NOTE PURCHASE AGREEMENT
Exhibit 10.6
This NOTE
PURCHASE AGREEMENT (this "Agreement") is
entered into as of June 11, 2010 (the "Effective Date"), by
and between VERECLOUD, INC., a Nevada corporation (the "Corporation"), and
XXX and XXX XXXXX, individual residents of the State of Colorado (collectively,
the "Xxxxxx").
WHEREAS, Cadence II, LLC, a
Colorado limited liability company and wholly owned subsidiary of the
Corporation ("Cadence
II"), is a party to that certain Purchase Agreement, dated as of May 26,
2009, by and between Cadence II and the Xxxxxx (the "Purchase
Agreement");
WHEREAS, pursuant to the Purchase
Agreement, Cadence II purchased the Xxxxxx' membership interests in Cadence II
for $3,609,244.00 (the "Interests Purchase
Price"), such Interests Purchase Price consisted of $600,000.00 in cash,
a tax payment of $61,977.00, $123,000.00 purchase of a time share interest for
the Xxxxxx, the provision of health insurance benefits in the amount of
$24,267.00 and the issuance of a Secured Promissory Note to the Xxxxxx in the
amount of $2,800,000.00 (the "Note");
WHEREAS, the Corporation is
currently in default under certain terms of the Purchase Agreement and the
Note;
WHEREAS, on May 26, 2010,
Cadence II and the Xxxxxx entered into that certain Forbearance Agreement (the
"Forbearance
Agreement") pursuant to which the Xxxxxx agreed to not pursue any
remedies under the Purchase Agreement or the Note as a result of the
Corporation's default thereunder, for a period ending June 2, 2010 (the "Forbearance
Period");
WHEREAS, on June 2, 2010,
Cadence II and the Xxxxxx extended the Forbearance Period until June 4,
2010;
WHEREAS, on June 4, 2010, Cadence
II and the Xxxxxx extended the Forbearance Period again until June 8,
2010;
WHEREAS, on June 8, 2010, Cadence
II and the Xxxxxx extended the Forbearance Period again until June 10, 2010;
and
WHEREAS, subject to the terms
and conditions of this Agreement, the Corporation and the Xxxxxx have agreed
that the Corporation shall pay and deliver to the Xxxxxx the following in full
satisfaction of the Note: (i) $750,000.00 in cash (the "Note Cash Purchase
Price"); and (ii) a warrant to purchase 1,250,000 shares of the
Corporation's common stock, par value $0.001 ("Common Stock"), in
the form attached hereto as Exhibit
A (the
"Warrant").
NOW, THEREFORE, for good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the undersigned agree as follows:
1. Payment
of the Note; Termination of Obligations. On the Effective
Date, the Corporation shall deliver to the Xxxxxx the following: (a) the Note
Cash Purchase Price by wire to an account designated by the Xxxxxx; and (b) a
fully executed original of the Warrant. Upon the receipt of the
foregoing, on the Effective Date, the Xxxxxx shall deliver to the Corporation a
fully executed original of the Note marked "Paid in Full." Upon
receipt by the Xxxxxx of the items described under clauses (a) and (b) of this
Section 1, (x) Cadence II's obligations under the Note shall be fully satisfied
and discharged and no obligations of Cadence II under the Note shall remain or
survive, (y) consistent with the foregoing, the Xxxxxx consent to the
termination of any UCC-1 financing statements filed in connection with the Note,
and (z) the Purchase Agreement shall terminate and no obligations of
Cadence II or the Xxxxxx under the Purchase Agreement shall remain or
survive.
2. Purchase
Price Adjustment.
2.1 The
Corporation and the Xxxxxx hereby covenant and agree that the Interests Purchase
Price shall be reduced to $2,399,244.00 effective as of the Effective
Date. The Purchase Agreement is hereby amended by this Agreement
effective as of May 26, 2009 and shall be interpreted, applied and construed in
accordance herewith.
2.2 Consistent
Treatment. The Xxxxxx and the Corporation each agree that the
provisions of Section 1.1 shall be treated as an adjustment to the Interests
Purchase Price set forth in the Purchase Agreement. Such adjustment
to the Interests Purchase Price is intended to comply with the provisions of
Section 108(E)(5) of the Internal Revenue Code of 1986, as amended, and any
applicable common law principles. Each party shall, at its own cost
and expense, take all actions necessary to report the transactions reflected in
the Purchase Agreement consistent with this Agreement, which action shall
include, without limitation, the amendment of any tax returns and the execution
of any and all substitute purchase documentation if required or otherwise
appropriate.
3. Release.
3.1 The
Xxxxxx, for themselves and each of their respective affiliates, employees,
partners, agents, successors, assigns, agents and representatives, hereby
voluntarily and knowingly, unconditionally and absolutely, release and forever
discharge the Corporation and The Mesa Group, Inc. and their respective
affiliates, subsidiaries, parents, officers, directors, managers, members,
shareholders, employees, partners, representatives, successors, assigns, agents
and representatives from any and all claims, complaints, contracts, liabilities,
obligations, demands, debts, damages, losses, costs, expenses, attorneys' fees,
rights of action and causes of action, of any kind whatsoever, sounding in
contract, tort or otherwise, at law or in equity, whether known or unknown,
suspected or unsuspected, arising out of or related to the Purchase Agreement,
the Note or the Forbearance Agreement (excluding the terms of this Agreement,
which shall remain in effect in accordance with its terms and shall not be
released hereby).
3.2 The
Corporation and Cadence II, for themselves and each of their respective
affiliates, employees, partners, agents, successors, assigns, agents and
representatives, hereby voluntarily and knowingly, unconditionally and
absolutely release and forever discharge the Xxxxxx and their respective
affiliates, subsidiaries, parents, officers, directors, managers, members,
shareholders, employees, partners, representatives, successors, assigns, agents
and representatives from any and all claims, complaints, contracts, liabilities,
obligations, demands, debts, damages, losses, costs, expenses, attorneys' fees,
rights of action and causes of action, of any kind whatsoever, sounding in
contract, tort or otherwise, at law or in equity, whether known or unknown,
suspected or unsuspected, arising out of or related to the Purchase Agreement,
the Note or the Forbearance Agreement (excluding the terms of this Agreement,
which shall remain in effect in accordance with its terms and shall not be
released hereby).
4. Xxxxxx'
Representations and Warranties. The Xxxxxx, jointly and
severally, represent and warrant to the Corporation, which representations and
warranties shall survive the Effective Date and delivery of this Agreement, that
as of the Effective Date:
4.1 The
Xxxxxx have full power and authority to enter into this Agreement, perform this
Agreement and consummate the transactions contemplated hereby. The
Xxxxxx have duly and validly executed and delivered this
Agreement. This Agreement constitutes the legal, valid and binding
obligation of the Xxxxxx, enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect which affect enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies.
4.2 The
compliance and fulfillment of the terms and conditions hereof will not conflict
with, or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, any contract to which the Xxxxxx are a party or by
which the Xxxxxx are otherwise bound, which conflict, breach or default would
have a material adverse affect on the Xxxxxx ability to consummate the
transactions contemplated by this Agreement or in the Note.
4.3 The
Xxxxxx have received all the information they consider necessary or appropriate
for deciding whether to enter into this Agreement and consummate the transaction
contemplated hereby. The Xxxxxx have had an opportunity to ask
questions and receive answers from the Corporation regarding and the business,
properties, prospects and financial condition of the Corporation. The
Xxxxxx have independently evaluated the merits of their decision to acquire the
Warrant and the Warrant Shares pursuant to this Agreement, and the Xxxxxx
confirm that they have not relied on the advice of any other person in making
such decision. The Xxxxxx have not relied on the business or legal
advice of the Corporation, The Mesa Group, Inc. or any of their respective
agents, counsel or affiliates in making their investment decision hereunder, and
confirm that none of such persons has made any representations or warranties to
the Xxxxxx in connection with the transactions contemplated by this
Agreement
4.4 The
Xxxxxx are acquiring the Warrant as principal for their own account and not with
a current view to or for distributing or reselling the Warrant or the shares of
Common Stock underlying the Warrant (the "Warrant
Shares"). The Xxxxxx are acquiring the Warrant in the ordinary
course of their business and do not have any agreement or understanding,
directly or indirectly, with any person to distribute the Warrant or any of the
Warrant Shares.
4.5 At the
time the Xxxxxx were offered the Warrant, they were, and as of the date hereof,
they are, "accredited investors" as defined in Rule 501 of the Securities Act of
1933, as amended (the "Securities
Act"). The Xxxxxx are not required to be registered
broker-dealers under Section 15 of the Securities Exchange Act of 1934, as
amended (the "Exchange
Act"), and are not affiliated with any broker-dealer registered under
Section 15 of the Exchange Act.
4.6 The
Xxxxxx have such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Warrant and the Warrant Shares, and have so
evaluated the merits and risks of such investment. The Xxxxxx are
able to bear the economic risk of an investment in the Warrant and the Warrant
Shares and, at the present time, are able to afford a complete loss of such
investment.
4.7 The
Xxxxxx are not acquiring the Warrant as a result of any advertisement, article,
notice or other communication regarding the Warrant or the Warrant Shares
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
4.8 The
Xxxxxx acknowledge that the Warrant and the Warrant Shares are "restricted
securities" as defined in Rule 144 under the Securities Act.
4.9 The
Xxxxxx have exclusive legal and valid title to the Note, free and clear of any
mortgage, lien, charge, restriction, pledge, security interest, option,
preemptive right, right of first refusal, claim, right of any third party or
encumbrance. The Xxxxxx have not sold, assigned, conveyed, granted or
otherwise transferred to any other person or entity the Note or any claims,
demands, actions, or causes of action encompassed by the matters released or
discharged.
4.10 The
Xxxxxx have not used any broker or finder in connection with the transactions
contemplated hereby, and the Xxxxxx shall have no liability as a result of or in
connection with any brokerage or finder's fee or other commissions of any person
or entity retained by the Xxxxxx in connection with the transactions
contemplated by this Agreement.
4.11 This
Agreement is executed voluntarily and with the full knowledge of the
consequences and implications of the obligations contained herein. The Xxxxxx
have had the opportunity to be represented by counsel of their choice throughout
the negotiations which preceded the execution of this Agreement, and in
connection with the preparation and execution of this Agreement, and that they
have carefully and thoroughly reviewed this Agreement in its
entirety.
5. The
Corporation's Representations and Warranties. The Corporation
represents and warrants to the Xxxxxx, which representations and warranties
shall survive the execution and delivery of this Agreement, that as of the
Effective Date:
5.1 The
Corporation is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Nevada and has all requisite corporate
power and authority to carry on its business as now conducted.
5.2 The
Corporation has all requisite legal and corporate power and authority to enter
into this Agreement and consummate the transactions contemplated hereby. This
Agreement is a valid and binding obligation of the Corporation, enforceable in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, moratorium, and other laws of general application affecting the
enforcement of creditors' rights and general principles of equity.
5.3 The
compliance with or fulfillment of the terms and conditions hereof will not
conflict with, or result in a breach of, the terms, conditions or provisions of,
or constitute a default under, any contract to which the Corporation is a party
or by which the Corporation is otherwise bound, or the Corporation's articles of
incorporation and bylaws, which conflict, breach or default would have a
material adverse affect on the Corporation's ability to consummate the
transaction contemplated by this Agreement.
5.4 The
Corporation has not used any broker or finder in connection with the
transactions contemplated hereby, and the Corporation shall have no liability as
a result of or in connection with any brokerage or finder's fee or other
commission of any person or entity retained by the Corporation in connection
with the transactions contemplated by this Agreement.
5.5 This
Agreement is executed voluntarily and with the full knowledge of the
consequences and implication of the obligations contained herein. The
Corporation has had the opportunity to be represented by counsel of their choice
through the negotiations which preceded the execution of this Agreement, and in
connection with the preparation and execution of this Agreement, and that they
have carefully and thoroughly reviewed this Agreement in its
entirety.
5.6 The
Warrant and shares of Common Stock issuable upon exercise thereof, when issued,
sold, and delivered in accordance with the terms of this Agreement or the
Warrant, as the case may be, for the consideration expressed therein, will be
duly and validly issued, and, based in part upon the representations of the
Xxxxxx in this Agreement, will be issued in compliance with all applicable
federal and state securities laws. In addition, the Corporation
agrees to take all action within its reasonable control following the Closing in
order to carry out the purpose and intent of this Agreement, including without
limitation, ensuring that the securities into which the Warrant may be
converted, when issued, are fully paid and non-assessable and issued in
compliance with all applicable federal and state securities laws.
6. Miscellaneous.
6.1 Recitals;
Exhibits. All recitals herein and exhibits attached hereto are
hereby incorporated by reference as though set out in full herein.
6.2 Amendments in
Writing. This Agreement shall not be amended, altered,
changed, modified, supplemented or rescinded in any manner except by written
contract executed by the Corporation and the Xxxxxx.
6.3 Severability. In
the event that any part of this Agreement shall be held to be invalid or
unenforceable by a court of competent jurisdiction, such provision shall be
reformed and enforced to the maximum extent permitted by law. If such
provision cannot be reformed, it shall be severed from this Agreement and the
remaining portions of this Agreement shall be valid and
enforceable.
6.4 Construction. This
Agreement shall not be construed more strictly against one party hereto than
against any other party hereto merely by virtue of the fact that it may have
been prepared by counsel for one of the parties.
6.5 Captions;
Headings. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit, amplify
or modify the terms and provisions hereof.
6.6 Time of the
Essence. It is expressly agreed by the parties hereto that
time is of the essence with respect to all matters contemplated by this
Agreement.
6.7 No Personal Liability of
Officers or Directors. The Xxxxxx acknowledge that this
Agreement is entered into by the Corporation, which is a corporation, and the
Xxxxxx agree that none of the Corporation's parent and subsidiary entities,
officers, directors, shareholders, members, managers, partners, affiliates,
employees, agents and representatives and each of their successors and assigns
shall have any personal liability under this Agreement or any document executed
in connection with the transactions contemplated by this Agreement.
6.8 Further
Assurances. The Corporation and the Xxxxxx shall each execute
and deliver to any other party, all further documents or instruments reasonably
requested by either of them in order to effect the intent of this Agreement and
to obtain the full benefits of this Agreement.
6.9 Notices. All
notices, consents, reports, demands, requests and other communications required
or permitted hereunder ("Notices") shall be in
writing, and shall be (a) personally delivered with a written receipt of
delivery; (b) sent by a nationally recognized overnight delivery service
requiring an written acknowledgement of receipt or providing a certification of
delivery or attempted delivery; (c) sent by certified or registered mail, return
receipt requested; or (d) sent by confirmed facsimile transmission, with an
original copy thereof transmitted to the recipient by one of the means described
in subsections (a) through (c) promptly thereafter. All Notices shall
be deemed effective when actually delivered as document in a delivery receipt;
provided, however, that if the
Notice was sent by overnight courier or mail as aforesaid and is affirmatively
refused or cannot be delivered during customary business hours by reason of the
absence of a signatory to acknowledge receipt, or by reason of a change of
address with respect to which the addressor did not have either knowledge or
written notice delivered in accordance with this section, then the first
attempted delivery shall be deemed to constitute delivery; and provided, further, however that
notices given by facsimile, when received by facsimile as the case may
be. Each party shall be entitled to change its address for Notices
from time to time by delivering to the other party Notice thereof in the manner
herein provided for the delivery of Notices. All Notices shall be
sent to the addressee at its address set forth following its name
below:
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If
to the Corporation:
0000
Xxxxx Xxxxxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxxx,
XX 00000
Attn: Xxxx
X. XxXxxxxx, Chief Executive Officer
Facsimile:
____________
with
a copy to:
Xxxxxxxxxx
Hyatt Xxxxxx Xxxxxxx, LLP
000
00xx
Xxxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Attn: Xxxx
X. Xxxxx, Esq.
Facsimile:
____________
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If
to the Xxxxxx:
Xxx
and Xxx Xxxxx
c/x
Xxxxxxx Coie LLP
1899
Xxxxxxx
Xxxxxx,
XX 00000
Attn:
Xxxx Will, Esq.
Facsimile:
303.291.2400
with
a copy to:
Xxxxxxx
Coie LLP
0000
Xxxxxxx
Xxxxxx,
XX 00000
Attn:
Xxxx Will, Esq.
Facsimile:
303.291.2400
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6.10 Modifications; Successors
and Assigns; Third-Party Beneficiaries. This Agreement shall be binding
upon and shall inure to the successors and assigns of the parties
hereto. Any person or entity who is not named as a party to this
Agreement shall have the rights of an intended third-party beneficiary with
respect to the provisions of the releases in its or his favor. Except
as set forth in the immediately preceding sentence, not other party shall be
deemed a third-party beneficiary of any provision of this Agreement or shall
otherwise be entitled to enforce any provision hereof.
6.11 Attorneys'
Fees. In the event that an action is instituted to enforce
this Agreement, the prevailing party shall recover reasonable costs and
attorneys' fees incurred in bringing or defending the action.
6.12 Governing
Law. This Agreement shall be governed by and enforced in
accordance with the laws of the State of Colorado without reference to conflicts
of law principles.
6.13 Execution in
Counterparts. This Agreement may be executed in facsimile and
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which when taken together shall constitute but one and
the same instrument.
6.14 Entire
Agreement. This Agreement represents the final agreement among
the Corporation and the Xxxxxx with respect to the subject matter hereof and may
not be contradicted, modified or supplemented in any way by evidence of any
prior or contemporaneous written or oral agreements of the Corporation and the
Xxxxxx.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date first written above.
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CORPORATION
VERECLOUD,
INC., a Nevada corporation
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By:
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/s/ Xxxx X. XxXxxxxx | |
| Name: | Xxxx X. XxXxxxxx | ||
| Title: | Chief Executive Officer | ||
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XXXXXX
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/s/ Xxx Xxxxx | ||
| Xxx Xxxxx | |||
| /s/ Xxx Xxxxx | |||
| Xxx Xxxxx | |||
[Signature
Page to Note Purchase Agreement]
Exhibit
A
Form
of Common Stock Purchase Warrant
(see
attached)
The
securities represented by this Warrant and issuable upon exercise hereof have
not been registered under the Securities Act of 1933, as amended (the "Act"), or under the
provisions of any applicable state securities laws, but have been acquired by
the registered holder hereof for purposes of investment and in reliance on
statutory exemptions under the Act and under any applicable state securities
laws. These securities and the securities issued upon exercise hereof
may not be sold, pledged, transferred or assigned, nor may this Warrant be
exercised, except in a transaction which is exempt under the provisions of both
the Act and applicable state securities laws or pursuant to an effective
registration statement.
COMMON STOCK PURCHASE
WARRANT
| Issuance Date: June __, 2010 | Certificate No. ___ |
For value
received, VERECLOUD, INC., a Nevada corporation (the "Company"), hereby
grants to XXX AND XXX XXXXX, individual residents of the State of Colorado (the
"Registered
Holder"), the right to purchase from the Company a total of 1,250,000
Warrant Shares, at a price per share equal to the Exercise
Price. Certain capitalized terms used herein are defined in Secion
1
hereof.
Section 1. Definitions. The
following terms shall have the meanings set forth below:
"Act" shall mean the
Securities Act of 1933, as amended.
"Aggregate Exercise
Price" shall have the meaning set forth in
Section 2(b)(i)(C)
hereof.
"Business Day" shall
mean any day except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of Colorado are
authorized or required by law or other governmental action to
close.
"Change Event" shall
have the meaning set forth in
Section 4(a)
hereof.
“Closing Price” means,
for any date, the price determined by the first of the following clauses that
applies: (a) if the Common Stock is then listed or quoted on an
Eligible Market or any other national securities exchange, the closing price per
share of the Common Stock for such date (or the nearest preceding date) on the
primary Eligible Market or exchange on which the Common Stock is then listed or
quoted; (b) if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the closing bid price per share of the Common Stock for such date (or the
nearest preceding date) so quoted; or (c) if prices for the Common Stock are
then reported in the “Pink Sheets” published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent closing bid price per share of the Common
Stock so reported.
"Common Stock" shall
mean the common stock of the Company, $.001 par value per share.
"Company" shall have
the meaning set forth in the preamble.
"Eligible Market"
means any of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital
Market.
"Exercise Date" shall
have the meaning set forth in
Section 2(b)(i)
hereof.
"Exercise Notice"
shall have the meaning set forth in
Section 2(b)(i)
hereof.
"Exercise Price" shall
have the meaning set forth in
Section 4
hereof.
"Expiration Date"
shall mean this fifth anniversary of the Issuance Date, which shall be the date
upon which the rights evidenced by this Warrant shall terminate, as described in
Section 2(a)
hereof.
"Initial Exercise
Price" shall mean $.01 per Warrant Share.
"Issuance Date" shall
mean the date first listed above, which shall be the date upon which this
Warrant may be first exercised.
"Person" shall mean an
individual, limited liability company, partnership, joint venture, corporation,
trust, unincorporated organization, government or any governmental department or
agency.
"Registered Holder"
shall have the meaning set forth in the preamble.
"Trading Day" means
(a) any day on which the Common Stock is listed or quoted and traded on its
primary Trading Market, or (b) if trading ceases to occur on any Trading Market
(or any successor thereto), any Business Day.
"Trading Market" means
the Over the Counter Bulletin Board or any other Eligible Market, or any
national securities exchange, market or trading or quotation facility on which
the Common Stock is then listed or quoted.
"Warrant" shall mean
the right to purchase a number of Warrant Shares pursuant to the terms
hereof.
"Warrant Shares" shall
mean the shares of Common Stock issuable upon the proper exercise of this
Warrant.
2
Section 2. Exercise of
Warrant.
(a) erms of Warrants; Exercise
Period. Subject to the terms of this Warrant and commencing at
any time on the Issuance Date and expiring on the Expiration Date, the
Registered Holder shall have the right to exercise the Warrants, in whole or in
part, and receive from the Company a number of Warrant Shares as indicated in
the Exercise Notice. At 11:59 p.m. Mountain Time on the Expiration
Date, this Warrant shall become void and all rights of the Registered Holder
hereunder shall terminate.
(b) xercise
Procedure.
(i) his
Warrant may be exercised, in whole or in part, only by the Registered Holder, or
its permitted assigns pursuant to
Section 6 hereof, and
shall be deemed to have been exercised as of the date (the "Exercise Date") on
which a written notice (the "Exercise Notice")
indicating such exercise is delivered by the Registered Holder, or its permitted
assigns pursuant to
Section 6 hereof, to
the Company. On the Exercise Date, the Registered Holder, or its
permitted assigns pursuant to
Section 6 hereof,
shall deliver to the Company:
(A)
a
completed and executed Exercise Notice, substantially in the form of Exhibit A hereto,
specifying the number of Warrant Shares to be purchased;
(B)
This
Warrant; and
(C) Payment to
the Company of an amount equal to the product of the Exercise Price multiplied
by the number of Warrant Shares being purchased upon such exercise (the "Aggregate Exercise
Price"), by cashier’s check payable to the Company or wire transfer of
immediately available funds to an account designated by the Company; provided,
however, that the Registered Holder may satisfy its obligation to pay the
Aggregate Exercise Price through a “cashless exercise,” in which event the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:
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X =
Y [(A-B)/A]
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where:
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X =
the number Warrant Shares to be issued to the Registered
Holder.
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Y =
the number of Warrant Shares with respect to which this Warrant is being
exercised.
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A =
the average of the Closing Prices for the twenty Trading Days immediately
prior to (but not including) the Exercise Date.
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B =
the Exercise Price.
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3
For
purposes of Rule 144 promulgated under the Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction
shall be deemed to have been acquired by the Registered Holder, and the holding
period for such shares shall be deemed to have commenced, on the date this
Warrant was originally issued.
(ii) Upon
compliance by the Registered Holder with the procedures described in
(i) above, within
five Business Days, the Company shall provide evidence that the Warrant Shares
have been entered into the books of the Company's transfer agent, or if the
Company's Common Stock is certificated, issue or cause to be issued and cause to
be delivered to or upon the written order of the Registered Holder and in such
name or names as the Registered Holder may designate, a certificate for the
Warrant Shares issuable upon such exercise, free of restrictive legends unless a
registration statement covering the resale of the Warrant Shares and naming the
Registered Holder as a selling stockholder thereunder is not then effective and
the Warrant Shares are not freely transferable without volume restrictions
pursuant to Rule 144 under the Act. Following such exercise, to the
extent any of the purchase rights represented hereby have not expired and remain
unexercised, the Company shall issue and deliver to the Registered Holder, at
its address then listed on the books of the Company, a new warrant representing
such remaining unexpired, unexercised purchase rights. The terms of
such new warrant shall otherwise be identical to this Warrant.
(iii) The
Warrant Shares issuable upon the exercise of this Warrant shall be deemed to
have been issued to the Registered Holder on the Exercise Date and the
Registered Holder shall be deemed for all purposes to be the record holder of
such Warrant Shares as of the Exercise Date.
(iv) The
Company shall at all times reserve and keep available out of its authorized but
unissued capital stock, solely for the purpose of issuance upon the exercise of
this Warrant, the number of Warrant Shares issuable upon the exercise of this
Warrant in its entirety. The Company covenants that all Warrant
Shares shall, when issued and upon the payment of the Exercise Price therefor,
be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges.
(v) The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Registered Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Registered Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Registered Holder or any other
Person, and irrespective of any other circumstance which might otherwise limit
such obligation of the Company to the Registered Holder in connection with the
issuance of Warrant Shares. Nothing herein shall limit a Registered
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
4
Section 3. Charges, Taxes and
Expenses. Issuance and delivery of the Warrant
Shares upon exercise of this Warrant shall be made without charge to the
Registered Holder for any issue or transfer tax, withholding tax, transfer agent
fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Registered Holder or an Affiliate thereof. The Registered Holder
shall be responsible for all other tax liability that may arise as a result of
holding or transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
Section 4. Adjustment of Exercise Price and Number of
Warrant Shares. The Initial Exercise Price shall be
subject to adjustment from time to time as provided in this
Section 4 hereof
(such price or such price as last adjusted pursuant to the terms hereof, as the
case may be, the "Exercise Price"), and
the number of Warrant Shares obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time as provided in this
Section 4
hereof.
(a) Reorganization,
Reclassification, Consolidation, Merger or Sale. In the case
of any reclassification, capital reorganization, consolidation, merger, sale of
all or substantially all of the assets of the Company to another Person or any
other change in the Common Stock of the Company, other than as a result of a
subdivision, combination, or stock dividend provided for in
Section 4
(b) hereof (any of
which, a "Change
Event"), then lawful provision shall be made, and duly executed documents
evidencing the same from the Company or its successor shall be delivered to the
Registered Holder, such that the Registered Holder shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant (subject to the adjustment of
the Exercise Price as provided in this
Section 4), the kind
and amount of shares of stock or other securities and property receivable in
connection with such Change Event by a holder of the same number of shares of
Common Stock as were purchasable by the Registered Holder immediately prior to
such Change Event. Appropriate adjustments shall also be made to the
Exercise Price, but the Aggregate Exercise Price shall remain the
same.
(b) Subdivisions, Combinations
and Other Issuances. If the Company shall at any
time prior to the expiration of this Warrant (i) subdivide its Common Stock, by
stock split or otherwise, or combine its Common Stock, or (ii) issue additional
shares of its Common Stock or other equity securities as a dividend with respect
to any shares of its Common Stock, the number of Warrant Units issuable upon the
exercise of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to
the Exercise Price, but the Aggregate Exercise Price shall remain the
same. Any adjustment under this
Section 4
(b) shall become
effective at the close of business on the effective date of such subdivision or
combination, or as of the record date of such dividend, or in the event that no
record date is fixed, upon the making of such dividend.
5
(c) Issuance of New
Warrant. Upon the occurrence of any of the events listed in
this
Section 4 that
results in an adjustment of the type, number or Exercise Price of the securities
underlying this Warrant, the Registered Holder shall have the right to receive a
new warrant reflecting such adjustment upon the tender by the Registered Holder
of this Warrant in exchange therefor. The terms of such new warrant
shall otherwise be identical to this Warrant.
Section 5. No Voting
Rights; Limitations of Liability. The Registered Holder shall
not be entitled to any rights with respect to the Warrant Shares, including,
without limitation, voting rights or rights to receive dividends or
other distributions in respect thereof, prior to the issuance of such Warrant
Shares to the Registered Holder pursuant to the terms hereof. In the
absence of the exercise of this Warrant by the Registered Holder, no provision
hereof shall give rise to any liability of the Registered Holder as a
stockholder of the Company or for the Exercise Price of the Warrant Shares
issuable pursuant hereto.
Section 6. Transfer. Subject
to compliance with applicable securities laws and the terms of this
Section 6, this
Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the Registered Holder, upon surrender of this Warrant with a properly
executed Assignment of Warrant (in the form of Exhibit B
hereto) at the principal office of the Company.
Section 7. Replacement. Upon
receipt of evidence reasonably satisfactory to the Company of the ownership and
the loss, theft, destruction or mutilation of this Warrant or any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company, or, in the
case of any such mutilation upon surrender of this Warrant or such certificate,
the Company shall (at the expense of the Registered Holder) execute and deliver
in lieu of this Warrant or such certificate a new warrant or certificate of like
kind representing the same rights represented by such lost, stolen, destroyed or
mutilated Warrant or certificate and dated the date of such lost, stolen,
destroyed or mutilated Warrant or certificate.
Section 8. Warrant
Register. The Company shall maintain, at its principal
executive office, books for the registration of this Warrant. The
Company shall deem and treat the Registered Holder as the absolute owner hereof
for all purposes and shall disregard entirely any assertion or notice to the
contrary.
Section 9. Fractional Warrant
Shares. The Company may, but shall not be required to, issue a
fractional Warrant Share upon the exercise hereof. In the event the
Company elects not to issue such a fractional Warrant Share, any fractional
Warrant Share resulting from the exercise hereof shall be rounded to the nearest
whole Warrant Share and any exercise that would result in the issuance one-half
of one Warrant Share shall be rounded up to the next whole Warrant
Share.
Section 10. Amendments. The
terms of this Warrant may be amended by the Company, without the consent of the
Registered Holder, to cure any ambiguity, or to cure, correct or supplement any
defective or inconsistent provision. All other amendments to this Warrant shall
require the written consent of the Company and the Registered
Holder.
6
Section 11. Notices. All
notices, requests, deliveries, and other communications provided for herein
shall be in writing and shall be effective upon the delivery thereof in person,
by facsimile, or by certified or registered mail, return receipt requested,
postage prepaid and addressed as follows:
If to the Company,
to:
0000 X.
Xxxxxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxxx,
Xxxxxxxx 00000
Fax.: (___)
_____________
Attn:
Xxxx Xxxxxxx
with a copy
to:
Xxxxxxxxxx
Xxxxx Xxxxxx Xxxxxxx, LLP
000
Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
Xxxxxxxx 00000
Fax:
(000) 000-0000
Attn:
Xxxx X. Xxxxx
If to the Registered Holder,
to:
Xxx and
Xxx Xxxxx
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxxx 00000
Fax.: (___)
_____________
with a copy
to:
Xxxxxxx
Coie LLP
0000
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxx 00000
Fax:
(___) ______________
Attn:
Xxxx Will, Esq.
or, in
any case, at such other address or addresses as shall have been furnished in
writing to the Company or Registered Holder, as applicable, in accordance with
the provisions of this paragraph.
Section 12. Descriptive Headings; Governing
Law.
(a) The
descriptive headings of the several Sections of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant.
(b) The
construction, validity, enforcement and interpretation of the terms of this
Warrant shall be governed by, and construed in accordance with, the laws of the
State of Colorado, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Colorado or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Colorado.
7
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed as of the
Issuance Date listed above.
|
COMPANY:
|
|||
|
|
By:
|
||
| Name: | Xxxx X. XxXxxxxx | ||
| Title: | Chief Executive Officer | ||
[Signature
Page to Common Stock Purchase Warrant]
EXHIBIT A TO COMMON STOCK
PURCHASE WARRANT
EXERCISE
NOTICE
Dated:
__________, 20__
The
undersigned, pursuant to the terms of the attached Warrant (Certificate No.
W-__) and as Registered Holder thereof, hereby exercises its right thereunder to
purchase ___________ Warrant Shares at the Exercise
Price. Capitalized terms used herein shall have the respective
meanings set forth in the Warrant.
Payment of the Aggregate
Exercise Price (check appropriate boxes):
|
|
The
Registered Holder intends that payment of the Exercise Price shall be made
as (check one):
|
|
|
[ ]
|
“Cash
Exercise” under Section 2
|
|
|
[ ]
|
“Cashless
Exercise” under Section 2
|
|
|
If
the Registered Holder has elected a Cash Exercise (check
one):
|
|
|
[ ]
|
Payment
in the sum of $__________ is enclosed, in accordance with the terms of the
Warrant; or
|
|
|
[ ]
|
Payment
in the sum of $__________ has been wire transferred to the Company,
Account No. _____________, in accordance with the terms of the
Warrant.
|
| Signature: | [DRAFT – DO NOT SIGN] | ||
|
|
Address:
|
||
EXHIBIT B COMMON STOCK
PURCHASE WARRANT
ASSIGNMENT
OF WARRANT
FOR VALUE
RECEIVED, _____________________________ hereby sells, assigns and transfers all
of the rights of the undersigned under the attached Warrant (Certificate No.
W-__) with respect to the number of the Warrant Shares covered thereby set forth
below, unto:
| Names of Assignee | Address | No. of Shares |
| Signature: | [DRAFT – DO NOT SIGN] | ||
|
|
Witness
|
||
The
Assignee agrees to be bound by the terms of the Warrant.
| Signature: | [DRAFT – DO NOT SIGN] | ||
|
|
Witness
|
||
