observance of any term of this Warrant
      may be waived (either generally or in a particular instance and either
      retroactively or prospectively) only with the written consent of the Company
      and
      the Warrant Holder. Any amendment or waiver effected in accordance with this
      Section shall be binding upon the Warrant Holder, each future holder of such
      securities, and the Company.

     

    14.  SEVERABILITY.
      If one
      or more provisions of this Warrant are held to be unenforceable under applicable
      law, such provision(s) shall be excluded from this Warrant and the balance
      of
      the Warrant shall be interpreted as if such provision(s) were so excluded and
      shall be enforceable in accordance with its terms.

     

    15.  TERMS
      BINDING.
      By
      acceptance of this Warrant, the Warrant Holder accepts and agrees to be bound
      by
      all the terms and conditions of this Warrant.

     

    16.  COUNTERPARTS.
      This
      Warrant may be executed in any number of counterparts, each of which when so
      executed and delivered will be deemed an original, and all of which together
      shall constitute one and the same agreement.



    
      
         

      

      
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    IN
      WITNESS WHEREOF, the
      parties hereto have executed this Warrant as of the date first above
      written.

     

     

     

     

     

     

    
      	
              THE
                COMPANY:

               

              ARIEL
                WAY, INC.

               

            	 
	
              By:

            	 	 
	
               

              Name:

            	
               

              Leif
                Carlsson

            	 
	
               

              Title:

            	
               

              Director
                of the Board

            	 
	
               

              AGREED
                AND ACKNOWLEDGED

               

            	 
	
               

              THE
                HOLDER:

               

               

              MRS.
                EVA DUNHEM

               

               

               

            	 


    

    


     

    


     


    
      
         

      

      
         

        
          

        

      

      
         

        
          


        

      

    



    EXHIBIT 1

     

    FORM
      OF SUBSCRIPTION

     

    (To
      be signed only upon exercise of Warrant)

     

    To:
      Ariel
      Way, Inc.

     

    (1)  The
      undersigned Warrant Holder hereby elects to purchase     
        
      shares
      of Common Stock of Ariel Way, Inc. (the “Warrant
      Stock”),
      pursuant to the terms of the attached Warrant, and tenders herewith payment
      of
      the purchase price for such shares in full or accepts cancellation of
      indebtedness of the Company to the Warrant Holder of the same equal
      amount.

     

    (2)  In
      exercising the Warrant, the undersigned Warrant Holder hereby confirms and
      acknowledges that the representations and warranties set forth in Section 5
      of the Warrant as they apply to the undersigned Warrant Holder continue to
      be
      true and correct as of this date. 

     

    (3)  Please
      issue a certificate or certificates representing such shares of Warrant Stock
      in
      the name specified below:

     

    
      	 	 
	 	
              (Name)

            
	 	 
	 	
              (Address)

            
	 	 
	 	
              (City,
                State, Zip Code)

            
	 	 
	 	
              (Federal
                Tax Identification Number)

            
	 	 
	 	
              (Date)