Unassociated Document


    THIS
      WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE
      NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”). THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE HEREOF
      MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
      IN
      THE ABSENCE OF AN EFFECTIVE REGISTRATION ACT, OR AN OPINION OF COUNSEL, WHICH
      OPINION IS SATISFACTORY IN FORM AND SUBSTANCE TO THE CORPORATION, TO THE EFFECT
      THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR SUCH
      TRANSACTION COMPLIES WITH RULES PROMULGATED BY THE SECURITIES AND EXCHANGE
      COMMISSION UNDER THE SECURITIES ACT OR UNLESS SOLD PURSUANT TO RULE 144 OF
      SUCH
      ACT.

    


    VOID
      AFTER 8/5/ 2013

    


    STOCK
      PURCHASE WARRANT

    To
      Purchase Shares of Common Stock of

    EMVELCO
      CORP.

    


    THIS
      CERTIFIES that, for value received, Mike
      M. Mustafoglu
      (“Holder”) is entitled, upon the terms and subject to the conditions hereinafter
      set forth, to subscribe for and purchase, from Emvelco Corp., a Delaware
      corporation (the “Company”), 10,000,000 fully paid and non-assessable shares of
      the Company’s Common Stock (“Stock”) at a purchase price equal to the lesser of
      $0.50 per share or 50% of the average market price of the Common Stock of the
      Company over the 20-day period prior to exercise (the “Exercise Price”). The
      Exercise Price and the number and kind of Stock purchasable under this warrant
      (“Warrant”) are subject to adjustments as provided herein.

    


    1. Term
      of Warrant. Subject
      to the terms and restrictions set forth herein, this Warrant may be exercised
      at
      any time, or from time to time, in whole or in part during the term commencing
      on the day following the issuance of this Warrant and ending on the earlier
      of:

    


    (a) 5:00p.m.
      West Coast time on the date five years after the date of issuance of this
      Warrant; or

    


    (b) the
      effective date of the merger of the Company with and into, the consolidation
      of
      the Company with, or the sale by the Company of all or substantially all of
      its
      assets to, another corporation (other than such a transaction wherein the
      shareholders of the Company retain or obtain a majority of the voting capital
      stock of the surviving, resulting or purchasing corporation); provided that
      the
      Company shall notify the registered Holder of this Warrant of the proposed
      effective date of the merger, consolidation or sale at least thirty (30) days
      prior to the effectiveness thereof; and provided further that no less than
      five
      (5), nor more than ten (10), days before the actual effective date of the
      merger, consolidation or sale, the Company shall give further notice to such
      holder by advising it of such actual date.

    


    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    In
      the
      event that any transaction of which the Company shall have given notice pursuant
      to sub-paragraph (c) hereof does not come on approximately the date specified
      by
      the Company, unless otherwise elected by the Holder, any exercise of the Warrant
      subsequent to the giving of such notice shall be rescinded and the Warrant
      shall
      again be exercisable until terminated in accordance with this paragraph
      1.

    


    2. Transfer
      of Warrant. The
      Stock
      issued upon exercise hereof may not be transferred or assigned without
      compliance with applicable federal and state securities laws by the transferor
      and the transferee (including the delivery of investment representation letters
      and legal opinions reasonably satisfactory to the Company, if requested by
      the
      Company).

    


    3. Regular
      Exercise of Warrant. Subject
      to the vesting limitations set forth in Section 3(b) of the Employment Agreement
      executed August 19, 2008 and effective July 1, 2008 by and between the Holder
      and the Company, the rights represented by this Warrant may be exercised by
      Holder, in whole or in part, at any time or from time to time, during the term
      hereof as described in Section 1 above, by the surrender of this Warrant and
      the
      Notice of Exercise annexed hereto duly executed on behalf of Holder, at the
      office of the Company, in 10990
      Wilshire Blvd., Suite 1220, Los Angeles, CA  90024
      (or such
      other office or agency of the Company as it may designate by notice in writing
      to Holder at its address appearing on the books of the Company), and upon
      payment of the Exercise Price of the Stock thereby purchased by cash, certified
      check or wire transfer whereupon Holder shall be entitled to receive a
      certificate for the number of shares of Stock so purchased. The Company agrees
      that the shares so purchased shall be issued to Holder as the record owner
      of
      such shares as of the close of business on the date on which this Warrant shall
      have been exercised.

    


    Certificates
      for shares purchased hereunder shall be delivered to Holder within a reasonable
      time after the date on which this Warrant shall have been exercised. Unless
      this
      Warrant has expired, a new Warrant representing the number of shares, if any,
      with respect to which this Warrant shall not then have been exercised shall
      also
      be issued to Holder. Such certificates shall bear any restrictive legends
      required by United States or California securities law.

    


    The
      Company covenants and warrants that all shares of Stock which may be issued
      upon
      the exercise of this Warrant will, upon exercise of the rights represented
      by
      this Warrant, be duly authorized, validly issued, fully paid and
      nonassessable.

     

    4. Right
      to Convert Warrant Net Issuance.

    


    (a) Right
      to Convert. In
      addition to and without limiting the rights of the Holder under the terms of
      this Warrant, the Holder shall have the right to convert this Warrant or any
      portion thereof (the “Conversion Right”) into shares of Stock as provided in
      this Section 4 at any time or from time to time during the term of this Warrant.
      Upon exercise of the Conversion Right with respect to a particular number of
      shares of Stock subject to this Warrant (“Converted Warrant Shares”), the
      Company shall deliver to the Holder (without payment by the Holder of any
      Exercise Price or any cash or other consideration) (X) that number of shares
      of
      fully paid and nonassessable Stock equal to the quotient obtained by dividing
      the value of this Warrant (or the specified portion hereof) on the Conversion
      Date (as defined in Section 4(b), which value shall be determined by subtracting
      (A) the aggregate Exercise Price of the Converted Warrant Shares immediately
      prior to the exercise of this Warrant (or the specified portion hereof) on
      the
      Conversion Date (as herein defined) by (Y) the fair market value of one share
      of
      Stock on the Conversion Date (as herein defined).

    


    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Expressed
      as a formula, such conversion shall be computed as follows:

    


    X
      =
B
      - A


             
      Y

     

    
      
        
          	
                  Where:
                    

                	
                  X

                	
                  =

                	
                  the
                    number of shares of Stock that may be issued to the
                    Holder

                
	 	 	 	 	 
	 	 	
                  Y

                	
                  =

                	
                  the
                    fair market value (FMV) of one share of Stock

                
	 	 	 	 	 
	 	 	
                  A

                	
                  =

                	
                  the
                    aggregate Exercise Price (i.e., Converted Warrant Shares x Exercise
                    Price)

                
	 	 	 	 	 
	 	 	
                  B

                	
                  =

                	
                  the
                    aggregate FMV (i.e., FMV x Converted Warrant
                    Shares)

                


        

         

      

    

    No
      fractional shares shall be issuable upon exercise of the Conversion Right,
      and,
      if the number of shares to be issued determined in accordance with the foregoing
      formula is other than a whole number, the Company shall pay to the Holder an
      amount in cash equal to the fair market value of the resulting fractional share
      on the Conversion Date (as hereinafter defined). For purposes of this Section
      4,
      shares issued pursuant to the Conversion Right shall be treated as if they
      were
      issued upon the exercise of this Warrant.


    (b) Method
      of Exercise. The
      Conversion Right may be exercised by the Holder by the surrender of this Warrant
      at the principal office of the Company together with a written statement
      specifying that the Holder thereby intends to exercise the Conversion Right
      and
      indicating the number of shares of Stock subject to this Warrant which are
      being
      surrendered (referred to in Section 4(a) hereof as the Converted Warrant Shares)
      in exercise of the Conversion Right. Such conversion shall be effective upon
      receipt by the Company of this Warrant together with the aforesaid written
      statement, or on such later date as is specified therein (the “Conversion
      Date”). Certificates for the shares issuable upon exercise of the Conversion
      Right and , if applicable, a new warrant evidencing the balance of the shares
      remaining subject to this Warrant, shall be issued as of the Conversation Date
      and shall be delivered to the Holder within fourteen (14) days following the
      Conversion Date.

    


    
      
         

      

      
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    (c) Determination
      of Fair Market Value. For
      purposes of this Section 4, “fair market value” of a share of Stock as of the
      Conversion Date shall mean:

    


    (A) If
      the
      Common Stock is traded on a securities exchange, the Nasdaq Small-Cap Market,
      the fair market value per share of the Common Stock shall be deemed to be the
      product of (i) the average of the closing prices of the Common Stock on such
      exchange or market over the thirty (30) day period ending five (5) business
      days
      prior to the Conversion Date and (ii) the number of shares of Common Stock
      into
      which each share of Stock under this Warrant is convertible at the time of
      such
      conversion;

    


    (B) If
      the
      Common Stock is traded over-the-counter but not on the Nasdaq National Market
      or
      the Nasdaq Small-Cap Market, the fair market value per share of the Stock shall
      be deemed t be the product of (i) the average of the closing bid prices of
      the
      Common Stock over the thirty (30) day period ending five (5) business days
      prior
      to the Conversion Date and (ii) the number of shares of Stock for which the
      Warrant may be exercised at the time of such conversion; and 

    


    (C) If
      there
      is no public market for the Common Stock, then the fair market value shall
      be
      determined by the Company’s Board of Directors in good faith.

    


    5. No
      Fractional Shares or Scrip. No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant.

    


    6. Charges,
      Taxes and Expenses. Issuance
      of certificates for shares of Stock upon the exercise of this Warrant shall
      be
      made without charge to Holder for any United States or state of United States
      documentary stamp tax or other incidental expense in respect of the issuance
      of
      such certificate, all of which taxes and expenses shall be paid by the Company,
      and such certificates shall be issued in the name of Holder.

    


    7. Transfer
      Rights; Rights as Stockholders; Registration Rights. This
      Warrant is fully assignable by Holder, without limitation, to any party it
      so
      chooses. The rights and obligations of the parties hereunder shall inure to
      the
      benefit of, and be binding upon, their respective successors, assigns and legal
      representatives. This Warrant does not entitle the Holder hereto to any voting
      rights or other rights as a stockholder of the Company prior to the exercise
      hereof. The Stock subject to this Warrant is subject to that certain Investors’
Rights Agreement of even date herewith entered into by and among the Company,
      the Holders and certain other parties.

    


    8. Exchange
      and Registry of Warrant. This
      Warrant is exchangeable, upon the surrender hereof by the registered holder
      at
      the above-mentioned office or agency of the Company, for a new Warrant in such
      denominations as may be requested, but otherwise of like tenor and dated as
      of
      such exchange.

    


    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    The
      Company shall maintain a registry showing the name and address of the registered
      holder of this Warrant. This Warrant may be surrendered for exchange or
      exercise, in accordance with its terms, at such office or agency of the Company,
      and the Company shall be entitled to rely in all respects, prior to written
      notice to the contrary, upon such registry.

    


    9. Loss,
      Theft, Destruction or Mutilation of Warrant. Upon
      receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Warrant, and in case of loss, theft
      or
      destruction, of indemnity or security reasonably satisfactory to it, and upon
      reimbursement to the Company of all reasonable expenses incidental thereto,
      and
      upon surrender and cancellation of this Warrant, if mutilated, the Company
      will
      make and deliver a new Warrant of like tenor and dated as of such cancellation,
      in lieu of this Warrant.

    


    10. Adjustments. The
      terms
      of this Warrant, the Exercise Price per share and the number of shares
      purchasable hereunder are subject to adjustment from time to time as
      follows:


    (a) Merger,
      Sale of Assets, etc. If
      at any
      time while this Warrant, or any portion thereof, is outstanding and unexpired
      there shall be (i) a reorganization (other than a combination, reclassification,
      exchange or subdivision of shares otherwise provided for herein), (ii) a merger
      or consolidation of the Company with or into another corporation in which the
      Company is not the surviving entity, or a reverse triangular merger in which
      the
      Company is the surviving entity but the shares of the Company’s capital stock
      outstanding immediately prior to the merger are converted by virtue of the
      merger into other property, whether in the form of securities, cash or
      otherwise, or (iii) a sale or transfer of the Company’s properties and assets as
      , or substantially as, an entirety to any other person, then, as a part of
      such
      reorganization, merger, consolidation, sale or transfer, lawful provision shall
      be made so that the Holder of this Warrant shall thereafter be entitled to
      receive upon exercise of this Warrant, during the period specified herein and
      upon payment of the Exercise Price then if effect, the number of shares of
      stock
      or other securities or property of the successor corporation resulting from
      such
      reorganization, merger, consolidation, sale or transfer that a holder of shares
      deliverable upon exercise of this Warrant would have been entitled to receive
      in
      such reorganization, consolidation, merger, sale or transfer if this Warrant
      had
      been exercised immediately before such reorganization, merger, consolidation,
      sale or transfer, all subject to further adjustment as provided in this Section
      10. The foregoing provisions of this Section 10(a) shall similarly apply to
      successive reorganizations, consolidations, mergers, sales and transfers and
      to
      the stock or securities of any other corporation that are at the time receivable
      upon the exercise of this Warrant. If the per-share consideration payable to
      the
      Holder hereof for shares in connection with any such transaction is in a form
      other than cash or marketable securities, then the value of such consideration
      shall be determined in good faith by the Company’s Board of Directors. In all
      events, appropriate adjustment (as determined in good faith by the Company’s
      Board of Directors) shall be made in the application of the provisions of the
      Warrant with respect to the rights and interests of the Holder after the
      transaction, to the end that the provisions of this Warrant shall be applicable
      after that event, as near as reasonably may be, in relation to any shares or
      other property deliverable after that event upon exercise of this
      Warrant.

    


    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (b) Reclassification,
      etc. If
      the
      Company, at any time while this Warrant, or any portion thereof, remains
      outstanding and unexpired by reclassification of securities or otherwise, shall
      change any of the securities as to which purchase rights under this Warrant
      exist into the same or a different number of securities of any other class
      or
      classes, this Warrant shall thereafter represent the right to acquire such
      number and kind of securities as would have been issuable as the result of
      such
      change with respect to the securities that were subject to the purchase rights
      under this Warrant immediately prior to such reclassification or other change
      and the Exercise Price therefor shall be appropriately adjusted, all subject
      to
      further adjustment as provided in this Section 10. 

    


    (c) Split,
      Subdivision or Combination of Shares. If
      the
      Company at any time while this Warrant, or any portion thereof, remains
      outstanding and unexpired shall split, subdivide or combine the securities
      as to
      which purchase rights under this Warrant exist, into a different number of
      securities of the same class, the Exercise Price for such securities shall
      be
      proportionately decreased in the case of a split or subdivision or
      proportionately increased in the case of a combination.


    (d) Adjustments
      for Dividends in Stock or Other Securities or Property. If
      while
      this Warrant, or any portion hereof, remains outstanding and unexpired the
      holders of the securities as to which purchase rights under this Warrant exist
      at the time shall have received, or, on or after the record date fixed for
      the
      determination of eligible stockholders, shall have become entitled to receive,
      without payment therefor, other or additional stock or other securities or
      property (other than cash) of the Company by way of dividend, then and in each
      case, to the number of shares of the security receivable upon exercise of this
      Warrant, and without payment of any additional stock or other securities or
      property (other than cash) of the Company that such holder would hold on the
      date of such exercise had it been the holder of record of the security
      receivable upon exercise of this Warrant on the date hereof and had thereafter,
      during the period from the date to and including the date of such exercise,
      retained such shares and/or all other additional stock available by it as
      aforesaid during such period, giving effect to all adjustments called for during
      such period by the provisions of this Section 10.

    


    (e) Certificate
      as to Adjustments. Upon
      the
      occurrence of each adjustment or readjustment pursuant to this Section 10,
      the
      Company at its expense shall promptly compute such adjustment or readjustment
      in
      accordance with the terms hereof and furnish to each Holder of this Warrant
      a
      certificate setting forth such adjustment or readjustment and showing in detail
      the facts upon which such adjustment or readjustment is based. The Company
      shall, upon the written request, at any time, of any such Holder, furnish or
      cause to be furnished to such Holder a like certificate setting forth: (i)
      such
      adjustments and readjustments; (ii) the Exercise Price at the time in effect;
      and (iii) the number of shares and the amount, if any, of other property that
      at
      the time would be received upon the exercise of the Warrant.

    


    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    11. Authorized
      Shares. The
      Company covenants that during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of this Warrant shall constitute full
      authority to its officers who are charged with the duty of executing stock
      certificates to execute and issue the necessary certificates for shares of
      the
      Company’s Common Stock upon the exercise of the rights under this
      Warrant.

    


    12. Miscellaneous.

    


    (a) Issue
      Date. The
      provisions of this Warrant shall be construed and shall be given effect in
      all
      respect as if it had been issued and delivered by the Company on the date
      hereof.

    


    (b) Successors. This
      Warrant shall be binding upon any successors or assigns of the
      Company.

    


    (c) Governing
      Law. This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of California.

    


    (d) Headings. The
      headings used in this Warrant are used for convenience only and are not to
      be
      considered in construing or interpreting this Agreement.

    


    (e) Notices. Unless
      otherwise provided, any notice required or permitted under this Warrant shall
      be
      given in writing and shall be deemed effectively given upon personal delivery to
      the party to be notified or three (3) days after being sent via air courier,
      in
      all cases addressed to the party to be notified at the address indicated for
      such party on the signature page hereof, or at such other address as such party
      may designate by ten (10) days advance written notice to the other
      party.

    


    (f) Saturdays,
      Sundays, Holidays. If
      the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall be a Saturday or a Sunday or shall be
      a
      legal holiday in the State of California, then such action may be taken or
      such
      right may be exercised on the next succeeding day not a legal
      holiday.

    


    (g) Attorney’s
      Fees. In
      the
      event that any dispute among the parties to this Agreement should result in
      litigation, the prevailing party in such dispute shall be entitled to recover
      from the losing party all fees, costs and expenses of enforcing any right of
      such prevailing party under or with respect to this Agreement, including without
      limitation, such reasonable fees and expenses of attorneys and accountants,
      which shall include, without limitation, all fees, costs and expenses of
      appeals.

    


    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, Emvelco Corp. has caused this Warrant to be executed by its
      officer thereunto duly authorized.

    


    Dated:
      August 19, 2008


    

      
        	 	EMVELCO
                CORP.
	 	 	 
	 	
                By:
                  

              	
                /s/
                  Yossi Attia

              
	 	 	
                Yossi
                  Attia

              
	 	
                Its:

              	
                Chief
                  Executive
                  Officer

              


      

    

    


    Address
      of Holder

    


    2934
      Beverly Glen Circle, No. 276

    


    Bel
      Air,
      CA 90077

    
      
         

      

      
        8

        
          

        

      

      
         

      

    


    Notice
      of Exercise

    


    Pursuant
      to the terms of the Common Stock Purchase Warrant of Emvelco Corp. Dated as
      of
      August __, 2008 (the “Warrant”), the undersigned registered holder of the
      Warrant hereby elects to purchase _________ shares of Common Stock of EMVELCO
      CORP. at a price of $_______ per share (the “Exercise Price”). Payment of the
      Exercise Price is hereby made by [indicate which]:

    
       

        
          	 	
                  ________

                	
                  Cash
                    in the amount of $__________________.

                
	 	 	 
	 	
                  ________

                	
                  Certified
                    check made payable to the Company in the amount of $_______________.

                
	 	 	 
	 	
                  ________

                	
                  Wire
                    transfer to the Company’s account in the amount of $_______________.

                
	 	 	 
	 	
                  ________

                	
                  Cancellation
                    of the following indebtedness of the Company to Holder in the
                    amount of
                    $________________.

                
	 	 	 
	 	 	 
	 	 	 
	 	
                  ________

                	
                  Net
                    Exercise for _______________________
                    shares.

                


        

      

    

    
      


      IN
        WITNESS WHEREOF, ____________________________ (“Holder”) has caused this Notice
        of Exercise to be executed by its officers thereunto duly
        authorized.

      


      Dated:
        ___________________, 200 ___

      


      
        	 	 	
                 

              
	 	 	
                (Name
                  of Holder)

              
	 	 	 
	 	 By:
                	 
	 	 	 
	 	 Its:	 


      

      


      
        
           

        

        
          9