EXHIBIT 10.2
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO INCENTRA SOLUTIONS, INC. THAT SUCH
REGISTRATION IS NOT REQUIRED.
Right to Purchase up to __________ Shares of Common Stock of
Incentra Solutions, Inc.
(subject to adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT
No. 2006-__ Issue Date: June 6, 2006
INCENTRA SOLUTIONS, INC., a corporation organized under the laws of the
State of Nevada ("ICNS"), hereby certifies that, for value received,
____________________, or assigns (the "Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company (as defined herein) from and
after the Issue Date of this Warrant and at any time or from time to time before
5:00 p.m., Denver, Colorado time, through the close of business June 6, 2007
(the "Expiration Date"), up to ______ fully paid and nonassessable shares of
Common Stock (as hereinafter defined), at the applicable Exercise Price (as
defined below) per share. The number and character of such shares of Common
Stock and the applicable Exercise Price per share are subject to adjustment as
provided herein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" shall include ICNS and any corporation
which shall succeed, or assume the obligations of, ICNS hereunder.
(b) The term "Common Stock" includes (i) the Company's Common
Stock, par value $0.001 per share; and (ii) any other securities into
which or for which any of the securities described in (i) may be
converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other
than Common Stock) and other securities of the Company or any other
person (corporate or otherwise) which the Holder of this Warrant at any
time shall be entitled to receive, or shall have received, on the
exercise of the Warrant, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities
pursuant to Section 4 or otherwise.
(d) The "Exercise Price" applicable under this Warrant shall
be $1.40 per share.
1. EXERCISE OF WARRANT.
1.1 NUMBER OF SHARES ISSUABLE UPON EXERCISE. From and after
the date hereof, the Holder shall be entitled to receive, upon exercise of this
Warrant in whole or in part, by delivery of an original or fax copy of an
exercise notice in the form attached hereto as Exhibit A (the "Exercise Notice")
up to 142,080 shares of Common Stock of the Company, subject to adjustment
pursuant to Section 4.
1.2 FAIR MARKET VALUE. For purposes hereof, the "Fair Market
Value" of a share of Common Stock as of a particular date (the "Determination
Date") shall mean:
(a) If the Company's Common Stock is traded on the American
Stock Exchange or another national exchange or is quoted on the
National or SmallCap Market of The Nasdaq Stock Market, Inc.
("Nasdaq"), then the closing or last sale price, respectively, reported
for the last business day immediately preceding the Determination Date.
(b) If the Company's Common Stock is not traded on the
American Stock Exchange or another national exchange or on the Nasdaq
but is traded on the National Association of Securities Dealers, Inc.
Over-the-Counter Bulletin Board, then the mean of the average of the
closing bid and asked prices reported for the last business day
immediately preceding the Determination Date.
(c) Except as provided in clause (d) below, if the Company's
Common Stock is not publicly traded, then as the Holder and the Company
agree or in the absence of agreement by arbitration in accordance with
the rules then in effect of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons
qualified by education and training to pass on the matter to be
decided.
(d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company's charter, then all
amounts to be payable per share to holders of the Common Stock pursuant
to the charter in the event of such liquidation, dissolution or winding
up, plus all other amounts to be payable per share in respect of the
Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of the Warrant are outstanding at the
Determination Date.
1.3 COMPANY ACKNOWLEDGMENT. The Company will, at the time of
the exercise of this Warrant, upon the request of the Holder hereof, acknowledge
in writing its continuing obligation to afford to such Holder any rights to
which such Holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the Holder
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shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Holder any such rights.
1.4 TRUSTEE FOR WARRANT HOLDERS. In the event that a bank or
trust company shall have been appointed as trustee for the Holder of this
Warrant pursuant to Subsection 3.2, such bank or trust company shall have all
the powers and duties of a Warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.
2. PROCEDURE FOR EXERCISE.
2.1 DELIVERY OF STOCK CERTIFICATES, ETC., ON EXERCISE. The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder as the record owner of such
shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for such shares in accordance herewith. As
soon as practicable after the exercise of this Warrant in full or in part, and
in any event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.
2.2 EXERCISE. (a) Payment may be made either (i) in cash or by
certified or official bank check payable to the order of the Company equal to
the applicable aggregate Exercise Price, (ii) by delivery of this Warrant, or
shares of Common Stock and/or Common Stock receivable upon exercise of this
Warrant in accordance with Section (b) below, or (iii) by a combination of any
of the foregoing methods, for the number of Common Shares specified in such
Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Common Stock issuable to the Holder
per the terms of this Warrant); provided, however, that if at the time of
delivery of an Exercise Notice the shares of Common Stock to be issued upon
payment of the Exercise Price have been registered under the Securities Act of
1933, as amended (the "Securities Act"), and are covered by an effective
registration statement under the Securities Act, payment of the Exercise Price
may only be made pursuant to clause (i) above and may not be made pursuant to
clause (ii) or (iii) above. Upon receipt by the Company of an Exercise Notice
and proper payment of the aggregate Exercise Price, the Holder shall thereupon
be entitled to receive the number of duly authorized, validly issued, fully-paid
and non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.
(b) Notwithstanding any provisions herein to the contrary, if the Fair
Market Value of one share of Common Stock is greater than the Exercise Price (at
the date of calculation as set
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forth below), in lieu of exercising this Warrant for cash, the Holder may elect
to receive shares equal to the value (as determined below) of this Warrant (or
the portion thereof being exercised) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Exercise
Notice, in which event the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:
X=Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the
Holder
Y = the number of shares of Common Stock purchasable under
this Warrant or, if only a portion of this Warrant is
being exercised, the portion of this Warrant being
exercised (at the date of such calculation)
A = the Fair Market Value of one share of the Company's Common
Stock (at the date of such calculation)
B = the Exercise Price (as adjusted to the date of such
calculation)
3. EFFECT OF REORGANIZATION, ETC.; ADJUSTMENT OF EXERCISE PRICE.
3.1 REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at any
time or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
Holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.
3.2 DISSOLUTION. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, concurrently with any distributions made to holders of its
Common Stock, shall at its expense deliver or cause to be delivered to the
Holder the stock and other securities and property (including cash, where
applicable) receivable by the Holder of this Warrant pursuant to Section 3.1,
or, if the Holder shall so instruct the Company, to a bank or trust company
specified by the Holder and having its principal office in New York, NY as
trustee for the Holder of this Warrant (the "Trustee").
3.3 CONTINUATION OF TERMS. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the shares of
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stock and other securities and property receivable on the exercise of this
Warrant after the consummation of such reorganization, consolidation or merger
or the effective date of dissolution following any such transfer, as the case
may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full force
and effect after the consummation of the transactions described in this Section
3, then the Company's securities and property (including cash, where applicable)
receivable by the Holders of the Warrant will be delivered to Holder or the
Trustee as contemplated by Section 3.2.
3.4 (a) ADJUSTMENTS TO THE EXERCISE PRICE. Except (i) as
provided in Section 3.4(b) hereof, (ii) in the case of an event described in
Section 3.4(c) hereof and (iii) as the Holder otherwise agrees in writing to
waive the provisions hereof, if and whenever after the date hereof the Company
shall issue or sell, or is, in accordance with this Section 3.4(a), deemed to
have issued or sold, any shares of Common Stock for a consideration per share
less than the Exercise Price in effect immediately prior to such issuance or
sale, then, upon such issuance or sale (or deemed issuance or sale), the
Exercise Price shall be reduced to the price determined by dividing (i) the sum
of (A) the Common Stock Deemed Outstanding (as defined in subparagraph (x)
below) immediately prior to such issuance or sale (or deemed issuance or sale)
multiplied by the Exercise Price then in effect and (B) the aggregate
consideration, if any, received by the Corporation upon such issuance or sale
(or deemed issuance or sale) by (ii) the Common Stock Deemed Outstanding
immediately after such issuance or sale (or deemed issuance or sale).
For purposes of this Section 3.4, the following shall also be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company shall, at
any time after the date hereof, in any manner grant (whether directly
or by assumption in a merger or otherwise) any warrants or other rights
to subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called
"Options" and such convertible or exchangeable stock or securities
being called "CONVERTIBLE Securities"), in each case for consideration
per share (determined as provided in this paragraph and in Section
3.4(vi)) hereof less than the Exercise Price then in effect, whether or
not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, then the total
maximum number of shares of Common Stock issuable upon the exercise of
such Options, or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon exercise of such
Options, shall be deemed to have been issued as of the date of granting
of such Options, at a price per share equal to the amount determined by
dividing (A) the total amount, if any, received or receivable by the
Company as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case of
such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issuance or sale of such Convertible Securities and upon the conversion
or exchange thereof, by (B) the total maximum number of shares of
Common Stock deemed to have been so issued. Except as otherwise
provided
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in Section 3.4(iii) hereof, no adjustment of the Exercise Price shall
be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange of such
Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company shall,
at any time after the date hereof, in any manner issue or sell any
Convertible Securities for consideration per share (determined as
provided in this paragraph and in Section 3.4(vi)) hereof less than the
Exercise Price then in effect, whether or not the rights to exchange or
convert any such Convertible Securities are immediately exercisable,
then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be
deemed to have been issued as of the date of the issuance or sale of
such Convertible Securities, at a price per share equal to the amount
determined by dividing (A) the total amount, if any, received or
receivable by the Company as consideration for the issuance or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (B) the total maximum number of
shares of Common Stock deemed to have been so issued; PROVIDED, that
(1) except as otherwise provided in Section 3.4(iii) hereof, no
adjustment of the Exercise Price shall be made upon the actual issuance
of such Common Stock upon conversion or exchange of such Convertible
Securities and (2) if any such issuance or sale of such Convertible
Securities is made upon exercise of any Options to purchase any such
Convertible Securities, no further adjustment of the Exercise Price
shall be made by reason of such issuance or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there
shall occur a change in (A) the maximum number of shares of Common
Stock issuable in connection with any Option referred to in Section
3.4(a) or any Convertible Securities referred to in Section 3.4(a)(i)
or (ii) hereof, (B) the purchase price provided for in any Option
referred to in Section 3.4(a)(i) hereof, (C) the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in Section 3.4(a)(i) or (ii) hereof,
or (D) the rate at which Convertible Securities referred to in Section
3.4(a)(i) or (ii) hereof are convertible into or exchangeable for
Common Stock (in each case, other than in connection with an event
described in Section 3.4(b) hereof), then the Exercise Price in effect
at the time of such event shall be adjusted to the Exercise Price that
would have been in effect at such time had such Options or Convertible
Securities that are still outstanding provided for such changed maximum
number of shares, purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted,
issued or sold, but only if as a result of such adjustment the Exercise
Price then in effect is thereby reduced.
(iv) STOCK DIVIDENDS. If the Company, at any time or from time
to time after the date hereof, shall declare or make, or fix a record
date for the determination of holders of Common Stock entitled to
receive, a dividend or make any other distribution upon any stock of
the Company payable in Common Stock, Options or Convertible Securities,
any Common Stock, Options or Convertible Securities, as the case may
be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration, and the
Exercise Price will be adjusted pursuant to this
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Section 3.4(a); PROVIDED, that if any adjustment is made to the
Exercise Price as a result of the declaration of a dividend and such
dividend is not effected, the Exercise Price shall be appropriately
readjusted to the Exercise Price in effect had such dividend not been
declared.
(v) OTHER DIVIDENDS AND DISTRIBUTIONS. If the Company, at any
time or from time to time after the date hereof, shall declare or make,
or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in
securities or other property of the Company other than shares of Common
Stock, then and in each such event provision shall be made so that the
Holder shall receive upon exercise hereof, in addition to the number of
shares of Common Stock receivable thereupon, the amount of such other
securities of the Company or the value of such other property that they
would have received had this Warrant been exercised for Common Stock on
the date of such event and had Holder thereafter, during the period
from the date of such event to and including the conversion date,
retained such securities or other property receivable by them during
such period giving application to all adjustments called for during
such period under Section 3.3 with respect to the rights of the Holder;
and, PROVIDED, FURTHER, however, that no such adjustment shall be made
if the Holder simultaneously receives a dividend or other distribution
of such securities or other property in an amount equal to the amount
of such securities or other property as he or she would have received
if this Warrant had been exercised for Common Stock on the date of such
event.
(vi) CONSIDERATION FOR STOCK. If the Company, at any time or
from time to time after the date hereof, shall issue or sell, or is
deemed to have issued or sold, any shares of Common Stock for cash, the
consideration received therefor shall be deemed to be the amount
received or to be received by the Company therefor (determined with
respect to deemed issuances and sales in connection with Options and
Convertible Securities in accordance with clause (A) of Section
3.4(a)(i) or (ii) hereof, as appropriate). In case any shares of Common
Stock shall be issued or sold, or deemed issued or sold, for a
consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value
of such consideration received or to be received by the Company
(determined with respect to deemed issuances and sales in connection
with Options and Convertible Securities in accordance with clause (A)
of Section 3.4(a)(i) or(ii) hereof, as appropriate) as determined in
good faith by the Board of Directors of the Company. In case any
Options shall be issued in connection with the issuance and sale of
other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have
been issued for such consideration as determined in good faith by the
Board of Directors of the Company.
(vii) RECORD DATE. In case the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them (A)
to receive a dividend or other distribution payable in Common Stock,
Options or Convertible Securities or (B) to subscribe for or purchase
Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issuance or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of
such dividend
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or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
(viii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by
or for the account of the Company; PROVIDED, that the disposition of
any such shares shall be considered an issuance or sale of Common Stock
for the purpose of this Section 3.4.
(ix) OTHER ISSUANCES OR SALES. In calculating any adjustment
to the Exercise Price pursuant to this Section 3.4(a): (A) any shares
of Common Stock, Options or Convertible Securities issued or sold (or
deemed issued or sold pursuant to Section 3.4(a)(i) or (ii) above)
after the date hereof and prior to the effective date of such
adjustment, the issuance or sale (or deemed issuance or sale) of which
did not result in any adjustment to the Exercise Price under this
Section 3.4(a), shall be deemed to have been issued or sold as part of
the issuance or sale (or deemed issuance or sale) giving rise to such
adjustment for the same consideration per share as the Company received
in the issuance or sale (or deemed issuance or sale) giving rise to
such adjustment, and (B) any Options or Convertible Securities that
provide, as of the effective date of such adjustment, for the issuance
upon exercise or conversion thereof of an indeterminable number of
shares of Common Stock shall (together with the shares of Common Stock
issuable upon exercise or conversion thereof) be disregarded; PROVIDED,
that at such time as the number of shares of Common Stock issuable upon
exercise or conversion of such Options or Convertible Securities
becomes determinable, the Exercise Price shall be adjusted as provided
in Section 3.4(a)(iii) above.
(x) COMMON STOCK DEEMED OUTSTANDING. For purposes of this
Section 3.4, the term "Common Stock Deemed Outstanding" shall mean, at
any time, the sum of (A) the number of shares of Common Stock
outstanding immediately prior to the date hereof (including for this
purpose all shares of Common Stock issuable upon exercise or conversion
of any Options or Convertible Securities outstanding immediately prior
to the date hereof), PLUS (B) the number of shares of Common Stock
issued or sold (or deemed issued or sold) after the date hereof, the
issuance or sale of which resulted in an adjustment to the Exercise
Price pursuant to Section 3.4(a) hereof, PLUS (C) the number of shares
of Common Stock deemed issued or sold pursuant to Section 3.4(a)(ix)(A)
above; PROVIDED, that Common Stock Deemed Outstanding shall not include
any shares of Common Stock issuable upon exercise of the Warrant.
(b) CERTAIN ISSUES OF COMMON STOCK EXCEPTED. Anything herein to the
contrary notwithstanding, the Corporation shall not be required to make any
adjustment of the Exercise Price in the case of the issuance from and after the
Filing Date of (i) shares of Common Stock upon conversion of the Notes, upon
exercise of the Warrants, upon conversion of other convertible securities issued
prior to the date hereof, or upon exercise of warrants issued prior to the date
hereof, and (ii) up to 4,012,500 shares of Common Stock or options therefor to
directors, officers, employees or consultants of the Company in connection with
their service as directors of the Company, their employment by the Company or
their retention as consultants by the Company, in each case authorized by the
Board of Directors and issued pursuant to the
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Company's 2000 Equity Incentive Plan, 2006 Stock Option Plan, or 401K Plan
("EXCLUDED SHARES").
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the Company
shall at any time after the date hereof subdivide its outstanding shares of
Common Stock into a greater number of shares (by any stock split, stock dividend
or otherwise), the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
Company shall at any time after the date hereof combine its outstanding shares
of Common Stock into a smaller number of shares (by any reverse stock split or
otherwise), the Exercise Price in effect immediately prior to such combination
shall be proportionately increased. In the case of any such subdivision, no
further adjustment shall be made pursuant to Section 3.4(a)(iv) hereof by reason
thereof.
(d) RECLASSIFICATION. If the Company at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Note, as to the
unpaid Principal Amount and accrued interest thereon, shall thereafter be deemed
to evidence the right to purchase an adjusted number of such securities and kind
of securities as would have been issuable as the result of such change with
respect to the Common Stock (i) immediately prior to or (ii) immediately after,
such reclassification or other change at the sole election of the Holder.
4. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment or readjustment
in the shares of Common Stock (or Other Securities) issuable on the exercise of
this Warrant, the Company at its expense will promptly cause its Chief Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including a statement of (a) the
consideration received or receivable by the Company for any additional shares of
Common Stock (or Other Securities) issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Exercise Price and the
number of shares of Common Stock to be received upon exercise of this Warrant,
in effect immediately prior to such adjustment or readjustment and as adjusted
or readjusted as provided in this Warrant. The Company will forthwith mail a
copy of each such certificate to the Holder of this Warrant and any Warrant
agent of the Company (appointed pursuant to Section 11 hereof).
5. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANT. The Company will
at all times reserve and keep available, solely for issuance and delivery on the
exercise of this Warrant, shares of Common Stock (or Other Securities) from time
to time issuable on the exercise of this Warrant.
6. ASSIGNMENT; EXCHANGE OF WARRANT. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a "Transferor") in whole or in
part. On the surrender for exchange of this Warrant, with the Transferor's
endorsement in the form of Exhibit B attached hereto (the "Transferor
Endorsement Form") and together with evidence reasonably satisfactory to the
Company demonstrating compliance with applicable securities laws, which shall
include, without limitation, the provision of a legal opinion from the
Transferor's counsel that such transfer is exempt from the registration
9
requirements of applicable securities laws, and with payment by the Transferor
of any applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Warrant of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a "Transferee"), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant so surrendered by the Transferor.
7. REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
8. REGISTRATION RIGHTS. The Holder of this Warrant has been granted certain
registration rights by the Company. These registration rights are set forth in
the Registration Rights Agreement dated as of June 6, 2006 entered into by the
Company and the initial Holder of this Warrant, as amended, modified or
supplemented from time to time.
9. MAXIMUM EXERCISE. Notwithstanding anything herein to the contrary, in no
event shall the Holder be entitled to exercise any portion of this Warrant in
excess of that portion of this Warrant upon exercise of which the sum of (1) the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of the Warrant or the
unexercised or unconverted portion of any other security of the Holder subject
to a limitation on conversion analogous to the limitations contained herein) and
(2) the number of shares of Common Stock issuable upon the exercise of the
portion of this Warrant with respect to which the determination of this proviso
is being made, would result in beneficial ownership by the Holder and its
Affiliates of any amount greater than 9.99% of the then outstanding shares of
Common Stock (whether or not, at the time of such exercise, the Holder and its
Affiliates beneficially own more than 9.99% of the then outstanding shares of
Common Stock). As used herein, the term "Affiliate" means any person or entity
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a person or entity, as such terms
are used in and construed under Rule 144 under the Securities Act. For purposes
of the proviso to the second preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided
in clause (1) of such proviso. The limitations set forth herein (x) may be
waived by the Holder upon provision of no less than sixty-one (61) days prior
notice to the Company and (y) shall automatically become null and void following
notice to the Company upon the occurrence and during the continuance of an Event
of Default (as defined in either Note referred to in the Purchase Agreement
dated as of the date hereof among the Holder and the Company (as amended,
modified, restated and/or supplemented from time to time, the "Purchase
Agreement")) which has not been waived by the Holder.
10. RESTRICTION. Notwithstanding anything to the contrary contained herein, the
Holder hereby agrees that during the period on and after the Issue Date and
prior to the date that is the one year
10
anniversary of the Issue Date, it shall not sell any Common Stock acquired upon
exercise of this Warrant.
11. WARRANT AGENT. The Company may, by written notice to the Holder of this
Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance, exchange
or replacement, as the case may be, shall be made at such office by such agent.
12. TRANSFER ON THE COMPANY'S BOOKS. Until this Warrant is transferred on the
books of the Company, the Company may treat the registered Holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
13. NOTICES, ETC. All notices and other communications from the Company to the
Holder of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the Company
in writing by such Holder or, until any such Holder furnishes to the Company an
address, then to, and at the address of, the last Holder of this Warrant who has
so furnished an address to the Company.
14. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be governed by and construed in accordance with the
laws of State of Colorado without regard to principles of conflicts of laws. Any
action brought concerning the transactions contemplated by this Warrant shall be
brought only in the state courts of Colorado or in the federal courts located in
the state of Colorado. In the event that any provision of this Warrant is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision of this
Warrant. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision hereof. The Company acknowledges that
legal counsel participated in the preparation of this Warrant and, therefore,
stipulates that the rule of construction that ambiguities are to be resolved
against the drafting party shall not be applied in the interpretation of this
Warrant to favor any party against the other party.
[SIGNATURE PAGE FOLLOWS]
11
IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.
INCENTRA SOLUTIONS, INC.
WITNESS:
By: /s/Xxxxxx X. Xxxxxxx III
------------------------------
Name: Xxxxxx X. Xxxxxxx III
------------------------------
Title: Chief Executive Officer
------------------------------------- ------------------------------
12
EXHIBIT A
FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Warrant)
TO: INCENTRA SOLUTIONS, INC.
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):
_________ ________ shares of the Common Stock covered by such Warrant; or
_________ the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth in
Section 2.
The undersigned herewith makes payment of the full Exercise Price for
such shares at the price per share provided for in such Warrant, which is $1.40.
Such payment takes the form of (check applicable box or boxes):
_________ $__________ in lawful money of the United States; and/or
_________ the cancellation of such portion of the attached Warrant as is
exercisable for a total of _______ shares of Common Stock (using a
Fair Market Value of $_______ per share for purposes of this
calculation); and/or
_________ the cancellation of such number of shares of Common Stock as is
necessary, in accordance with the formula set forth in Section
2.2, to exercise this Warrant with respect to the maximum number
of shares of Common Stock purchasable pursuant to the cashless
exercise procedure set forth in Section 2.
The undersigned requests that the certificates for such shares be
issued in the name of, and delivered to ________________________________________
whose address is ______________________________________________________________.
The undersigned represents and Warrants that all offers and sales by
the undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Common Stock under the Securities
Act of 1933, as amended (the "Securities Act") or pursuant to an exemption from
registration under the Securities Act.
Dated: ________________________ ____________________________________________
(Signature must conform to name of holder as
specified on the face of the Warrant)
Address: ___________________________________
___________________________________
A-1
EXHIBIT B
FORM OF TRANSFEROR ENDORSEMENT
(To Be Signed Only On Transfer Of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading "Transferees" the
right represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of INCENTRA SOLUTIONS, INC. into which the within Warrant
relates specified under the headings "Percentage Transferred" and "Number
Transferred," respectively, opposite the name(s) of such person(s) and appoints
each such person Attorney to transfer its respective right on the books of
INCENTRA SOLUTIONS, INC. with full power of substitution in the premises.
Percentage Number
Transferees Address Transferred Transferred
----------- ------- ----------- -----------
-------------------------------------- ----------------------------------- ----------------- ----------------
-------------------------------------- ----------------------------------- ----------------- ----------------
-------------------------------------- ----------------------------------- ----------------- ----------------
-------------------------------------- ----------------------------------- ----------------- ----------------
Dated: __________________________ ____________________________________________
(Signature must conform to name of holder as
specified on the face of the Warrant)
Address: ___________________________________
___________________________________
SIGNED IN THE PRESENCE OF:
____________________________________________
(Name)
ACCEPTED AND AGREED:
[TRANSFEREE]
___________________________________
(Name)
B-1
