EX-10.41
ANNEX VII
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 140,000 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 September 28, 2011, 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"), 140,000 shares (the "WARRANT SHARES") of
Common Stock, $.01 par value, 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 Bridge
Loan Agreement (the "BRIDGE LOAN AGREEMENT"), dated September 28,
2006, between the Company and the Buyers signatory thereto.
SECTION 2. EXERCISE.
a) EXERCISE OF WARRANT. Exercise of the purchase rights
represented by this Warrant may be made 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); PROVIDED, HOWEVER, within 5
Trading Days of the date said Notice of Exercise is
delivered to the Company, the Holder shall have surrendered
this
Warrant to the Company and 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.
b) EXERCISE PRICE. The exercise price of the Common Stock
under this Warrant shall be $0.11 (the "EXERCISE PRICE"),
subject to adjustment pursuant to Section 3 hereof.
c) CASHLESS EXERCISE. This Warrant may also be exercised 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.
d) EXERCISE LIMITATIONS; HOLDER'S RESTRICTIONS. The 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, the Holder (together with the Holder's
affiliates), as set forth on the applicable Notice of
Exercise, would beneficially own in excess of 4.9% of the
number of shares of the Common Stock outstanding
immediately after giving effect to such issuance. For
purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect
to which the determination of such sentence 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
the 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 Notes or Warrants) subject to a
limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the
Holder or any of its affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 2(d),
beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act, it being acknowledged by
Holder that the Company is not representing to Holder that
such calculation is in compliance with Section 13(d) of the
Exchange Act and 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 the
Holder) and of which a portion of this Warrant is
exercisable shall be in the sole discretion of such Xxxxxx,
and the submission of a Notice of Exercise shall be deemed
to be such Holder's determination of whether this Warrant
is exercisable (in relation to other securities owned by
such Holder) 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. For purposes of this Section 2(d), in
determining the number of outstanding shares of Common
Stock, the 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 (or similar form),
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 the Holder, the Company shall within two
Trading Days confirm orally and in writing to the 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 the Holder or its affiliates since the date as
of which such number of outstanding shares of Common Stock
was reported. The provisions of this Section 2(d) may be
waived by the Holder upon, at the election of the Holder,
not less than 61 days' prior notice to the Company, and the
provisions of this Section 2(d) shall continue to apply
until such 61st day (or such later date, as determined by
the Holder, as may be specified in such notice of waiver).
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 in respect of the issue thereof (other than
taxes in respect of any transfer occurring
contemporaneously with such issue). 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.
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 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 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 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, together with applicable
confirmations and other
evidence reasonably requested by the Company.
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 pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction
multiplied by the Exercise Price.
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 pursuant to 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
before such event and of which the denominator shall
be the number of shares of Common Stock outstanding
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 offer, sell,
grant any option to purchase or offer, 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"), as adjusted
hereunder (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 is
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), then,
the Exercise Price shall be 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. Such adjustment shall
be made whenever such Common Stock or Common Stock
Equivalents are issued. 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
of 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) 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 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 Holders 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.
d) 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. The number
of shares of Common Stock outstanding at any given
time shall not includes shares of Common Stock owned
or held by or for the account of the Company, and
the description of any such shares of Common Stock
shall be considered on issue or sale of Common
Stock. 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.
e) NOTICE TO HOLDERS.
i. ADJUSTMENT TO EXERCISE PRICE. Whenever
the Exercise Price is adjusted pursuant to 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, 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.
ii. NOTICE TO ALLOW EXERCISE BY HOLDER. If
(A) the Company shall declare a dividend (or any
other distribution) 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 addresses 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 the date of such notice to the
effective date of the event triggering such notice.
f) 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 conversion
of this Warrant, the Holder shall have the right to
receive, for each Warrant Share that would have been
issuable upon such exercise absent 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 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) cash equal to the value of this
Warrant as determined in accordance with the
Black-Scholes option pricing formula (the "ALTERNATE
CONSIDERATION"). 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 paragraph (f) and insuring that
this Warrant (or any such replacement security) will
be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
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.
SECTION 4. TRANSFER OF WARRANT.
a) TRANSFERABILITY. Subject to compliance with any
applicable securities laws and the conditions set
forth in Sections 5(a) and 4(d) hereof, this Warrant
and all rights hereunder are transferable, in whole
or in part, upon surrender of this Warrant at the
principal office of the Company, 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) TITLE TO WARRANT. Prior to the Termination Date and
subject to compliance with applicable laws and
Section 4 of this Warrant, this Warrant and all
rights hereunder are transferable, in whole or in
part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed.
The transferee shall sign an investment letter in
form and substance reasonably satisfactory to the
Company.
b) 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. Upon the
surrender of this Warrant and the payment of the
aggregate Exercise Price (or by means of a cashless
exercise), the Warrant Shares so purchased shall be
and be deemed to be issued to such Holder as the
record owner of such shares as of the close of
business on the later of the date of such surrender
or payment.
c) 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.
d) 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 be a Saturday, Sunday or a legal holiday, then
such action may be taken or such right may be
exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
e) 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 Xxxxxx 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.
f) JURISDICTION. All questions concerning the
construction, validity, enforcement and
interpretation of this Warrant shall be determined
in accordance with the provisions of the Bridge Loan
Agreement.
g) 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.
h) 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.
i) 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 Bridge
Loan Agreement.
j) LIMITATION OF LIABILITY. No provision hereof, in the
absence of any affirmative action by Holder to
exercise this Warrant or 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.
k) 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 the defense in
any action for specific performance that a remedy at
law would be adequate.
l) 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.
m) AMENDMENT. This Warrant may be modified or amended
or the provisions hereof waived with the written
consent of the Company and the Holder.
n) 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.
o) 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: September 28, 2006
SONOMA COLLEGE, INC.
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Name:
Title:
NOTICE OF EXERCISE
TO:
(1) The undersigned hereby elects to purchase ________ Warrant
Shares of the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2)________Payment shall take the form of (check applicable box):
[_] in lawful money of the United States; or
[_] the cancellation of such number of Warrant Shares as
is necessary, in accordance with the formula set forth in
subsection 2(c), to exercise this Warrant with respect to
the maximum number of Warrant Shares purchasable pursuant
to the cashless exercise procedure set forth in subsection
2(c).
(3)________Please issue a certificate or certificates representing
said Warrant Shares in the name of the undersigned or in such other name as is
specified below:
-------------------------------
The Warrant Shares shall be delivered to the following:
-------------------------------
-------------------------------
-------------------------------
(4) ACCREDITED INVESTOR. The undersigned is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act of
1933, as amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ______________________________________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Date: __________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
whose address is
---------------------------------------------------------------
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Dated: ,
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Holder's Signature:
-----------------------------
Holder's Address:
-----------------------------
-----------------------------
Signature Guaranteed:
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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 whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
