EXHIBIT 10.30
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
To Purchase __________ Shares of Common Stock of
SONOMA COLLEGE, INC.
THIS COMMON STOCK PURCHASE WARRANT (the "WARRANT") certifies that, for
value received, Harborview Master Fund LP (the "HOLDER"), is entitled, upon the
terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the date hereof (the "INITIAL EXERCISE DATE")
and on or prior to the close of business on the five year anniversary of the
Initial Exercise Date (the "TERMINATION DATE") but not thereafter, to subscribe
for and purchase from Sonoma College, Inc., a California corporation (the
"COMPANY"), up to ______ shares (the "WARRANT SHARES") of Common Stock, par
value $.0001 per share, of the Company (the "COMMON STOCK"). The purchase price
of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).
SECTION 1. DEFINITIONS. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the "PURCHASE AGREEMENT"), dated August 9, 2006, among the
Company and the purchasers signatory thereto.
SECTION 2. EXERCISE.
a) EXERCISE OF WARRANT. Exercise of the purchase rights
represented by this Warrant may be made, in whole or in part, at any
time or times on or after the Initial Exercise Date and on or before
the Termination Date by delivery to the Company of a duly executed
facsimile copy of the Notice of Exercise Form annexed hereto (or such
other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder
appearing on the books of the Company); and, within 3 Trading Days of
the date said Notice of Exercise is delivered to the Company, the
Company shall have received payment of the aggregate Exercise Price of
the shares thereby purchased by wire transfer or cashier's check drawn
on a United States bank. Notwithstanding anything herein to the
contrary, the Holder shall not be required to physically surrender this
Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been exercised
in full, in which case, the Holder shall surrender this Warrant to the
Company for cancellation within 3 Trading Days of the date the final
Notice of Exercise is delivered to the Company. Partial exercises of
this Warrant resulting in purchases of a portion of the total number of
Warrant Shares available hereunder shall have the effect
of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased. The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise Form
within 2 Business Days of receipt of such notice. In the event of any
dispute or discrepancy, the records of the Holder shall be controlling
and determinative in the absence of manifest error. The Holder and any
assignee, by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following the purchase of a
portion of the Warrant Shares hereunder, the number of Warrant Shares
available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.
b) EXERCISE PRICE. The exercise price per share of the
Common Stock under this Warrant shall be $0.10, subject to adjustment
hereunder (the "EXERCISE PRICE").
c) CASHLESS EXERCISE. If at any time after one year from
the date of issuance of this Warrant there is no effective Registration
Statement registering, or no current prospectus available for, the
resale of the Warrant Shares by the Holder, then this Warrant may also
be exercised at such time by means of a "cashless exercise" in which
the Holder shall be entitled to receive a certificate for the number of
Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)]
by (A), where:
(A) = the VWAP on the Trading Day immediately preceding the
date of such election;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of
this Warrant in accordance with the terms of this
Warrant by means of a cash exercise rather than a
cashless exercise.
Notwithstanding anything herein to the contrary, on the
Termination Date, this Warrant shall be automatically exercised via
cashless exercise pursuant to this Section 2(c).
d) EXERCISE LIMITATIONS.
i. HOLDER'S RESTRICTIONS. The Company
shall not effect any exercise of this Warrant, and a
Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2(c) or
otherwise, to the extent that after giving effect to
such issuance after exercise as set forth on the
applicable Notice of Exercise, such Holder (together
with such Holder's Affiliates, and any other person
or entity acting as a group together with such Holder
or any of such Holder's Affiliates), as set forth on
the applicable Notice of Exercise, would beneficially
own in excess of the Beneficial Ownership Limitation
(as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock
beneficially owned by such Holder and its Affiliates
shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect
to which such determination is being made, but shall
exclude the number of shares of Common Stock which
would be issuable upon: (A) exercise of the
remaining, nonexercised portion of this Warrant
beneficially owned by such Holder or any of its
Affiliates, and (B) exercise or conversion of the
unexercised or nonconverted portion of any other
securities of the Company (including, without
limitation, any other Debentures or Warrants) subject
to a limitation on conversion or exercise analogous
to the limitation contained herein beneficially owned
by such Holder or any of its affiliates. Except as
set forth in the preceding sentence, for purposes of
this Section 2(d)(i), beneficial ownership shall be
calculated in accordance
with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder, it being
acknowledged by a Holder that the Company is not
representing to such Holder that such calculation is
in compliance with Section 13(d) of the Exchange Act
and such Holder is solely responsible for any
schedules required to be filed in accordance
therewith. To the extent that the limitation
contained in this Section 2(d) applies, the
determination of whether this Warrant is exercisable
(in relation to other securities owned by such Holder
together with any Affiliates) and of which a portion
of this Warrant is exercisable shall be in the sole
discretion of a Holder, and the submission of a
Notice of Exercise shall be deemed to be each
Holder's determination of whether this Warrant is
exercisable (in relation to other securities owned by
such Holder together with any Affiliates) and of
which portion of this Warrant is exercisable, in each
case subject to such aggregate percentage limitation,
and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In
addition, a determination as to any group status as
contemplated above shall be determined in accordance
with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes
of this Section 2(d), in determining the number of
outstanding shares of Common Stock, a Holder may rely
on the number of outstanding shares of Common Stock
as reflected in (x) the Company's most recent Form
10-QSB or Form 10-KSB, as the case may be, (y) a more
recent public announcement by the Company or (z) any
other notice by the Company or the Company's Transfer
Agent setting forth the number of shares of Common
Stock outstanding. Upon the written or oral request
of a Holder, the Company shall within two Trading
Days confirm orally and in writing to such Holder the
number of shares of Common Stock then outstanding. In
any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company,
including this Warrant, by such Holder or its
Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The
"Beneficial Ownership Limitation" shall be 4.99% of
the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of
shares of Common Stock issuable upon exercise of this
Warrant. The Beneficial Ownership Limitation
provisions of this Section 2(d)(i) may be waived by
such Xxxxxx, at the election of such Holder, upon not
less than 61 days' prior notice to the Company to
change the Beneficial Ownership Limitation to 9.99%
of the number of shares of the Common Stock
outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of
this Warrant, and the provisions of this Section 2(d)
shall continue to apply. Upon such a change by a
Holder of the Beneficial Ownership Limitation from
such 4.99% limitation to such 9.99% limitation, the
Beneficial Ownership Limitation may not be further
waived by such Holder. The provisions of this
paragraph shall be construed and implemented in a
manner otherwise than in strict conformity with the
terms of this Section 2(d)(i) to correct this
paragraph (or any portion hereof) which may be
defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or
to make changes or supplements necessary or desirable
to properly give effect to such limitation. The
limitations contained in this paragraph shall apply
to a successor holder of this Warrant.
e) MECHANICS OF EXERCISE.
i. AUTHORIZATION OF WARRANT SHARES.
The Company covenants that all Warrant Shares which
may be issued upon the exercise of the purchase
rights represented by this Warrant will, upon
exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes,
liens and charges created by the Company in respect
of the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such
issue).
ii. DELIVERY OF CERTIFICATES UPON
EXERCISE. Certificates for shares purchased hereunder
shall be transmitted by the transfer agent of the
Company to the Holder by crediting the account of the
Holder's prime broker with the Depository Trust
Company through its Deposit Withdrawal Agent
Commission ("DWAC") system if the Company is a
participant in such system, and otherwise by physical
delivery to the address specified by the Holder in
the Notice of Exercise within 3 Trading Days from the
delivery to the Company of the Notice of Exercise
Form, surrender of this Warrant (if required) and
payment of the aggregate Exercise Price as set forth
above ("WARRANT SHARE DELIVERY DATE"). This Warrant
shall be deemed to have been exercised on the date
the Exercise Price is received by the Company. The
Warrant Shares shall be deemed to have been issued,
and Holder or any other person so designated to be
named therein shall be deemed to have become a holder
of record of such shares for all purposes, as of the
date the Warrant has been exercised by payment to the
Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be
paid by the Holder, if any, pursuant to Section
2(e)(vii) prior to the issuance of such shares, have
been paid.
iii. DELIVERY OF NEW WARRANTS UPON
EXERCISE. If this Warrant shall have been exercised
in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant
certificate, at the time of delivery of the
certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing
the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with
this Warrant.
iv. RESCISSION RIGHTS. If the Company
fails to cause its transfer agent to transmit to the
Holder a certificate or certificates representing the
Warrant Shares pursuant to this Section 2(e)(iv) by
the Warrant Share Delivery Date, then the Holder will
have the right to rescind such exercise.
v. COMPENSATION FOR BUY-IN ON FAILURE
TO TIMELY DELIVER CERTIFICATES UPON EXERCISE. In
addition to any other rights available to the Holder,
if the Company fails to cause its transfer agent to
transmit to the Holder a certificate or certificates
representing the Warrant Shares pursuant to an
exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required
by its broker to purchase (in an open market
transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of
the Warrant Shares which the Holder anticipated
receiving upon such exercise (a "BUY-IN"), then the
Company shall (1) pay in cash to the Holder the
amount by which (x) the Holder's total purchase price
(including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the
amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise
at issue times (B) the price at which the sell order
giving rise to such purchase obligation was executed,
and (2) at the option of the Holder, either reinstate
the portion of the Warrant and equivalent number of
Warrant Shares for which such exercise was not
honored or deliver to the Holder the number of shares
of Common Stock that would have been issued had the
Company timely complied with its exercise and
delivery obligations hereunder. For example, if the
Holder purchases Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an
attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the
immediately preceding
sentence the Company shall be required to pay the
Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the
Holder in respect of the Buy-In and, upon request of
the Company, evidence of the amount of such loss.
Nothing herein shall limit a 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.
vi. NO FRACTIONAL SHARES OR SCRIP. No
fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder
would otherwise be entitled to purchase upon such
exercise, the Company shall at its election, either
pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the
next whole share.
vii. CHARGES, TAXES AND EXPENSES.
Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect
of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the
Holder or in such name or names as may be directed by
the Holder; PROVIDED, HOWEVER, that in the event
certificates for Warrant Shares are to be issued in a
name other than the name of the Holder, this Warrant
when surrendered for exercise shall be accompanied by
the Assignment Form attached hereto duly executed by
the Holder; and the Company may require, as a
condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.
viii. CLOSING OF BOOKS. The Company will
not close its stockholder books or records in any
manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
SECTION 3. CERTAIN ADJUSTMENTS.
a) STOCK DIVIDENDS AND SPLITS. If the Company, at any
time while this Warrant is outstanding: (A) pays a stock dividend or
otherwise make a distribution or distributions on shares of its Common
Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise
of this Warrant), (B) subdivides outstanding shares of Common Stock
into a larger number of shares, (C) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller
number of shares, or (D) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each
case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and
of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares
issuable upon exercise of this Warrant shall be proportionately
adjusted. Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or re-classification.
b) SUBSEQUENT EQUITY SALES. If the Company or any
Subsidiary thereof, as applicable, at any time while this Warrant is
outstanding, shall sell or grant any option to purchase or sell or
grant any right to reprice its securities, or otherwise dispose of or
issue (or announce any offer, sale, grant
or any option to purchase or other disposition) any Common Stock or
Common Stock Equivalents entitling any Person to acquire shares of
Common Stock, at an effective price per share less than the then
Exercise Price (such lower price, the "BASE SHARE PRICE" and such
issuances collectively, a "DILUTIVE ISSUANCE") (if the holder of the
Common Stock or Common Stock Equivalents so issued shall at any time,
whether by operation of purchase price adjustments, reset provisions,
floating conversion, exercise or exchange prices or otherwise, or due
to warrants, options or rights per share which are issued in connection
with such issuance, be entitled to receive shares of Common Stock at an
effective price per share which is less than the Exercise Price, such
issuance shall be deemed to have occurred for less than the Exercise
Price on such date of the Dilutive Issuance), then the Exercise Price
shall be reduced and only reduced to equal the Base Share Price and the
number of Warrant Shares issuable hereunder shall be increased such
that the aggregate Exercise Price payable hereunder, after taking into
account the decrease in the Exercise Price, shall be equal to the
aggregate Exercise Price prior to such adjustment. Such adjustment
shall be made whenever such Common Stock or Common Stock Equivalents
are issued. Notwithstanding the foregoing, no adjustments shall be
made, paid or issued under this Section 3(b) in respect of an Exempt
Issuance. The Company shall notify the Holder in writing, no later than
the Trading Day following the issuance of any Common Stock or Common
Stock Equivalents subject to this section, indicating therein the
applicable issuance price, or applicable reset price, exchange price,
conversion price and other pricing terms (such notice the "DILUTIVE
ISSUANCE NOTICE"). For purposes of clarification, whether or not the
Company provides a Dilutive Issuance Notice pursuant to this Section
3(b), upon the occurrence of any Dilutive Issuance, after the date of
such Dilutive Issuance the Holder is entitled to receive a number of
Warrant Shares based upon the Base Share Price regardless of whether
the Holder accurately refers to the Base Share Price in the Notice of
Exercise.
c) SUBSEQUENT RIGHTS OFFERINGS. If the Company, at any
time while the Warrant is outstanding, shall issue rights, options or
warrants to all holders of Common Stock (and not to Holders) entitling
them to subscribe for or purchase shares of Common Stock at a price per
share less than the VWAP at the record date mentioned below, then the
Exercise Price shall be multiplied by a fraction, of which the
denominator shall be the number of shares of the Common Stock
outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of
the Common Stock outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price
of the total number of shares so offered (assuming receipt by the
Company in full of all consideration payable upon exercise of such
rights, options or warrants) would purchase at such VWAP. Such
adjustment shall be made whenever such rights or warrants are issued,
and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options
or warrants.
d) PRO RATA DISTRIBUTIONS. If the Company, at any time
prior to the Termination Date, shall distribute to all holders of
Common Stock (and not to Holders of the Warrants) evidences of its
indebtedness or assets (including cash and cash dividends) or rights or
warrants to subscribe for or purchase any security other than the
Common Stock (which shall be subject to Section 3(b)), then in each
such case the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution by
a fraction of which the denominator shall be the VWAP determined as of
the record date mentioned above, and of which the numerator shall be
such VWAP on such record date less the then per share fair market value
at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the
Common Stock as determined by the Board of Directors in good faith. In
either case the adjustments shall be described in a statement provided
to the Holder of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of
Common Stock. Such adjustment shall be made
whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
e) FUNDAMENTAL TRANSACTION. If, at any time while this
Warrant is outstanding, (A) the Company effects any merger or
consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets in
one or a series of related transactions, (C) any tender offer or
exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D)
the Company effects any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or
property (in any such case, a "FUNDAMENTAL TRANSACTION"), then, upon
any subsequent exercise of this Warrant, the Holder shall have the
right to receive, for each Warrant Share that would have been issuable
upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder, (a) upon exercise
of this Warrant, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the "ALTERNATE
CONSIDERATION") receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a
Holder of the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to such event or (b) if the Company is
acquired in an all cash transaction, cash equal to the value of this
Warrant as determined in accordance with the Black-Scholes option
pricing formula. For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the
Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. To the extent necessary to
effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the
Holder a new warrant consistent with the foregoing provisions and
evidencing the Holder's right to exercise such warrant into Alternate
Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of
this Section 3(e) and insuring that this Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
f) CALCULATIONS. All calculations under this Section 3
shall be made to the nearest cent or the nearest 1/100th of a share, as
the case may be. For purposes of this Section 3, the number of shares
of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.
g) VOLUNTARY ADJUSTMENT BY COMPANY. The Company may at
any time during the term of this Warrant reduce the then current
Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
h) NOTICE TO HOLDERS.
i. ADJUSTMENT TO EXERCISE PRICE.
Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 3, the Company shall
promptly mail to each Holder a notice setting forth
the Exercise Price after such adjustment and setting
forth a brief statement of the facts requiring such
adjustment. If the Company issues a variable rate
security, despite the prohibition thereon in the
Purchase Agreement, the
Company shall be deemed to have issued Common Stock
or Common Stock Equivalents at the lowest possible
conversion or exercise price at which such securities
may be converted or exercised in the case of a
Variable Rate Transaction (as defined in the Purchase
Agreement).
ii. NOTICE TO ALLOW EXERCISE BY HOLDER.
If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common
Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the
Common Stock; (C) the Company shall authorize the
granting to all holders of the Common Stock rights or
warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be
required in connection with any reclassification of
the Common Stock, any consolidation or merger to
which the Company is a party, any sale or transfer of
all or substantially all of the assets of the
Company, of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash
or property; (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company; then, in
each case, the Company shall cause to be mailed to
the Holder at its last address as it shall appear
upon the Warrant Register of the Company, at least 20
calendar days prior to the applicable record or
effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the
Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger,
sale, transfer or share exchange is expected to
become effective or close, and the date as of which
it is expected that holders of the Common Stock of
record shall be entitled to exchange their shares of
the Common Stock for securities, cash or other
property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share
exchange; provided that the failure to mail such
notice or any defect therein or in the mailing
thereof shall not affect the validity of the
corporate action required to be specified in such
notice. The Holder is entitled to exercise this
Warrant during the 20-day period commencing on the
date of such notice to the effective date of the
event triggering such notice.
SECTION 4. TRANSFER OF WARRANT.
a) TRANSFERABILITY. Subject to compliance with any
applicable securities laws and the conditions set forth in Section 4(d)
hereof and to the provisions of Section 4.1 of the Purchase Agreement,
this Warrant and all rights hereunder (including, without limitation,
any registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or its
designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder
or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing
the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without
having a new Warrant issued.
b) NEW WARRANTS. This Warrant may be divided or combined
with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the
Holder or its
agent or attorney. Subject to compliance with Section 4(a), as to any
transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Warrant or Warrants in exchange
for the Warrant or Warrants to be divided or combined in accordance
with such notice.
c) WARRANT REGISTER. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose
(the "WARRANT REGISTER"), in the name of the record Holder hereof from
time to time. The Company may deem and treat the registered Holder of
this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
d) TRANSFER RESTRICTIONS. If, at the time of the
surrender of this Warrant in connection with any transfer of this
Warrant, the transfer of this Warrant shall not be registered pursuant
to an effective registration statement under the Securities Act and
under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such transfer: (i) that the Holder
or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer may be made without
registration under the Securities Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee execute
and deliver to the Company an investment letter in form and substance
acceptable to the Company, and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7), or (a)(8) promulgated under the Securities Act or a "qualified
institutional buyer" as defined in Rule 144A(a) under the Securities
Act.
SECTION 5. MISCELLANEOUS.
a) NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE. This Warrant
does not entitle the Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof as set forth in
Section 2(e)(ii).
b) LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT.
The Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the
Warrant Shares, and in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender
and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of
like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c) SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or
appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business Day, then such
action may be taken or such right may be exercised on the next
succeeding Business Day.
d) AUTHORIZED SHARES.
The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized
and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the
exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant
shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as
may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable
law or regulation, or of any requirements of the Trading
Market upon which the Common Stock may be listed.
Except and to the extent as waived or consented to by
the Holder, the Company shall not by any action, including,
without limitation, amending its certificate of incorporation
or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of
this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing,
the Company will: (a) not increase the par value of any
Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b)
take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully
paid and nonassessable Warrant Shares upon the exercise of
this Warrant, and (c) use commercially reasonable efforts to
obtain all such authorizations, exemptions or consents from
any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations
under this Warrant.
Before taking any action which would result in an
adjustment in the number of Warrant Shares for which this
Warrant is exercisable or in the Exercise Price, the Company
shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
e) JURISDICTION. All questions concerning the
construction, validity, enforcement and interpretation of this Warrant
shall be determined in accordance with the provisions of the Purchase
Agreement.
f) RESTRICTIONS. The Holder acknowledges that the
Warrant Shares acquired upon the exercise of this Warrant, if not
registered, will have restrictions upon resale imposed by state and
federal securities laws.
g) NONWAIVER AND EXPENSES. No course of dealing or any
delay or failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice Xxxxxx's
rights, powers or remedies, notwithstanding the fact that all rights
hereunder terminate on the Termination Date. If the Company willfully
and knowingly fails to comply with any provision of this Warrant, which
results in any material damages to the Holder, the Company shall pay to
Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.
h) NOTICES. Any notice, request or other document
required or permitted to be given or delivered to the Holder by the
Company shall be delivered in accordance with the notice provisions of
the Purchase Agreement.
i) LIMITATION OF LIABILITY. No provision hereof, in the
absence of any affirmative action by Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of Holder, shall give rise to any liability of Holder for
the purchase price of any Common Stock or as a stockholder of the
Company, whether such liability is asserted by the Company or by
creditors of the Company.
j) REMEDIES. Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant.
The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Warrant and hereby agrees to waive
and not to assert the defense in any action for specific performance
that a remedy at law would be adequate.
k) SUCCESSORS AND ASSIGNS. Subject to applicable
securities laws, this Warrant and the rights and obligations evidenced
hereby shall inure to the benefit of and be binding upon the successors
of the Company and the successors and permitted assigns of Holder. The
provisions of this Warrant are intended to be for the benefit of all
Holders from time to time of this Warrant and shall be enforceable by
any such Holder or holder of Warrant Shares.
l) AMENDMENT. This Warrant may be modified or amended or
the provisions hereof waived with the written consent of the Company
and the Holder.
m) SEVERABILITY. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Warrant shall
be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
n) HEADINGS. The headings used in this Warrant are for
the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
********************
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: August 9, 2006
SONOMA COLLEGE, INC.
By:
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Name: Xxxxxxx Xxxxxx
Title: CEO
