Contract
Exhibit
10.37
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR COMMUNICATION INTELLIGENCE CORPORATION SHALL HAVE
RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS
NOT REQUIRED.
WARRANT
TO PURCHASE
SHARES
OF
COMMON STOCK
OF
Expires:
______________, 200X
No.:
W2007- __Number
of
Shares: ___________
Date
of
Issuance: ___________, 200X
FOR
VALUE
RECEIVED, subject to the provisions hereinafter set forth, the undersigned,
Communication Intelligence Corporation, a Delaware corporation (together with
its successors and assigns, the "Issuer"),
hereby certifies that _______________________________ or its registered assigns
is entitled to subscribe for and purchase, during the Term (as hereinafter
defined), up to ____________________________________ (_____________) shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price per share equal to the Warrant Price then in effect, subject, however,
to
the provisions and upon the terms and conditions hereinafter set forth.
Capitalized terms used in this Warrant and not otherwise defined herein shall
have the respective meanings specified in Section 8 hereof.
1. Term.
The
term of this Warrant shall commence on _______, 200X [date
of
issuance, but no earlier than June 30, 2007]
and
shall expire at 5:00 p.m., eastern time, on _________, 200X [3
years
after commencing date]
(such
period being the "Term").
| 2. |
Method
of Exercise; Payment; Issuance of New Warrant; Transfer and
Exchange.
|
(a) Time
of Exercise.
The
purchase rights represented by this Warrant may be exercised in whole or in
part
at any time during the Term.
(b) Method
of Exercise.
The
Holder hereof may exercise this Warrant, in whole or in part, by the surrender
of this Warrant (with the exercise form attached hereto duly executed) at the
principal office of the Issuer, and by the payment to the Issuer of an amount
of
consideration therefor equal to the Warrant Price in effect on the date of
such
exercise multiplied by the number of shares of Warrant Stock with respect to
which this Warrant is then being exercised, payable at such Holder's election
by
certified or official bank check or by
wire
transfer to an account designated by the Issuer.
(c) Issuance
of Stock Certificates.
In the
event of any exercise of the rights represented by this Warrant in accordance
with and subject to the terms and conditions hereof, (i) certificates for the
shares of Warrant Stock so purchased shall be dated the date of such exercise
and delivered to the Holder hereof within a reasonable time after such exercise,
and the Holder hereof shall be deemed for all purposes to be the holder of
the
shares of Warrant Stock so purchased as of the date of such exercise and (ii)
unless this Warrant has expired, a new Warrant representing the number of shares
of Warrant Stock, if any, with respect to which this Warrant shall not then
have
been exercised (less any amount thereof which shall have been canceled in
payment or partial payment of the Warrant Price as hereinabove provided) shall
also be issued to the Holder hereof at the Issuer's expense within such
time.
(d) Transferability
of Warrant.
Subject
to Section 2(e), this Warrant may be transferred by a Holder without the consent
of the Issuer. If transferred pursuant to this paragraph and subject to the
provisions of Section 2(e), this Warrant may be transferred on the books of
the
Issuer by the Holder hereof in person or by duly authorized attorney, upon
surrender of this Warrant at the principal office of the Issuer, properly
endorsed (by the Holder executing an assignment in the form attached hereto)
and
upon payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. This Warrant is exchangeable at the principal office of
the
Issuer for Warrants to purchase the same aggregate number of shares of Warrant
Stock, each new Warrant to represent the right to purchase such number of shares
of Warrant Stock as the Holder hereof shall designate at the time of such
exchange. All Warrants issued upon a transfer or exchange shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant hereto.
(e) Compliance
with Securities Laws.
(i) The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
or
the shares of Warrant Stock to be issued upon exercise hereof, as applicable,
are being acquired for the Holder's own account and not as a nominee for any
other party, and for investment, and that the Holder will not offer, sell or
otherwise dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof, except pursuant to an effective registration statement,
or
an exemption from registration, under the Securities Act and any applicable
state securities laws.
(ii) Except
as
provided in Section 2(e)(iii), this Warrant and all certificates representing
shares of Warrant Stock issued upon exercise hereof shall be stamped or
imprinted with a legend in substantially the following form:
2
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR COMMUNICATION INTELLIGENCE CORPORATION
SHALL
HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES
LAWS
IS NOT REQUIRED.
(iii) The
Issuer agrees to reissue this Warrant or certificates representing any of the
Warrant Stock, without the legend set forth above if at such time, prior to
making any transfer of any such securities, the Holder shall give written notice
to the Issuer describing the manner and terms of such transfer and removal
as
the Issuer may reasonably request. Such proposed transfer and removal will
not
be effected until: (a) either (i) the Issuer has received an opinion of counsel
reasonably satisfactory to the Issuer, to the effect that the registration
of
such securities under the Securities Act is not required in connection with
such
proposed transfer, (ii) a registration statement under the Securities Act
covering such proposed disposition has been filed by the Issuer with the
Securities and Exchange Commission and has become effective under the Securities
Act, (iii) the Issuer has received other evidence reasonably satisfactory to
the
Issuer that such registration and qualification under the Securities Act and
state securities laws are not required, or (iv) the Holder provides the Issuer
with reasonable assurances that such security can be sold pursuant to Rule
144
under the Securities Act; and (b) either (i) the Issuer has received an opinion
of counsel reasonably satisfactory to the Issuer, to the effect that
registration or qualification under the securities or "blue sky" laws of any
state is not required in connection with such proposed disposition, or (ii)
compliance with applicable state securities or "blue sky" laws has been effected
or a valid exemption exists with respect thereto. The Issuer will respond to
any
such notice from the Holder within five (5) business days. In the case of any
proposed transfer under this Section 2(e), the Issuer will use reasonable best
efforts to comply with any such applicable state securities or "blue sky" laws,
but shall in no event be required, (x) to qualify to do business in any state
where it is not then qualified, or (y) to take any action that would subject
it
to tax or to the general service of process in any state where it is not then
subject. The restrictions on transfer contained in this Section 2(e) shall
be in
addition to, and not by way of limitation of, any other restrictions on transfer
contained in any other section of this Warrant. Whenever
a
certificate representing the Warrant Stock is required to be issued to a Holder
without a legend, in lieu of delivering physical certificates representing
the
Warrant Stock, provided the Issuer’s transfer agent is participating in the DTC
Fast Automated Securities Transfer program, the Issuer shall use its reasonable
best efforts to cause its transfer agent to electronically transmit the Warrant
Stock to the Holder by crediting the account of the Holder's Prime Broker with
DTC through DWAC (to the extent not inconsistent with any provisions of this
Warrant or the Purchase Agreement).
3
3. Stock
Fully Paid; Reservation and Listing of Shares; Covenants.
(a) Stock
Fully Paid.
The
Issuer represents, and warrants to the Holder, and covenants and agrees for
the
benefit of the Holder that all shares of Warrant Stock which may be issued
upon
the exercise of this Warrant or otherwise hereunder will, upon issuance, be
duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens, charges or other encumbrances of any nature whatsoever created
by
or through the Issuer. The Issuer further covenants and agrees that during
the
period within which this Warrant may be exercised, the Issuer will at all times
have authorized and reserved for the purpose of the issue upon exercise of
this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant.
(b) Reservation.
If any
shares of Common Stock required to be reserved for issuance upon exercise of
this Warrant or as otherwise provided hereunder require registration or
qualification with any governmental authority under any federal or state law
before such shares may be so issued, the Issuer will in good faith use its
best
efforts at its expense to cause such shares to be duly registered or qualified.
If the Issuer shall list any shares of Common Stock on any securities exchange
or market it will, at its expense, list thereon, maintain and increase when
necessary such listing, of, all shares of Warrant Stock from time to time issued
upon exercise of this Warrant or as otherwise provided hereunder (provided
that
such Warrant Stock has been registered pursuant to a registration statement
under the Securities Act then in effect), and, to the extent permissible under
the applicable securities exchange rules, all unissued shares of Warrant Stock
which are at any time issuable hereunder, so long as any shares of Common Stock
shall be so listed. The Issuer will also so list on each securities exchange
or
market, and will maintain such listing of, any other securities which the Holder
of this Warrant shall be entitled to receive upon the exercise of this Warrant
if at the time any securities of the same class shall be listed on such
securities exchange or market by the Issuer.
(c) Covenants.
The
Issuer shall not by any action including, without limitation, amending the
Certificate of Incorporation or the by-laws of the Issuer, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or
sale of securities or any other action, avoid or seek to avoid the observance
or
performance of any of the terms or provisions 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 the Holder hereof against dilution (to the extent specifically
provided herein) or impairment. Without limiting the generality of the
foregoing, the Issuer will (i) not permit the par value, if any, of its Common
Stock to exceed the then effective Warrant Price, (ii) not amend or modify
any
provision of the Certificate of Incorporation or by-laws of the Issuer in any
manner that would adversely affect the rights of the Holder of this Warrant,
(iii) take all such action as may be reasonably necessary in order that the
Issuer may validly and legally issue fully paid and nonassessable shares of
Common Stock, free and clear of any liens, claims, encumbrances and restrictions
(other than as provided herein) upon the exercise of this Warrant, and (iv)
use
its best efforts to obtain all such authorizations, exemptions or consents
from
any public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this
Warrant.
4
(d) Loss,
Theft, Destruction of Warrants.
Upon
receipt of evidence satisfactory to the Issuer of the ownership of and the
loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Issuer or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Issuer will make and deliver,
in
lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of
like
tenor and representing the right to purchase the same number of shares of Common
Stock.
4. Adjustment
of Warrant Price and Warrant Share Number.
The
number of shares of Common Stock for which this Warrant is exercisable, and
the
price at which such shares may be purchased upon exercise of this Warrant,
shall
be subject to adjustment from time to time as set forth in this Section 4.
The
Issuer shall give the Holder notice of any event described below which requires
an adjustment pursuant to this Section 4 in accordance with Section 5.
(a) Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or Sale.
(i)
In
case the Issuer after the Original Issue Date shall do any of the following
(each, a "Triggering
Event"):
(a)
consolidate with or merge into any other Person and the Issuer shall not be
the
continuing or surviving corporation of such consolidation or merger, or (b)
permit any other Person to consolidate with or merge into the Issuer and the
Issuer shall be the continuing or surviving Person but, in connection with
such
consolidation or merger, any Capital Stock of the Issuer shall be changed into
or exchanged for Securities of any other Person or cash or any other property,
or (c) transfer all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or reclassification of
its
Capital Stock, then, and in the case of each such Triggering Event, proper
provision shall be made so that, upon the basis and the terms and in the manner
provided in this Warrant, the Holder of this Warrant shall be entitled upon
the
exercise hereof at any time after the consummation of such Triggering Event,
to
the extent this Warrant is not exercised prior to such Triggering Event, to
receive at the Warrant Price in effect at the time immediately prior to the
consummation of such Triggering Event in lieu of the Common Stock issuable
upon
such exercise of this Warrant prior to such Triggering Event, the Securities,
cash and property to which such Holder would have been entitled upon the
consummation of such Triggering Event if such Holder had exercised the rights
represented by this Warrant immediately prior thereto, subject to adjustments
(subsequent to such corporate action) as nearly equivalent as possible to the
adjustments provided for elsewhere in this Section 4.
(ii) Notwithstanding
anything contained in this Warrant to the contrary, a Triggering Event shall
not
be deemed to have occurred if, prior to the consummation thereof, each Person
(other than the Issuer) which may be required to deliver any Securities, cash
or
property upon the exercise of this Warrant as provided herein shall assume,
by
written instrument delivered to, and reasonably satisfactory to, the Holder
of
this Warrant, (A) the obligations of the Issuer under this Warrant (and if
the
Issuer shall survive the consummation of such Triggering Event, such assumption
shall be in addition to, and shall not release the Issuer from, any continuing
obligations of the Issuer under this Warrant) and (B) the obligation to deliver
to such Holder such Securities, cash or property as, in accordance with the
foregoing provisions of this subsection (a), such
5
Holder
shall be entitled to receive, and such Person shall have similarly delivered
to
such Holder an opinion of counsel for such Person, which counsel shall be
reasonably satisfactory to such Holder, or in the alternative, a written
acknowledgement executed by the President or Chief Financial Officer of the
Issuer, stating that this Warrant shall thereafter continue in full force and
effect and the terms hereof (including, without limitation, all of the
provisions of this subsection (a)) shall be applicable to the Securities, cash
or property which such Person may be required to deliver upon any exercise
of
this Warrant or the exercise of any rights pursuant hereto.
(b) Stock
Dividends, Subdivisions and Combinations.
If at
any time the Issuer shall:
(i) take
a
record of the holders of its Common Stock for the purpose of entitling them
to
receive a dividend payable in, or other distribution of, shares of Common Stock,
(ii)
subdivide
its outstanding shares of Common Stock into a larger number of shares of Common
Stock, or
(iii)
combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock,
then
(1)
the number of shares of Common Stock for which this Warrant is exercisable
immediately after the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number
of
shares of Common Stock for which this Warrant is exercisable immediately prior
to the occurrence of such event would own or be entitled to receive after the
happening of such event, and (2) the Warrant Price then in effect shall be
adjusted to equal (A) the Warrant Price then in effect multiplied by the number
of shares of Common Stock for which this Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares of Common Stock
for
which this Warrant is exercisable immediately after such
adjustment.
(c) Certain
Other Distributions.
If at
any time the Issuer shall take a record of the holders of its Common Stock
for
the purpose of entitling them to receive any divi-dend or other distribution
of:
(i) cash
(other than a cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the jurisdiction of
incorporation of the Issuer),
(ii) any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property of any nature whatsoever (other than cash, Common Stock
Equivalents or Additional Shares of Common Stock), or
6
(iii) any
warrants or other rights to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property of any nature whatsoever (other than cash, Common Stock Equivalents
or
Additional Shares of Common Stock),
then
(1)
the number of shares of Common Stock for which this Warrant is exercisable
shall
be adjusted to equal the product of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such adjustment
multiplied by a fraction (A) the numerator of which shall be the Per Share
Market Value of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the amount
allocable to one share of Common Stock of any such cash so distributable and
of
the fair value (as determined in good faith by the Board of Directors of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any
and
all such evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights so distributable,
and (2) the Warrant Price then in effect shall be adjusted to equal (A) the
Warrant Price then in effect multiplied by the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to the adjustment
divided by (B) the number of shares of Common Stock for which this Warrant
is
exercisable immediately after such adjustment. A reclassification of the Common
Stock (other than a change in par value, or from par value to no par value
or
from no par value to par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its Common Stock of such shares of such other class of stock within the
meaning of this Section 4(c) and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock
as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4(b).
(d) Fractional
Interests.
In
computing ad-justments under this Section 4, fractional interests in Common
Stock shall be taken into account to the near-est one one-hundredth
(1/100th)
of a
share.
(e) When
Adjustment Not Required.
If the
Issuer shall take a record of the holders of its Common Stock for the purpose
of
entitling them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
(f) Form
of Warrant after Adjustments.
The
form of this Warrant need not be changed because of any adjustments in the
Warrant Price or the number and kind of Securities purchasable upon the exercise
of this Warrant.
(g) Escrow
of Warrant Stock.
If
after any property becomes distributable pursuant to this Section 4 by reason
of
the taking of any record of the holders of Common Stock, but prior to the
occurrence of the event for which such record is taken, and the Holder
exer-cises this Warrant, any shares of Common Stock issuable upon exercise
by
reason of such adjustment shall be deemed the last shares of Common Stock for
which this Warrant is exercised (notwithstanding any other provision to the
contrary herein) and such shares or other property shall be held in escrow
for
the Holder by the Issuer to be issued to the Holder upon and to the extent
that
the event actually takes place, upon payment of the current Warrant Price.
Notwithstanding any other provision to the contrary herein, if the event for
which such record was taken fails to occur or is rescinded, then such escrowed
shares shall be cancelled by the Issuer and escrowed property
returned.
7
5. Notice
of Adjustments.
Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant
to
Section 4 hereof (for purposes of this Section 5, each an "adjustment"), the
Issuer shall cause its Chief Financial Officer to prepare and execute a
certificate setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated (including a description of the basis on which the Board made
any
determination hereunder), and the Warrant Price and Warrant Share Number after
giving effect to such adjustment, and shall cause copies of such certificate
to
be delivered to the Holder of this Warrant promptly after each adjustment.
Any
dispute between the Issuer and the Holder of this Warrant with respect to the
matters set forth in such certificate may at the option of the Holder of this
Warrant be submitted to one of the national accounting firms currently known
as
the "big four" selected by the Holder; provided
that the
Issuer shall have ten (10) days after receipt of notice from such Holder of
its
selection of such firm to object thereto, in which case such Holder shall select
another such firm and the Issuer shall have no such right of objection. The
firm
selected by the Holder of this Warrant as provided in the preceding sentence
shall be instructed to deliver a written opinion as to such matters to the
Issuer and such Holder within thirty (30) days after submission to it of such
dispute. Such opinion shall be final and binding on the parties hereto.
6. Fractional
Shares.
No
fractional shares of Warrant Stock will be issued in connection with any
exercise hereof, but in lieu of such fractional shares, the Issuer shall make
a
cash payment therefor equal in amount to the product of the applicable fraction
multiplied by the Per Share Market Value then in effect.
7. Definitions.
For the
purposes of this Warrant, the following terms have the following
meanings:
"Additional
Shares of Common Stock"
means
all shares of Common Stock issued by the Issuer after the Original Issue Date,
and all shares of Other Common, if any, issued by the Issuer after the Original
Issue Date, except for Permitted Financings (as defined in the Purchase
Agreement) and the Other Warrants.
"Certificate
of Incorporation"
means
the Certificate of Incorporation of the Issuer as in effect on the Original
Issue Date, and as hereafter from time to time amended, modified, supplemented
or restated in accordance with the terms hereof and thereof and pursuant to
applicable law.
"Board"
shall
mean the Board of Directors of the Issuer.
8
"Capital
Stock"
means
and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Common
Stock"
means
the Common Stock, par value $0.01 per share, of the Issuer and any other Capital
Stock into which such stock may hereafter be changed.
"Convertible
Securities"
means
evidences of Indebtedness, shares of Capital Stock or other Securities which
are
or may be at any time convertible into or exchangeable for Additional Shares
of
Common Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Governmental
Authority"
means
any governmental, regulatory or self-regulatory entity, department, body,
official, authority, commission, board, agency or instrumentality, whether
federal, state or local, and whether domestic or foreign.
"Holder"
means
the Person who holds this Warrant. The term "Holders" means one of the Persons
who shall from time to time hold this Warrant.
"Independent
Appraiser"
means a
nationally recognized or major regional investment banking firm or firm of
independent certified public accountants of recognized standing (which may
be
the firm that regularly examines the financial statements of the Issuer) that
is
regularly engaged in the business of appraising the Capital Stock or assets
of
corporations or other entities as going concerns, and which is not affiliated
with either the Issuer or the Holder of any Warrant.
"Issuer"
means
Communication Intelligence Corporation, a Delaware corporation, and its
successors and assigns.
"Majority
Holders"
means
at any time the Holders of Warrants exercisable for a majority of the shares
of
Warrant Stock issuable under the Warrants at the time outstanding.
"Original
Issue Date"
means
_______, 200X.
"OTC
Bulletin Board"
means
the over-the-counter electronic bulletin board.
"Other
Common"
means
any other Capital Stock of the Issuer of any class which shall be authorized
at
any time after the date of this Warrant (other than Common Stock) and which
shall have the right to participate in the distribution of earnings and assets
of the Issuer without limitation as to amount.
"Other
Warrants"
means
the warrants to purchase shares of Common Stock issued to the other Purchasers
pursuant to the Purchase Agreement.
9
“Outstanding
Common Stock”
means,
at any given time, the aggregate amount of outstanding shares of Common Stock,
assuming full exercise, conversion or exchange (as applicable) of all options,
warrants and other Securities which are convertible into or exercisable or
exchangeable for, and any right to subscribe for, shares of Common Stock that
are outstanding at such time.
"Person"
means
an individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.
"Per
Share Market Value"
means
on any particular date (a) the closing bid price for a share of Common Stock
in
the over-the-counter market, as reported by the OTC Bulletin Board or in the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (b) if the Common Stock is not then reported by the OTC Bulletin
Board or the National Quotation Bureau Incorporated (or similar organization
or
agency succeeding to its functions of reporting prices), then the average of
the
"Pink Sheet" quotes for the relevant conversion period, as determined in good
faith by the Holder, or (c) if the Common Stock is not then publicly traded
the
fair market value of a share of Common Stock as determined by the Board in
good
faith; provided,
however,
that
the Majority Holders, after receipt of the determination by the Board, shall
have the right to select, jointly with the Issuer, an Independent Appraiser,
in
which case, the fair market value shall be the determination by such Independent
Appraiser; and provided,
further
that all
determinations of the Per Share Market Value shall be appropriately adjusted
for
any stock dividends, stock splits or other similar transactions during such
period. The determination of fair market value shall be based upon the fair
market value of the Issuer determined on a going concern basis as between a
willing buyer and a willing seller and taking into account all relevant factors
determinative of value, and shall be final and binding on all parties. In
determining the fair market value of any shares of Common Stock, no
consideration shall be given to any restrictions on transfer of the Common
Stock
imposed by agreement or by federal or state securities laws, or to the existence
or absence of, or any limitations on, voting rights.
"Purchase
Agreement"
means
the Note and Warrant Purchase Agreement dated as of June 15, 2007, among the
Issuer and the Purchasers.
"Purchasers"
means
the purchasers of the Notes and Warrants issued by the Issuer pursuant to the
Purchase Agreement.
"Securities"
means
any debt or equity securities of the Issuer, whether now or hereafter
authorized, any instrument convertible into or exchangeable for Securities
or a
Security, and any option, warrant or other right to purchase or acquire any
Security. "Security" means one of the Securities.
"Securities
Act"
means
the Securities Act of 1933, as amended, or any similar federal statute then
in
effect.
10
"Subsidiary"
means
any corporation at least 50% of whose outstanding Voting Stock shall at the
time
be owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries, or by the Issuer and one or more of its Subsidiaries.
"Term"
has the
meaning specified in Section 1 hereof.
"Trading
Day"
means
(a) a day on which the Common Stock is traded on the OTC Bulletin Board, or
(b)
if the Common Stock is not traded on the OTC Bulletin Board, a day on which
the
Common Stock is quoted in the over-the-counter market as reported by the
National Quotation Bureau Incorporated (or any similar organization or agency
succeeding its functions of reporting prices); provided,
however,
that in
the event that the Common Stock is not listed or quoted as set forth in (a)
or
(b) hereof, then Trading Day shall mean any day except Saturday, Sunday and
any
day which shall be a legal holiday or a day on which banking institutions in
the
State of New York are authorized or required by law or other government action
to close.
"Voting
Stock"
means,
as applied to the Capital Stock of any corporation, Capital Stock of any class
or classes (however designated) having ordinary voting power for the election
of
a majority of the members of the Board of Directors (or other governing body)
of
such corporation, other than Capital Stock having such power only by reason
of
the happening of a contingency.
"Warrants"
means
the Warrants issued and sold pursuant to the Purchase Agreement, including,
without limitation, this Warrant, and any other warrants of like tenor issued
in
substitution or exchange for any thereof pursuant to the provisions of Section
2(c) or 2(d) hereof or of any of such other Warrants.
"Warrant
Price"
initially means $______ per share as such price may be adjusted from time to
time as shall result from the adjustments specified in this Warrant, including
Section 4 hereto.
"Warrant
Share Number"
means
at any time the aggregate number of shares of Warrant Stock which may at such
time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made
under
the terms hereof.
"Warrant
Stock"
means
Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants.
9. Other
Notices.
In case
at any time:
|
(A)
|
the
Issuer shall make any distributions to the holders of Common Stock;
or
|
11
|
(B)
|
the
Issuer shall authorize the granting to all holders of its Common
Stock of
rights to subscribe for or purchase any shares of Capital Stock of
any
class or other rights; or
|
|
(C)
|
there
shall be any reclassification of the Capital Stock of the Issuer;
or
|
|
(D)
|
there
shall be any capital reorganization by the Issuer;
or
|
|
(E)
|
there
shall be any (i) consolidation or merger involving the Issuer or
(ii)
sale, transfer or other disposition of all or substantially all of
the
Issuer's property, assets or business (except a merger or other
reorganization in which the Issuer shall be the surviving corporation
and
its shares of Capital Stock shall continue to be outstanding and
unchanged
and except a consolidation, merger, sale, transfer or other disposition
involving a wholly-owned Subsidiary);
or
|
|
(F)
|
there
shall be a voluntary or involuntary dissolution, liquidation or winding-up
of the Issuer or any partial liquidation of the Issuer or distribution
to
holders of Common Stock;
|
then,
in
each of such cases, the Issuer shall give written notice to the Holder of the
date on which (i) the books of the Issuer shall close or a record shall be
taken
for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock
for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the action in question and not less than ten (10) days prior
to the record date or the date on which the Issuer's transfer books are closed
in respect thereto. This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to
the
holders of the Common Stock.
10. Amendment
and Waiver.
Any
term, covenant, agreement or condition in this Warrant may be amended, or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), by a written instrument or written
instruments executed by the Issuer and the Majority Holders; provided,
however,
that no
such amendment or waiver shall reduce the Warrant Share Number, increase the
Warrant Price, shorten the period during which this Warrant may be exercised
or
modify any provision of this Section 10 without the consent of the Holder of
this Warrant.
11. Governing
Law.
THIS
WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO ANY OF ITS PRINCIPLES OF CONFLICTS
OF LAW WHICH WOULD RESULT IN THE APPLICATION OF THE SUBSTANTIVE LAW OF ANOTHER
JURISDICTION.
12
12. Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earlier of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified for
notice prior to 5:00 p.m., eastern time, on a Trading Day, (ii) the Trading
Day
after the date of transmission, if such notice or communication is delivered
via
facsimile at the facsimile telephone number specified for notice later than
5:00
p.m., eastern time, on any date and earlier than 11:59 p.m., eastern time,
on
such date, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service or (iv) actual receipt by the
party to whom such notice is required to be given. The addresses for such
communications shall be with respect to the Holder of this Warrant or of Warrant
Stock issued pursuant hereto, addressed to such Holder at its last known address
or facsimile number appearing on the books of the Issuer maintained for such
purposes, or with respect to the Issuer, addressed to:
000
Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxx Xxxx
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
with
copies (which copies
shall
not
constitute notice
to
the
Issuer) to: Xxxxx
Xxxxxx Xxxxxxxx LLP
0000
X.X.
Xxxxx Xxx., 00xx
Xxxxx
Xxxxxxxx,
Xxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxx, Esq.
Tel.
No.:
(000) 000-0000
Fax
No.:
(000) 000-0000
Copies
of
notices to the Holder shall be sent to [Insert
name, address, phone and fax number]. Any
party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
13. Remedies.
The
Issuer stipulates that the remedies at law of the Holder of this Warrant in
the
event of any breach or threatened breach by the Issuer in the performance of
or
compliance with any of the terms or provisions of this Warrant are not and
will
not be adequate and that, to the fullest extent permitted by law, such terms
or
provisions may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of
any
of the terms or provisions hereof or otherwise.
14. Successors
and Assigns.
This
Warrant and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors and assigns of the Issuer, the Holder hereof and
(to
the extent provided herein) the Holders of Warrant Stock issued pursuant hereto,
and shall be enforceable by any such Holder or Holders of Warrant
Stock.
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15. Severability.
If, in
any action before any court or agency legally empowered to enforce any provision
contained herein, any provision hereof is found to be unenforceable, then such
provision shall be deemed modified to the extent necessary to make it
enforceable by such court or agency. If any such provision is not enforceable
as
set forth in the preceding sentence, the unenforceability of such provision
shall not affect the other provisions of this Warrant, but this Warrant shall
be
construed as if such unenforceable provision had never been contained
herein.
16. Headings.
The
headings of the Sections of this Warrant are for convenience of reference only
and shall not, for any purpose, be deemed a part of this Warrant and shall
not
influence the construction or interpretation of this Warrant.
[SIGNATURE
PAGE FOLLOWS]
14
IN
WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
first above written.
By:
Name:
Xxxxx Xxxx
Title:
Chief Financial and Legal Officer
15
EXERCISE
FORM
WARRANT
The
undersigned _______________, pursuant to the provisions of the within Warrant,
hereby elects to purchase _____ shares of Common Stock of ____________ covered
by the within Warrant.
Dated:
_________________ Signature ___________________________
Address _____________________
_____________________
ASSIGNMENT
FOR
VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and
does
irrevocably constitute and appoint _____________, attorney, to transfer the
said
Warrant on the books of the within named corporation.
Dated:
_________________ Signature ___________________________
Address _____________________
_____________________
PARTIAL
ASSIGNMENT
FOR
VALUE
RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named
corporation.
Dated:
_________________ Signature ___________________________
Address _____________________
_____________________
FOR
USE
BY THE ISSUER ONLY:
This
Warrant No. W2007-___ canceled (or transferred or exchanged) this _____ day
of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. 2007 W-_____ issued for ____ shares of Common
Stock
in the name of _______________.
16
