EX-10.36
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, CAMOFI MASTER LDC (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:
-----------------------------
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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.
