CROWDGATHER, INC. WARRANT TO PURCHASE SHARES OF COMMON STOCK
EXHIBIT
10.6
THIS
WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR QUALIFIED UNDER ANY
APPLICABLE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER SUCH STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION AND/OR QUALIFICATION IS NOT REQUIRED.
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
| No. __________ |
May __,
2009
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THIS CERTIFIES THAT, for value
received, _____________________, a ________________________ (the “Investor”), or
Investor’s assigns (Investor and Investor’s assigns being the “Holder”), is entitled
to subscribe for and purchase at any time during the Exercise Period from
CrowdGather, Inc., a Nevada corporation, with its principal office at 00000
Xxxxxxx Xxxx., Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000 (the “Company”), a number
of shares of Common Stock equal to the Share Number at a per share price equal
to the Exercise Price in effect at such time. This Warrant is issued
in conjunction with the 8% Secured Straight Convertible Debenture, dated of even
date herewith (the “Debenture”) by and
between the Company and the investor listed on the Debenture.
DEFINITIONS. As
used herein, the following terms shall have the following respective
meanings:
“Aggregate
Warrant Price” shall mean the dollar value obtained by multiplying $0.70 by
_______.
“Common
Stock” shall mean the common stock of the Company.
“Exercise
Period” shall mean the period commencing on the original date of issuance of
this Warrant and terminating on the Maturity Date of the Debenture (as that term
is defined therein), unless (i) said Maturity Date has been extended by the
Holder or (ii) all of the initial principal thereunder has been converted to
Common Stock in accordance with the terms and conditions thereof. In
the event that the Maturity Date has been extended, the Exercise Period hereof
shall terminate as of such extended Maturity Date, unless all of the initial
principal thereunder has been converted to Common Stock in accordance with the
terms and conditions thereof. In the event that all of the initial
principal thereunder has been converted to Common Stock in accordance with the
terms and conditions under the Debenture, the Exercise Period hereof shall
terminate two years after the Maturity Date, or extended Maturity Date, of the
Debenture.
“Exercise
Price” shall mean $0.70 per share of Common Stock.
“Exercise
Shares” shall mean any Common Stock acquired upon exercise of this
Warrant.
“Share
Number,” at any time, shall mean (i) the Aggregate Warrant Price minus the
aggregate exercise price previously paid upon exercise of this Warrant, divided
by (ii) the Exercise Price then in effect.
1
EXERCISE OF
WARRANT.
The
rights represented by this Warrant may be exercised as a whole or in part at any
time during the Exercise Period, by delivery of the following to the Company at
its address set forth above (or at such other address as it may designate by
notice in writing to the Holder):
An
executed Notice of Exercise in the form attached hereto;
Payment
of the Exercise Price either in cash or by check; and
This
Warrant.
Upon the
exercise of the rights represented by this Warrant, a certificate or
certificates for the Exercise Shares so purchased, registered in the name of the
Holder or persons affiliated with the Holder, if the Holder so designates (and
such designation is in compliance with applicable securities laws and any
stockholders, investor rights or similar agreement), shall be issued and
delivered to the Holder as promptly as practicable after the rights represented
by this Warrant shall have been so exercised.
The
person in whose name any certificate or certificates for Exercise Shares are to
be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.
Notwithstanding
anything to the contrary set forth in this Warrant, at no time may the Holder
exercise this Warrant if the number of shares of Common Stock to be issued
pursuant to such exercise would exceed, when aggregated with all other shares of
Common Stock owned by such Holder at such time, the number of shares of Common
Stock that would result in such Holder beneficially owning (as determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules thereunder) in excess of 4.99% of the then-issued and
outstanding shares of Common Stock; provided, however, that, upon
the Holder providing the Company with sixty-one (61) days notice (the “Waiver Notice”) that
such Holder would like to waive this Section 2(d) with regard to any or all
shares of Common Stock issuable upon exercise of this Warrant, this Section 2(d)
will be of no force or effect with regard to all or a portion of the Warrant
referenced in the Waiver Notice; provided, further, that this
provision shall be of no further force or effect during the sixty-one (61) days
immediately preceding the expiration of the term of this Warrant.
COVENANTS OF THE
COMPANY.
Covenants as to Exercise
Shares. The Company covenants and agrees that all Exercise
Shares that may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be validly issued and outstanding, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issuance thereof. The Company further covenants and agrees that the
Company will at all times during the Exercise Period have authorized and
reserved, free from preemptive rights, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by this
Warrant. If at any time during the Exercise Period the number of
authorized but unissued shares of Common Stock shall not be sufficient to permit
exercise of this Warrant, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
2
No
Impairment. Except and to the extent as waived or consented to
by the Holder, the Company will not, by amendment of its Articles 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 to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Holder against impairment.
Notices of Record
Date. In the event of any taking by the Company of a record of
the holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend (other than a cash
dividend which is the same as cash dividends paid in previous quarters) or other
distribution, the Company shall mail to the Holder, at least ten (10) days prior
to the date specified herein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or
distribution.
REPRESENTATIONS OF
HOLDER.
Acquisition of Warrant for
Personal Account. The Holder represents and warrants that it
is acquiring the Warrant and any shares of capital stock issued or issuable upon
exercise or conversion of the Warrant for investment purposes only and not with
a view to or for resale in connection with any distribution or public offering
thereof within the meaning of the Act (as defined below). The Holder
also represents that the entire legal and beneficial interests of the Warrant
and Exercise Shares the Holder is acquiring is being acquired for, and will be
held for, the account of the Holder only.
Accredited Investor
Status. The Holder represents and warrants that it is either
(a) an “accredited investor” as such term is defined in Rule 501 under the
Securities Act of 1933, as amended (the “Act”) or (b) not a
U.S. Person and the offer or sale of the Debentures and this Warrant were made
in an “offshore
transaction,” as that term is defined in Rule 902(h), as promulgated
under the Act. In either event, if required by the Company, the
Holder shall provide the Company with such additional information as the Company
may reasonably request with respect to this representation and
warranty.
Securities Are Not
Registered.
The
Holder understands that the Warrant and the Exercise Shares have not been
registered under the Act, on the basis that no distribution or public offering
of the stock of the Company is to be effected, or registered or qualified under
any applicable state securities laws. The Holder realizes that the
basis for the exemption may not be present if, notwithstanding its
representations, the Holder has a present intention of acquiring the securities
for a fixed or determinable period in the future, selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise
distributing the securities. The Holder has no such present
intention.
The
Holder recognizes that the Warrant and the Exercise Shares must be held
indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available.
The
Holder is aware that neither the Warrant nor the Exercise Shares may be sold
pursuant to Rule 144 adopted under the Act unless certain conditions are met,
including, among other things, the existence of a public market for the shares,
the availability of certain current public information about the Company, and
the resale following the required holding period under Rule 144.
3
The
Holder is aware of the Company’s business affairs and financial condition and
has acquired sufficient information about the Company to reach an informed and
knowledgeable decision regarding its investment in the Company. The
Holder is experienced in making investments of this type and has such knowledge
and background in financial and business matters that the Holder is capable of
evaluating the merits and risks of this investment and protecting its own
interests.
Disposition of Warrant and
Exercise Shares.
Except
for transfers by the Holder to its affiliates in compliance with all applicable
securities laws, the Holder further agrees not to make any disposition of all or
any part of the Warrant or Exercise Shares in any event unless and
until:
The
Company shall have received a letter secured by the Holder from the Securities
and Exchange Commission stating that no action will be recommended to the
Commission with respect to the proposed disposition; or
There is
then in effect a registration statement under the Act covering such proposed
disposition and such disposition is made in accordance with said registration
statement; or
The
Holder shall have shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, for the Holder to the effect that such
disposition will not require registration of such Warrant or Exercise Shares
under the Act or any applicable state securities laws.
The
Holder understands and agrees that all certificates evidencing the Exercise
Shares to be issued to the Holder may bear the following, or similar, legend (in
addition to any legend required under applicable state securities laws, the
Company’s Bylaws, or as provided elsewhere in this Warrant):
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”) OR QUALIFIED UNDER ANY APPLICABLE SECURITIES
LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND QUALIFICATION UNDER SUCH STATE SECURITIES LAWS OR AN OPINION
OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
AND/OR QUALIFICATION IS NOT REQUIRED.
ADJUSTMENTS AND
NOTICES. The Exercise Price and the number of Exercise Shares
issuable upon exercise of this Warrant shall be subject to adjustment from time
to time in accordance with this Section 5.
Subdivision, Stock
Dividends, or Combinations. In case the Company shall at any
time after the commencement of the Exercise Period subdivide the outstanding
Common Stock or shall issue a stock dividend with respect to the Common Stock,
the Exercise Price in effect immediately prior to such subdivision or the
issuance of such dividend shall be proportionately decreased, and in case the
Company shall at any time after the commencement of the Exercise Period combine
the outstanding shares of Common Stock, the Exercise Price in effect immediately
prior to such combination shall be proportionately increased, in each case
effective at the close of business on the date of such subdivision, dividend or
combination, as the case may be.
4
Reclassification, Exchange,
Substitution, In-Kind Distribution. Upon any reclassification,
exchange, substitution or other event after the commencement of the Exercise
Period that results in a change of the number and/or class of the securities
issuable upon exercise or conversion of this Warrant or upon the payment after
the commencement of the Exercise Period of a dividend in securities or property
other than shares of Common Stock, the Holder shall be entitled to receive, upon
exercise or conversion of this Warrant, the number and kind of securities and
property that Holder would have received if this Warrant had been exercised or
converted immediately before the record date for such reclassification,
exchange, substitution, or other event or immediately prior to the record date
for such dividend. The Company or its successor shall promptly issue
to Holder a new warrant for such new securities or other
property. The new warrant shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Section 5 including, without limitation, adjustments to the Warrant Price
and to the number of securities or property issuable upon exercise or conversion
of the new warrant. The provisions of this Section 5.2 shall
similarly apply to successive reclassifications, exchanges, substitutions, or
other events and successive dividends.
Consolidation, Merger, Sale,
and the Like. In case of any (i) merger or consolidation of
the Company into or with another corporation where the Company is not the
surviving corporation (but including a merger for the purpose of reincorporating
in a new domicile) (ii) sale, transfer or lease (but not including a transfer or
lease by pledge or mortgage to a bona fide lender) of all or substantially all
of the assets of the Company or (iii) sale by the Company’s stockholders of 50%
or more of the Company’s outstanding securities in one or more related
transactions, the Company, or such successor or purchasing corporation, as the
case may be, shall duly execute and deliver to the Holder hereof a new warrant
so that the Holder shall have the right to receive upon exercise or conversion
of the unexercised or unconverted portion of this Warrant, at a total purchase
price not to exceed that payable upon the exercise or conversion of the
unexercised or unconverted portion of this Warrant, and in lieu of shares of
Common Stock theretofore issuable upon exercise or conversion of this Warrant,
the kind and amount of shares of stock, or other securities, money and other
property in lieu of such shares of stock, receivable upon or as a result of such
reorganization, merger or sale by a holder of the number of shares of Common
Stock for which this Warrant is exercisable or convertible immediately prior to
such event. Such new warrant shall provide for adjustments that shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Section 5. The provisions of this Section 5.3 shall
similarly apply to successive reorganizations, mergers, and sales.
In each
case of an adjustment or readjustment of the Exercise Price pursuant to this
Section 5, the Company, at its expense, shall compute such adjustment or
readjustment in accordance with the provisions hereof and prepare a certificate
showing such adjustment or readjustment, and shall mail such certificate, by
first class mail, postage prepaid, to the Holder at the Holder’s address as
shown in the Company’s books. The certificate shall set forth such
adjustment or readjustment, showing in reasonable detail the facts upon which
such adjustment or readjustment is based, including a statement of , if
applicable, the type and amount, if any, of other property which at the time
would be received upon exercise of this Warrant.
FRACTIONAL
SHARES. No fractional shares shall be issued upon the exercise
of this Warrant as a consequence of any adjustment pursuant
hereto. All Exercise Shares (including fractions) issuable upon
exercise of this Warrant may be aggregated for purposes of determining whether
the exercise would result in the issuance of any fractional share. No
payments shall be made by the Company in respect of any fractional shares
otherwise issuable pursuant to this Warrant.
NO STOCKHOLDER
RIGHTS. This Warrant in and of itself shall not entitle the
Holder to any voting rights or other rights as a stockholder of the
Company.
TRANSFER OF
WARRANT. Subject to applicable laws, the restriction on
transfer set forth on the first page of this Warrant and in Section 4.4 and the
terms of any applicable stockholders, investor rights, or similar agreement,
this Warrant and all rights hereunder are transferable, by the Holder in person
or by duly authorized attorney, upon delivery of this Warrant and the form of
assignment attached hereto to any transferee designated by Holder, provided that
the transferee shall have signed an investment letter in form and substance
satisfactory to the Company and agreed to be bound by the provisions of this
Warrant. Notwithstanding anything to the contrary, no partial
transfer of this Warrant shall be permitted.
5
LOST, STOLEN, MUTILATED, OR
DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated,
or destroyed, the Company may, on such terms as to indemnity or otherwise as it
may reasonably impose (which shall, in the case of a mutilated Warrant, include
the surrender thereof), issue a new Warrant of like denomination and tenor as
the Warrant so lost, stolen, mutilated, or destroyed. Any such new
Warrant shall constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant shall
be at any time enforceable by anyone.
NOTICES,
ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by express mail or
other form of rapid communications, if possible, and if not then such notice or
communication shall be mailed by first-class mail, postage prepaid, addressed in
each case to the party entitled thereto at the following
addresses: (a) if to the Company, to CrowdGather, Inc., 00000 Xxxxxxx
Xxxx., Xxxxx 000, Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention: Chief
Executive Officer, and (b) if to the Holder, to such address as originally
furnished to the Company by the Holder, or at such other address as one party
may furnish to the other in writing. Notice shall be deemed effective
on the date dispatched if by personal delivery, two days after mailing if by
express mail, or three days after mailing if by first-class mail.
AMENDMENT. This
Warrant may be amended or otherwise modified only by a writing signed by the
Company and the Holder.
ACCEPTANCE. Receipt
of this Warrant by the Holder shall constitute acceptance of and agreement to
all of the terms and conditions contained herein.
GOVERNING
LAW. This Warrant and all rights, obligations and liabilities
hereunder shall be governed by the internal laws of the State of
Nevada.
IN WITNESS WHEREOF, the Company has
caused this Warrant to be executed by its duly authorized officer as of the date
first written above.
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CROWDGATHER,
INC., a Nevada corporation
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By:
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| Xxxxxx Xxxxxxx, Chief Executive Officer | |||
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ATTEST:
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6
NOTICE
OF EXERCISE
1. The
undersigned hereby elects to purchase ________ shares of the Common Stock of
CrowdGather, Inc. (the “Company”), pursuant
to the terms of the attached Warrant, and tenders herewith payment of the
exercise price in full pursuant to the terms of Section 2 of the attached
Warrant, together with all applicable transfer taxes, if any.
2. Please
issue a certificate or certificates representing said shares of Common Stock in
the name of the undersigned or in such other name as is specified
below:
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________________________
(Name)
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________________________
________________________
(Address)
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3. The
undersigned represents that (i) the aforesaid shares of Common Stock are being
acquired for the account of the undersigned for investment purposes only and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares; (ii) the undersigned is experienced in making investments of this
type and has such knowledge and background in financial and business matters
that the undersigned is capable of evaluating the merits and risks of this
investment and protecting the undersigned’s own interests; (iii) the undersigned
is an “accredited investor,” as defined in Rule 501 under the Securities Act of
1933, as amended (the “Securities Act”), or
not a U.S. Person and the offer or sale of this Warrant were made in an “offshore
transaction,” as that term is defined in Rule 902(h); (iv) the
undersigned understands that the shares of Common Stock issuable upon exercise
of this Warrant have not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act, which
exemption depends upon, among other things, the bona fide nature of the
investment intent as expressed herein, and, because such securities have not
been registered under the Securities Act, they must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such
registration is available; (v) the undersigned is aware that the aforesaid
shares of Common Stock may not be sold pursuant to Rule 144 adopted under the
Securities Act unless certain conditions are met and until the undersigned has
held the shares for the period prescribed by Rule 144; and (vi) the undersigned
agrees not to make any disposition of all or any part of the aforesaid shares of
Common Stock unless and until there is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with said registration statement, or the undersigned has
provided the Company with an opinion of counsel satisfactory to the Company,
stating that such registration is not required.
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_________________________________
(Date)
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_________________________________
(Signature)
_________________________________
(Print
name)
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7
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do
not use this form to purchase shares.)
FOR VALUE RECEIVED, the
foregoing Warrant and all rights evidenced thereby are hereby assigned
to
Name:________________________________________________
Address:______________________________________________
(Please
Print)
Dated:__________________________________________,
200__
Holder’s
Signature:_____________________________________________
Holder’s
Address:______________________________________________
NOTE: The signature
to this Assignment Form must correspond with the name as it appears on the face
of the Warrant, without alteration or enlargement or any change
whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
8
