FORM OF WARRANT
Exhibit 10.21
FORM OF WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND ARE ‘RESTRICTED SECURITIES’ AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THIS WARRANT MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933
ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, THE AVAILABILITY OF WHICH IS
TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY THROUGH REASONABLE MEANS AS DETERMINED BY THE
COMPANY, INCLUDING AN OPINION OF SELLER’S COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY.
WARRANT
| Warrant to Purchase Shares of Common Stock Warrant No. ___ |
April ___, 2008 Number of Shares: 89,284 (Subject to adjustment) |
This certifies that pursuant to the terms of this Common Stock Warrant (this “Warrant”), for
value received, Silicon Mountain Holdings, Inc., a Colorado corporation (the “Company”), hereby
grants to MemoryTen, Inc. (the “Holder”), or its registered assigns, the right to purchase from the
Company a number of shares of the Company’s common stock, $.001 par value per share, (“Common
Stock”) at a purchase price of $.01 per share (the “Exercise Price”) pursuant to that certain
Release and Settlement Agreement, dated April ___, 2008 (the “Settlement Agreement”). All
capitalized terms not defined herein shall have the meanings given to them in the Subscription
Agreement.
1. Exercise of Warrant.
1.1 Exercise Period.
(a) Except as restricted as set forth in Section 1.3 below, Holder may exercise this Warrant,
in whole or in part, at any time and from time to time commencing on the date hereof and prior to
5:00 p.m. (central standard time) on April ___, 2010 (the “Expiration Date”);
1.2 Procedure for Exercising Warrant.
(a) This Warrant will be deemed to have been exercised at such time as the
Company has received all of the following items (the “Exercise Date”):
(i) A completed Exercise Agreement, in substantially the form set forth
in Exhibit A hereto and as described in Section 1.4 below, executed
by the person exercising all or part of the purchase rights represented by
this Warrant (the “Purchaser”);
(ii) This Warrant;
(iii) If this Warrant is not registered in the name of the Purchaser,
an Assignment in the form set forth in Exhibit B, evidencing the
assignment of this Warrant to the Purchaser and the consent of the Company
thereto; and
(iv) A check payable to the Company in an amount equal to the product
of the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise.
(b) Certificates representing shares of Common Stock purchased upon exercise of
this Warrant will be delivered by the Company to the Purchaser within 10 days after
the Exercise Date. Unless this Warrant has expired or all of the purchase rights
represented hereby have been exercised, Company will prepare a new Warrant,
substantially identical hereto, representing the rights formerly represented by this
Warrant which have not expired or been exercised. The Company will deliver such new
Warrant to the person designated to receive it in the Exercise Agreement.
(c) The Common Stock issuable upon the exercise of this Warrant will be deemed
to have been issued to the Purchaser on the Exercise Date, and the Purchaser will be
deemed for all purposes to have become the record holder of such Common Stock on the
Exercise Date.
(d) The issuance of certificates for shares of Common Stock upon exercise of
this Warrant will be made without charge to the Holder or the Purchaser for any
issuance tax in respect thereof or any other cost incurred by the Company in
connection with such exercise and the related issuance of shares.
1.3 Net Exercise. Notwithstanding any provisions herein to the contrary, if
the fair market value of one share of the Company’s Common Stock is greater than the
Exercise Price (at the date of calculation as set forth below), in lieu of exercising this
Warrant by payment of cash, the Holder may elect (the “Conversion Right”) to receive shares
equal to the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company together with
the properly endorsed Notice of Exercise in which event the Company shall
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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 the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (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 =
|
Exercise Price (as adjusted to the date of such calculation) |
For purposes of the above calculation, the fair market value of one share of Common Stock shall be
determined based on the following:
(a) if this Warrant is exercised in connection with an initial public offering
of Common Stock, then the fair market value of one share of Common Stock shall be
the price that one share of Common Stock is offered to the public in such initial
public offering; and
(b) if the Common Stock is traded on a national securities exchange or admitted
to unlisted trading privileges on such an exchange, or is listed on the National
Market System (the “National Market System”) of the Nasdaq, the fair market value of
one share of Common Stock as of a specified day shall be the last reported sale
price of Common Stock on such exchange or on the National Market System on such date
or if no such sale is made on such day, the mean of the closing bid and asked prices
for such day on such exchange or on the National Market System. If the Common Stock
is not so listed or admitted to unlisted trading privileges, the fair market value
of one share of Common Stock as of a specified day shall be the mean of the last bid
and asked prices reported on such date by the Nasdaq or, if reports are unavailable
from Nasdaq, then by the National Quotation Bureau Incorporated. If the Common
Stock is not so listed or admitted to unlisted trading privileges and bid and ask
prices are not reported, the fair market value of one share of Common Stock as of a
specified day shall be determined in good faith by the Board of Directors of the
Company, taking into account the most recently or concurrently completed arm’s
length transaction between the Company and an unaffiliated third party the closing
of which occurs within the six months preceding or on the date of such calculation,
if any.
1.4 Exercise Agreement. The Exercise Agreement will be substantially in the
form set forth in Exhibit A hereto, except that if the shares of Common Stock are
not to be issued in the name of the Holder, the Exercise Agreement will also state the name
of the person to whom the certificates representing the shares of Common Stock are to be
issued, and if the number of shares of Common Stock to be issued does not include all the
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shares of Common Stock purchasable hereunder, it will also state the name of the person
to whom a new Warrant for the unexercised portion of the rights hereunder is to be
delivered.
1.5 Fractional Shares. The Company is not required to issue any fraction of a
share of Common Stock upon exercise of this Warrant. If the Company elects not to issue
fractional shares hereunder, the Company shall pay cash consideration in lieu of any
fractional shares that would otherwise have been issued hereunder but for the preceding
sentence.
1.6 Securities Acts Compliance. As a condition to its delivery of the
certificates representing the Common Stock, the Company may require the Purchaser to deliver
to the Company, in writing, representations regarding the Purchaser’s sophistication,
accredited investor status (as defined in Rule 501 of Regulation D promulgated by the U.S.
Securities and Exchange Commission), investment intent, acquisition for his, her or its own
account and such other matters as are reasonable and customary for purchasers of securities
in an unregistered private offering, and Company may place conspicuously upon each
certificate representing the Common Stock a legend restricting the assignment, transfer or
other disposition of the shares of Common Stock, unless such shares have been registered or
qualified under the Act and applicable blue sky laws or there has been delivered to the
Company an opinion of counsel, satisfactory to the Company, to the effect that such
registration and qualification is not required.
2. Adjustment in Shares of Common Stock and Exercise Price. The number of shares of
Common Stock purchasable upon the exercise of this Warrant and the Exercise Price per share are
subject to adjustment from time to time as provided in this Section 2; provided,
however, that the Exercise Price per share will not be less than $.001 per share.
2.1 Subdivision or Combination of Shares. If the Company at any time
subdivides its outstanding shares of Common Stock into a greater number of shares (including
a stock split effected as a stock dividend) or combines its outstanding shares of Common
Stock into a lesser number of shares, the number of shares issuable upon exercise of this
Warrant will be adjusted to such number as is obtained by multiplying the number of shares
issuable upon exercise of this Warrant immediately prior to such subdivision or combination
by a fraction, the numerator of which is the aggregate number of shares of Common Stock
outstanding immediately after giving effect to such subdivision or combination and the
denominator of which is the aggregate number of shares of Common Stock outstanding
immediately prior to such subdivision or combination, and the Exercise Price will be
correspondingly adjusted to such amount as will, when multiplied by the number of shares
issuable upon full exercise of this Warrant (as increased or decreased to reflect each
subdivision or combination of outstanding shares of Common Stock, as the case may be), equal
the product of the Exercise Price in effect immediately prior to such subdivision or
combination multiplied by the number of shares issuable upon exercise of this Warrant
immediately prior to such subdivision or combination.
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2.2 Effect of Sale, Merger or Consolidation. If any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or merger of the
Company with another corporation, or sale of all or substantially all of the Company’s
assets to another corporation, is effected after the date hereof in such a way that holders
of Common Stock will be entitled to receive stock, securities or assets with respect to or
in exchange for Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision will be made whereby the Holder
will thereafter have the right to purchase and receive, upon the basis and the terms and
conditions specified in this Warrant and in lieu of the shares immediately theretofore
purchasable and receivable upon the exercise of this Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of Common Stock equal to the number of shares of Common Stock
immediately theretofore purchasable and receivable upon the exercise of this Warrant, and in
any such case appropriate provision will be made with respect to the rights and interests of
the Holder to the end that the provisions of this Warrant (including, without limitation,
provisions for adjustments of the Exercise Price and of the number of shares issuable upon
the exercise of this Warrant) will thereafter be applicable, as nearly as may be possible,
in relation to any shares of stock, securities or assets thereafter deliverable upon the
exercise of this Warrant. Except for the transactions contemplated by the Stock Exchange
Agreement (as described below), the Company will not effect any such consolidation, merger
or sale unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets assumes, by written instrument executed and delivered to
the Holder at its last address appearing on the books of the Company, the obligation to
deliver to the Holder such shares of stock, securities or assets as, in accordance with the
foregoing sentence, the Holder may be entitled to purchase.
2.3
[Intentionally Omitted.]
2.4 [Intentionally Omitted.]
2.5 [Intentionally Omitted.]
2.6 Warrants Not Callable. The Warrants are not callable.
2.7 Notice to Holder of Adjustment. Whenever the number of shares purchasable
upon exercise of this Warrant or the Exercise Price is adjusted as herein provided, the
Company will cause to be mailed to the Holder notice setting forth the adjusted number of
shares purchasable upon the exercise of the Warrant and the adjusted Exercise Price and
showing in reasonable detail the computation of the adjustment and the facts upon which such
adjustment is based.
3. Prior Notice as to Certain Events. In the event the Company pays any dividend
payable in cash or stock upon its Common Stock or makes any distribution to the holders of its
Common Stock, then the Company will give prior written notice, by first class mail, postage
prepaid, addressed to the Holder at the address of such holder as shown on the books of the
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Company, of the date on which the books of the Company will close or a record taken for such
dividend or distribution. Such notice will also specify the date as of which the holders of the
Common Stock of record will participate in said dividend or distribution. Such written notice will
be given not less than 20 days prior to the record date in respect thereto. Notwithstanding the
rights established in Section 3, the Warrants are subject to restrictions on exercise as set forth
in Section 1.3.
4. Reservation of Common Stock. Not later than the date hereof, the Company will have
authorized Common Stock in an amount sufficient to permit the exercise in full of this Warrant. At
all times from and after such date, the Company will reserve and keep available for issuance upon
the exercise of Warrants such number of its authorized but unissued shares of Common Stock as will
be sufficient to permit such exercise. Upon issuance, in accordance with the terms of this
Warrant, such shares of Common Stock will be validly issued, fully paid and nonassessable.
5. No Voting Rights; Limitations of Liability. This Warrant does not confer upon the
holder hereof any voting rights or other rights as a stockholder of the Company, either at law or
equity. The rights of the Holder are limited to those expressed herein and the Holder by
acceptance hereof, consents to and agrees to be bound by and to comply with all the provisions of
this Warrant. No provision of this Warrant, in the absence of affirmative action by the Holder to
purchase Common Stock, and no enumeration in this Warrant of the rights or privileges of the
Holder, will give rise to any liability of such Holder for the Exercise Price of Common Stock
purchasable by exercise hereof or as a stockholder of Company.
6. Restrictions on Transfer of Warrant.
(a) This Warrant and the Holder’s rights hereunder may be transferred, assigned
or subjected to a pledge or security interest without the prior written consent of
the Company; provided that any transfer or assignment hererof shall be effected by
the surrender of this Warrant with a properly executed Assignment (in the form of
Exhibit B hereto) at the principal office of the Company. If the Company
determines that the proposed assignment is permitted pursuant to the requirements of
applicable securities law, the Company will register the assignment of this Warrant
in accordance with the information contained in the Assignment and will, without
charge, execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees named in such assignment instrument and this Warrant will promptly be
cancelled. In connection with such an assignment the Company may require as
conditions to the transfer of this Warrant or any portion thereof that (i) the
Holder deliver to the Company an opinion of counsel, reasonably satisfactory in form
and substance to the Company’s counsel, to the effect that the proposed transfer
will not be in violation of the Act or of any applicable state law and that (ii) the
proposed transferee deliver to the Company his, her or its written agreement to
accept and be bound by all of the terms and conditions of this Warrant, including
compliance with Section 1.6 of this Warrant; provided that the Company hereby
consents to the assignment of all or any portion of this warrant to the Company’s
employees, advisors and consultants without such an opinion of counsel. The date
the
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Company initially issues this Warrant will be deemed to be the “Date of
Issuance” of this Warrant regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by this
Warrant are issued.
(b) The Holder acknowledges that this Warrant has not been registered under the
Act, and, except in the limited instance described in Section 6(a) above, agrees not
to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this
Warrant or any Common Stock issued upon its exercise in the absence of (i) an
effective registration statement as to this Warrant or such Common Stock under the
Act, or (ii) an opinion of counsel for Company to the effect that such registration
is not, under the circumstances, required.
7. Miscellaneous.
7.1 Waiver. No delay or failure of the Holder in exercising any right, power,
privilege or remedy under this Warrant will affect such right, power, privilege or remedy or
be deemed to be a waiver of the same or any part thereof, nor will any single or partial
exercise thereof or any failure to exercise the same in any instance preclude any further or
future exercise thereof, or the exercise of any other right, power, privilege or remedy.
7.2 Notices. All notices, requests and consents hereunder must be in writing.
Notices, requests and consents to the Company will be effectively given and delivered (i)
upon personal delivery, or delivery via overnight courier or (ii) upon the third business
day after deposit in the United States mail, by certified or registered mail, postage
prepaid and addressed as follows to the Company at its offices at 0000 Xxxxxx Xxxxxx,
Xxxxxxx, XX 00000. Notices, requests, and consents to the Holder will be effectively given
and delivered when sent by facsimile or mailed by first class mail, postage prepaid, or sent
by overnight courier, to the Holder at the facsimile number or address of the Holder
appearing on the books and records of the Company. Either party by notice to the other may
from time to time change the facsimile number or address for any such notice, request, or
consent.
7.3 Governing Law; Venue. This Warrant and all rights and obligations
hereunder, including matters of construction, validity, and performance, will be governed by
and construed and interpreted in accordance with the laws of the State of Colorado, without
regard to the choice or conflicts of laws rules of such state. The parties agree that venue
for any suit, action, proceeding or litigation arising out of or in relation to this
Agreement will be in any federal or state court in the State of Colorado having subject
matter jurisdiction.
7.4 Successors. This Warrant will inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
7.5 Headings and Exhibits. The headings used in this Warrant are for
convenience only and will not constitute a part of this Warrant. All of the exhibits
attached hereto are incorporated herein and made a part of this Warrant by reference
thereto.
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[Signature Page Follows]
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IN WITNESS WHEREOF, this Warrant has been executed and delivered by a duly authorized
representative of the Company on the day and year first above written.
| SILICON MOUNTAIN HOLDINGS, INC. |
||||
| By: | ||||
| Xxxxxxx (Tré) Xxxxx, III | ||||
| President and Chief Executive Officer | ||||
EXHIBIT A
Exercise Agreement
| To: Silicon Mountain Holdings, Inc. | Dated: |
The undersigned, pursuant to the provisions set forth in the within Warrant, hereby agrees to
subscribe for and purchase ___shares of the Common Stock covered by such
Warrant and makes payment herewith in full for such Common Stock at the price per share provided by
such Warrant.
The undersigned requests that a certificate for the shares of Common Stock be issued as
follows:
| Name: | ||||||
| Address: | ||||||
and, if said number of shares is not all the shares of Common Stock purchasable hereunder, that a
new Warrant for the balance of the remaining shares of Common Stock purchasable under the within
Warrant be registered in the name of, and delivered to, the undersigned at the address stated
below:
| Name: | ||||||
| Address: | ||||||
Dated: |
||||||||
| HOLDER: | ||||||||
| Signature: | ||||||||
EXHIBIT B
Assignment
To be executed by the registered Holder to request a permitted transfer of the attached
Warrant.
FOR VALUE RECEIVED |
||
| (“Assignor”) | ||
hereby sells, assigns and transfers unto |
||
| (“Assignee”) | ||
(Name) |
||
(Address) |
||
the right to purchase shares of Common Stock of Silicon Mountain Holdings, Inc. evidenced by the
attached Warrant, together with all right, title and interest therein, and does irrevocably
constitute and appoint ___attorney to transfer the said right on the books
of said corporation with full power of substitution in the premises.
Date:
|
Assignor: | |||||
| By | ||||||
| Its | ||||||
| Signature: | ||||||
| APPROVED: | SILICON MOUNTAIN HOLDINGS, INC. | |||||
Date: |
||||||
| By | ||||||
| Its | ||||||
| Signature | ||||||
