Contract
THIS
WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE AFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
TELECOMM
SALES NETWORK, INC.
WARRANT
TO PURCHASE
[__________]
SHARES
OF
COMMON STOCK
(SUBJECT
TO ADJUSTMENT)
|
No.
PW-1
|
January
10, 2006
|
This
certifies that for value, [_______________] or
its
registered assigns (the “Holder”),
is
entitled, subject to the terms set forth below, at any time from and after
January 10, 2006 (the “Original Issuance
Date”)
and
before 5:00 p.m., Eastern Time, on the January 9, 2010 (the “Expiration
Date”),
to
purchase from Telecomm
Sales Network, Inc.,
a
Delaware corporation (the “Company”),
[_____________ (________)]
shares
(subject to adjustment as described herein), of common stock, par value $0.0001
per share, of the Company (the “Common
Stock”),
upon
surrender hereof, at the office of the Company referred to below, with a duly
executed subscription form in the form attached hereto as Exhibit A
and
simultaneous payment therefor in lawful, immediately available money of the
United States or otherwise as hereinafter provided, at an initial exercise
price
per share of $2.50
(the
“Purchase
Price”)
The
Purchase Price is subject to further adjustment as provided below, and the
term
“Common
Stock”
shall
include, unless the context otherwise requires, the stock and other securities
and property at the time receivable upon the exercise of this Warrant. The
term
“Warrants,”
as
used herein, shall mean this Warrant and any other Warrants delivered in
substitution or exchange therefor as provided herein.
This
Warrant was issued in connection with the Company’s private placement offering
(the “Offering”)
of its
Common Stock as described in greater detail in the Company’s Confidential
Private Placement Memorandum, dated November 16, 2005, as
amended or supplemented from time to time
(the
“Memorandum”).
[______________] acted
as
a participating dealer for the Offering. In the Offering, the Company sold
its
securities to “accredited investors” pursuant to subscription
agreements.
1. Exercise.
A. This
Warrant may be exercised at any time or from time to time from and after the
Original Issuance Date and before 5:00 p.m., Eastern Time, on the
Expiration Date, on any business day, for the full number of shares of Common
Stock called for hereby, by surrendering it at the Company’s office, at 000-X
Xxxxx Xxxxxxx, XXX 000 Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000-6830, Attention:
Xxxxxxx Xxxxxxxxx, Chief Financial Officer, with the subscription form duly
executed, together with payment in an amount equal to (a) the number of
shares of Common Stock called for on the face of this Warrant, as adjusted
in
accordance with the preceding paragraph of this Warrant multiplied (b) by
the then Purchase Price. Payment of the Purchase Price must be made by payment
in immediately available funds. This Warrant may be exercised for less than
the
full number of shares of Common Stock at the time called for hereby, except
that
the number of shares of Common Stock receivable upon the exercise of this
Warrant as a whole, and the sum payable upon the exercise of this Warrant as
a
whole, shall be proportionately reduced. Upon a partial exercise of this Warrant
in accordance with the terms hereof, this Warrant shall be surrendered, and
a
new Warrant of the same tenor and for the purchase of the number of such shares
not purchased upon such exercise shall be issued by the Company to Holder
without any charge therefor. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Common Stock issuable upon such exercise shall be treated for all purposes
as
the holder of such shares of record as of the close of business on such date.
Within ten (10) business days after such date, the Company shall issue and
deliver to the person or persons entitled to receive the same a certificate
or
certificates for the number of full shares of Common Stock issuable upon such
exercise, together with cash, in lieu of any fraction of a share, equal to
such
fraction of the then Fair Market Value (as defined below) on the date of
exercise of one full share of Common Stock.
B. In
lieu of
exercising this Warrant for cash pursuant to Section
1. A
above,
the Holder may elect to satisfy the Purchase Price by exchanging the Warrant
for
a number of shares of Common Stock computed using the following formula (such
election being referred to herein as a “Net
Issue Exercise Election”):
|
X
=
|
Y(A-B)
|
|
A
|
|
Where
|
X
=
|
the
number of shares of Common Stock to be issued to the Holder pursuant
to
this Section
1
|
|
Y
=
|
the
number of shares of Common Stock purchasable under this Warrant or,
if
only a portion of this Warrant is being exercised, the portion of
this
Warrant being exercised (at the date of such
calculation).
|
|
A
=
|
the
Fair Market Value of one share of the Common Stock (at the date of
such
calculation).
|
|
B
=
|
the
Exercise Price per share of Common Stock (as adjusted to the date
of such
calculation).
|
2
“Fair
Market Value”
shall
mean, as of any date: (i) if shares of the Common Stock are listed on a
national securities exchange, the average of the closing prices as reported
for
composite transactions during the five (5) consecutive trading days preceding
the trading day immediately prior to such date or, if no sale occurred on a
trading day, then the mean between the closing bid and asked prices on such
exchange on such trading day; (ii) if shares of the Common Stock are not so
listed but are traded on the Nasdaq SmallCap Market (“NSCM”),
the
average of the closing prices as reported on the NSCM during the five (5)
consecutive trading days preceding the trading day immediately prior to such
date or, if no sale occurred on a trading day, then the mean between the highest
bid and lowest asked prices as of the close of business on such trading day,
as
reported on the NSCM; or if applicable, the Nasdaq National Market
(“NNM”),
or if
not then included for quotation on the NNM or NSCM, the average of the highest
reported bid and lowest reported asked prices as reported by the OTC Bulletin
Board or the National Quotations Bureau, as the case may be; or (iii) if
the shares of the Common Stock are not then publicly traded, the fair market
price of the Common Stock as determined in good faith by at least a majority
of
the Board of Directors of the Company.
2. Shares
Fully Paid; Payment of Taxes.
All
shares of Common Stock issued upon the exercise of a Warrant shall be validly
issued, fully paid and non-assessable, and the Company shall pay all taxes
and
other governmental charges (other than income taxes to the holder) that may
be
imposed in respect of the issue or delivery thereof.
3. Transfer
and Exchange.
This
Warrant and all rights hereunder are transferable, in whole or in part, on
the
books of the Company maintained for such purpose at its office referred to
above
by Holder in person or by duly authorized attorney, upon surrender of this
Warrant together with a completed and executed assignment form in the form
attached as Exhibit B,
payment
of any necessary transfer tax or other governmental charge imposed upon such
transfer and an opinion of counsel reasonably acceptable to the Company stating
that such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended (the “1933
Act”).
Upon
any partial transfer, the Company will issue and deliver to Holder a new Warrant
or Warrants with respect to the shares of Common Stock not so transferred.
Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that this Warrant when endorsed in blank shall be deemed negotiable
and
that when this Warrant shall have been so endorsed, the holder hereof may be
treated by the Company and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise
the
rights represented hereby, or to the transfer hereof on the books of the
Company, any notice to the contrary notwithstanding; but until such transfer
on
such books, the Company may treat the registered Holder hereof as the owner
for
all purposes.
This
Warrant is exchangeable at such office for Warrants for the same aggregate
number of shares of Common Stock, each new Warrant to represent the right to
purchase such number of shares as the Holder shall designate at the time of
such
exchange.
3
4. Anti-Dilution
Provisions.
A. Adjustment
for Dividends in Other Stock and Property Reclassifications.
In case
at any time or from time to time the holders of the Common Stock (or any shares
of stock or other securities at the time receivable upon the exercise of this
Warrant) shall have received, or, on or after the record date fixed for the
determination of eligible shareholders, shall have become entitled to receive,
without payment therefor,
(1) other
or
additional stock or other securities or property (other than cash) by way of
dividend,
(2) any
cash
or other property paid or payable out of any source other than retained earnings
(determined in accordance with generally accepted accounting principles),
or
(3) other
or
additional stock or other securities or property (including cash) by way of
stock-split, spin-off, reclassification, combination of shares or similar
corporate rearrangement
(4) other
than in the cases of (1), (2) and (3) above, (x) additional shares of Common
Stock or any other stock or securities into which such Common Stock shall have
been changed, (y) any other stock or securities convertible into or exchangeable
for such Common Stock or such other stock or securities or (z) any stock
purchase rights, issued as a stock dividend or stock-split, adjustments in
respect of which shall be covered by the terms of Section 4.B,
Section
4.C
or Section
4.D,
then
and
in each such case, Holder, upon the exercise hereof as provided in Section 1,
shall
be entitled to receive the amount of stock and other securities and property
(including cash in the cases referred to in clauses (2) and (3) above) which
such Holder would hold on the date of such exercise if on the Original Issuance
Date Holder had been the holder of record of the number of shares of Common
Stock called for on the face of this Warrant, as adjusted in accordance with
the
first paragraph of this Warrant, and had thereafter, during the period from
the
Original Issuance Date to and including the date of such exercise, retained
such
shares and/or all other or additional stock and other securities and property
(including cash in the cases referred to in clause (2) and (3) above) receivable
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by Section 4.A
and
Section 4.B.
B. Adjustment
for Reorganization, Consolidation and Merger.
In case
of any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time receivable on the exercise of this
Warrant) after the Original Issuance Date, or in case, after such date, the
Company (or any such other corporation) shall consolidate with or merge into
another corporation or entity or convey all or substantially all its assets
to
another corporation or entity, then and in each such case Holder, upon the
exercise hereof as provided in Section 1
at any
time after the consummation of such reorganization, consolidation, merger or
conveyance, shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise of this Warrant prior
to
such consummation, the stock or other securities or property to which such
Holder would have been entitled upon such consummation if Holder had exercised
this Warrant immediately prior thereto, all subject to further adjustment as
provided in Sections 4.A, Section
4.B, Section
4.C
and Section
4.D
in each
such case, the terms of this Warrant shall be applicable to the shares of stock
or other securities or property receivable upon the exercise of this Warrant
after such consummation.
4
C. Adjustment
for Certain Dividends and Distributions.
If the
Company at any time or from time to time makes, or fixes a record date for
the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event:
(1) the
Purchase Price then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of business on
such
record date, by multiplying the Purchase Price then in effect by a fraction
(A) the numerator of which is the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance or the
close of business on such record date, and (B) the denominator of which
shall be the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on
such
record date as the case may be, plus the number of shares of Common Stock
issuable in payment of such dividend or distribution; provided,
however,
that if
such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Purchase Price
shall be recomputed accordingly as of the close of business on such record
date,
and thereafter the Purchase Price shall be adjusted pursuant to this
Section 4.C
as of
the time of actual payment of such dividends or distributions; and
(2) the
number of shares of Common Stock theretofore receivable upon the exercise of
this Warrant shall be increased, as of the time of such issuance or, in the
event such record date is fixed, as of the close of business on such record
date, in inverse proportion to the decrease in the Purchase Price.
D. Stock
Split and Reverse Stock Split.
If the
Company at any time or from time to time effects a stock split or subdivision
of
the outstanding Common Stock, the Purchase Price then in effect immediately
before that stock split or subdivision shall be proportionately decreased and
the number of shares of Common Stock theretofore receivable upon the exercise
of
this Warrant shall be proportionately increased. If the Company at any time
or
from time to time effects a reverse stock split or combines the outstanding
shares of Common Stock into a smaller number of shares, the Purchase Price
then
in effect immediately before that reverse stock split or combination shall
be
proportionately increased and the number of shares of Common Stock theretofore
receivable upon the exercise of this Warrant shall be proportionately decreased.
Each adjustment under this Section 4.D
shall
become effective at the close of business on the date the stock split,
subdivision, reverse stock split or combination becomes effective.
X. Xxxxxxxxxxx
as to Adjustments.
Upon
the occurrence of each adjustment or readjustment of the Conversion Price
pursuant to this Section 4,
the
Company at its expense shall promptly compute such adjustment or readjustment
in
accordance with the terms hereof and furnish to each holder of a Warrant a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon the written request at any time of any holder of a Warrant, furnish
or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) Purchase Price at the
time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon
the
exercise of the Warrant.
5
5. Notices
of Record Date.
In
case:
A. the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time receivable upon the exercise of the Warrants) for
the
purpose of entitling them to receive any dividend or other distribution, or
any
right to subscribe for or purchase any shares of stock of any class or any
other
securities, or to receive any other right, or
B. of
any
capital reorganization of the Company, any reclassification of the capital
stock
of the Company, any consolidation or merger of the Company with or into another
corporation, or any conveyance of all or substantially all of the assets of
the
Company to another corporation, or
C. of
any
voluntary dissolution, liquidation or winding-up of the Company, then, and
in
each such case, the Company will mail or cause to be mailed to each holder
of a
Warrant at the time outstanding a notice specifying, as the case may be,
(a) the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (b) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is expected to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
such stock or securities at the time receivable upon the exercise of the
Warrants) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up, such notice shall be mailed at least
ten
(10) days prior to the date therein specified.
6. Loss
or Mutilation.
Upon
receipt by the Company of evidence satisfactory to it (in the exercise of
reasonable discretion) of the ownership of and the loss, theft, destruction
or
mutilation of any Warrant and (in the case of loss, theft or destruction) of
indemnity satisfactory to it (in the exercise of reasonable discretion), and
(in
the case of mutilation) upon surrender and cancellation thereof, the Company
will execute and deliver in lieu thereof a new Warrant of like
tenor.
7. Reservation
of Common Stock.
The
Company shall at all times reserve and keep available for issue upon the
exercise of Warrants such number of its authorized but unissued shares of Common
Stock as will be sufficient to permit the exercise in full of all outstanding
Warrants. All of the shares of Common Stock issuable upon the exercise of the
rights represented by this Warrant will, upon issuance and receipt of the
Purchase Price therefor, be fully paid and nonassessable, and free from all
preemptive rights, rights of first refusal or first offer, taxes, liens and
charges of whatever nature, with respect to the issuance thereof.
6
8. Registration
Rights.
The
Holder of this Warrant is entitled to have the shares of Common Stock issuable
upon exercise of this Warrant registered for resale under the 1933 Act, pursuant
to and in accordance with the Registration Rights Agreement dated as of the
date
hereof by and between the Investors in the Offering, the Holder and the
Company.
9. Notices.
All
notices and other communications from the Company to the Holder of this Warrant
shall be mailed by first class, registered or certified mail, postage prepaid,
to [_______________________________], Attention: [___________________]. All
notices to the Company shall be sent in the same manner to Telecomm Sales
Network, Inc., [______________________________], Attention: Xxxxxxx Xxxxxxxxx,
Chief Financial Officer. Either the Company or the Holder may change the address
by notice to the other sent in the manner provided in this Section
9.
10. Change;
Modifications; Waiver.
No
terms of this Warrant may be amended, waived or modified except by the express
written consent of the Company and the Holder.
11. Headings.
The
headings in this Warrant are for purposes of convenience in reference only,
and
shall not be deemed to constitute a part hereof.
12. Governing
Law, Etc.
This
Warrant shall be governed by and construed in accordance with the internal
laws
of the State of New York without regard to the conflicts of laws principles
thereof.
[Signature
page to follow]
7
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its
duly authorized officer.
Dated
as
of: January 10, 2006
| TELECOMM SALES NETWORK, INC. | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
AGREED
TO
AND ACCEPTED:
[PARTICIPATING
DEALER]
By:
________________________________
Name:
___________
Title:
___________
8
EXHIBIT
A
SUBSCRIPTION
FORM
(To
be
executed only upon exercise of Warrant)
The
undersigned registered owner of this Warrant irrevocably exercises this Warrant
and purchases _______ of the number of shares of Common Stock of Telecomm Sales
Network, Inc., purchasable with this Warrant, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant.
Dated:
__________________________
|
(Signature
of Registered Owner)
(Street
Address)
(City
/ State / Zip Code)
|
EXHIBIT
B
FORM
OF ASSIGNMENT
FOR
VALUE RECEIVED
the
undersigned registered owner of this Warrant hereby sells, assigns and transfers
unto the Assignee named below all of the rights of the undersigned under the
within Warrant, with respect to the number of shares of Common Stock set forth
below:
|
Name
of Assignee
|
Address
|
Number
of Shares
|
and
does
hereby irrevocably constitute and appoint __________________________ Attorney
to
make such transfer on the books of Telecomm Sales Network, Inc., maintained
for
the purpose, with full power of substitution in the premises.
Dated:
____________________
|
(Signature)
(Witness)
|
The
undersigned Assignee of the Warrant hereby makes to Telecomm Sales Network,
Inc., as of the date hereof, with respect to the Assignee, all of the
representations and warranties made by the Holder, and the undersigned Assignee
agrees to be bound by all the terms and conditions of the Warrant.
Dated:
____________________
|
(Signature)
|
