WARRANT Original Issue Date: November 25, 2008
EXHIBIT
10.4
WARRANT
Original
Issue Date: November 25, 2008
THIS
CERTIFIES THAT, FOR VALUE RECEIVED, Able Income Fund, LLC or its registered
assigns (“Holder”) is
entitled to purchase from Valcom, Inc. (the “Company”), on the terms and
conditions hereinafter set forth, at any time or from time to time from the date
hereof until 5:00 p.m., Eastern Time, on the seven year anniversary of the
Original Issue Date set forth above, or if such date is not a day on which the
Company (as hereinafter defined) is open for business, then the next succeeding
day on which the Company is open for business (such date is the “Expiration Date”), but not
thereafter, to purchase up to 400,000 shares of the Common Stock, par value
$.001 per share (the “Common
Stock”), of the Company, at a purchase price of $0.10 per share (the
“Exercise Price”), such
number of shares and Exercise Price being subject to adjustment upon the
occurrence of the contingencies set forth in this Warrant. Each share
of Common Stock as to which this Warrant is exercisable is a “Warrant Share” and all such
shares are collectively referred to as the “Warrant
Shares.”
Section
1. Exercise of Warrant;
Conversion of Warrant.
(a) This
Warrant may, at the option of Holder, be exercised in whole or in part from time
to time by delivery to the Company on or before 5:00 p.m., Eastern Time, on the
Expiration Date, (i) a written notice of such Holder's election to exercise
this Warrant (the “Exercise
Notice”), which notice may be in the form of the Notice of Exercise
attached hereto, properly executed and completed by Holder or an authorized
officer thereof, and (ii) payment for the Warrant Shares (“Payment”), as
further described in Section 1(b), below (the items specified in (i) and (ii)
are collectively referred to as the “Exercise
Materials”).
(b) Payment
may be made, at the option of Holder, by check payable to the order of the
Company or wire transfer, in an amount equal to the product of the Exercise
Price multiplied
by the number of Warrant Shares specified in the Exercise
Notice.
(c) Notwithstanding
any provisions herein to the contrary, if the Fair Market Value (as defined
below) of one share of Common Stock is greater than the Exercise Price (at the
date of calculation as set forth below), to the extent the Holder does not elect
to pay cash or by promissory note upon the deemed exercise of this Warrant, the
Holder shall be deemed to have elected to receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being cancelled) in
which event the Company shall issue to the holder a number of shares of Common
Stock computed using the following formula:
|
X=Y
(A-B)
|
|
||
|
A
|
| Where | X= | the number of shares of Common Stock to be issued to the holder |
|
|
Y=
|
the
number of shares of Common Stock deemed purchased under the Warrant for
which the Holder is not paying cash
|
|
|
A=
|
the
Fair Market Value of one share of the Company’s Common Stock (at the date
of such calculation)
|
|
|
B=
|
Purchase
Price (as adjusted to the date of such
calculation)
|
For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, subject to
applicable interpretations of the Securities and Exchange Commission, that the
Warrant Shares issued in a cashless exercise transaction shall be deemed to have
been acquired by the Holder, and the holding period for the Warrant Shares shall
be deemed to have commenced, on the date this Warrant was originally
issued.
(c) Fair Market
Value of a share of Common Stock as of a particular date (the "Determination
Date") shall mean:
(i) If
the Company's Common Stock is traded on an exchange or is quoted on the National
Association of Securities Dealers, Inc. Automated Quotation ("Nasdaq") National
Market System, the Nasdaq SmallCap Market or the American Stock Exchange, Inc.,
then the closing or last sale price, respectively, reported for the last
business day immediately preceding the Determination Date;
(ii) If
the Company's Common Stock is not traded on an exchange or on the Nasdaq
National Market System, the Nasdaq SmallCap Market or the American Stock
Exchange, Inc., but is traded in the over-the-counter market, then the average
of the closing bid and ask prices reported for the last business day immediately
preceding the Determination Date;
(iii) Except
as provided in clause (iv) below, if the Company's Common Stock is not
publicly traded, then as the Holder and the Company agree, or in the absence of
such an agreement, by arbitration in accordance with the rules then standing of
the American Arbitration Association, before a single arbitrator to be chosen
from a panel of persons qualified by education and training to pass on the
matter to be decided; or
(iv) If
the Determination Date is the date of a liquidation, dissolution or winding up,
or any event deemed to be a liquidation, dissolution or winding up pursuant to
the Company's articles of incorporation , then all amounts to be payable per
share to holders of the Common Stock pursuant to the articles of incorporation
in the event of such liquidation, dissolution or winding up, plus all other
amounts to be payable per share in respect of the Common Stock in liquidation
under the articles of incorporation , assuming for the purposes of this clause
(iv) that all of the shares of Common Stock then issuable upon exercise of
all of the Warrants are outstanding at the Determination Date.
(d) As
promptly as practicable after its receipt of the Exercise Materials, Company
shall execute or cause to be executed and delivered to Holder a certificate or
certificates representing the number of Warrant Shares specified in the Exercise
Notice, together with cash in lieu of any fraction of a share, and if this
Warrant is partially exercised, a new warrant on the same terms for the
unexercised balance of the Warrant Shares. The stock certificate or
certificates shall be registered in the name of Holder or such other name or
names as shall be designated in the Exercise Notice. The date on
which the Warrant shall be deemed to have been exercised (the “Effective Date”), and the date
the person in whose name any certificate evidencing the Common Stock issued upon
the exercise hereof is issued shall be deemed to have become the holder of
record of such shares, shall be the date the Company receives the Exercise
Materials, irrespective of the date of delivery of a certificate or certificates
evidencing the Common Stock issued upon the exercise or conversion hereof, provided, however, that if the
Exercise Materials are received by the Company on a date on which the stock
transfer books of the Company are closed, the Effective Date shall be the next
succeeding date on which the stock transfer books are open. All shares of
Common Stock issued upon the exercise or conversion of this Warrant will, upon
issuance, be fully paid and nonassessable and free from all taxes, liens, and
charges with respect thereto.
Section
2. Adjustments to
Warrant Shares.
The
number of Warrant Shares issuable upon the exercise hereof shall be subject to
adjustment as follows:
(a) In the event
the Company is a party to a consolidation, share exchange, or merger, or the
sale of all or substantially all of the assets of the Company to, any person, or
in the case of any consolidation or merger of another corporation into the
Company in which the Company is the surviving corporation, and in which there is
a reclassification or change of the shares of Common Stock of the Company, this
Warrant shall after such consolidation, share exchange, merger, or sale be
exercisable for the kind and number of securities or amount and kind of property
of the Company or the corporation or other entity resulting from such share
exchange, merger, or consolidation, or to which such sale shall be made, as the
case may be (the “Successor
Company”), to which a holder of the number of shares of Common Stock
deliverable upon the exercise (immediately prior to the time of such
consolidation, share exchange, merger, or sale) of this Warrant would have been
entitled upon such consolidation, share exchange, merger, or sale; and in any
such case appropriate adjustments shall be made in the application of the
provisions set forth herein with respect to the rights and interests of Holder,
such that the provisions set forth herein shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to the number and
kind of securities or the type and amount of property thereafter deliverable
upon the exercise of this Warrant. The above provisions shall similarly
apply to successive consolidations, share exchanges, mergers, and sales.
Any adjustment required by this Section 2 (a) because of a consolidation, share
exchange, merger, or sale shall be set forth in an undertaking delivered to
Holder and executed by the Successor Company which provides that Holder shall
have the right to exercise this Warrant for the kind and number of securities or
amount and kind of property of the Successor Company or to which the holder of a
number of shares of Common Stock deliverable upon exercise (immediately prior to
the time of such consolidation, share exchange, merger, or sale) of this Warrant
would have been entitled upon such consolidation, share exchange, merger, or
sale. Such undertaking shall also provide for future adjustments to the
number of Warrant Shares and the Exercise Price in accordance with the
provisions set forth in Section 2 hereof.
(b) In the event
the Company should at any time, or from time to time after the Original Issue
Date, fix a record date for the effectuation of a stock split or subdivision of
the outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of Common Stock, or securities or rights convertible into, or entitling
the holder thereof to receive directly or indirectly, additional shares of
Common Stock (hereinafter referred to as “Common Stock Equivalents”)
without payment of any consideration by such holder for the additional shares of
Common Stock or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon exercise or exercise thereof), then, as of such
record date (or the date of such dividend, distribution, split, or subdivision
if no record date is fixed), the number of Warrant Shares issuable upon the
exercise hereof shall be proportionately increased and the Exercise Price shall
be appropriately decreased by the same proportion as the increase in the number
of outstanding Common Stock Equivalents of the Company resulting from the
dividend, distribution, split, or subdivision. Notwithstanding the
preceding sentence, no adjustment shall be made to decrease the Exercise Price
below $.001 per Share.
(c) In the event
the Company should at any time or from time to time after the Original Issue
Date, fix a record date for the effectuation of a reverse stock split, or a
transaction having a similar effect on the number of outstanding shares of
Common Stock of the Company, then, as of such record date (or the date of such
reverse stock split or similar transaction if no record date is fixed), the
number of Warrant Shares issuable upon the exercise hereof shall be
proportionately decreased and the Exercise Price shall be appropriately
increased by the same proportion as the decrease of the number of outstanding
Common Stock Equivalents resulting from the reverse stock split or similar
transaction.
(d) In the event
the Company should at any time or from time to time after the Original Issue
Date, fix a record date for a reclassification of its Common Stock, then, as of
such record date (or the date of the reclassification if no record date is set),
this Warrant shall thereafter be convertible into such number and kind of
securities as would have been issuable as the result of such reclassification to
a holder of a number of shares of Common Stock equal to the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to such
reclassification, and the Exercise Price shall be unchanged.
(e) The Company
will not, by amendment of its Certificate of Incorporation or through
reorganization, consolidation, merger, dissolution, issue, or sale of
securities, sale of assets or any other voluntary action, void or seek to avoid
the observance or performance of any of the terms of the 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 in order to
protect the rights of Holder against dilution or other impairment. Without
limiting the generality of the foregoing, the Company (x) will not create a par
value of any share of stock receivable upon the exercise of the Warrant above
the amount payable therefor upon such exercise, and (y) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares upon the exercise of the
Warrant.
(f) When any
adjustment is required to be made in the number or kind of shares purchasable
upon exercise of the Warrant, or in the Exercise Price, the Company shall
promptly notify Holder of such event and of the number of shares of Common Stock
or other securities or property thereafter purchasable upon exercise of the
Warrants and of the Exercise Price, together with the computation resulting in
such adjustment.
(g) The Company
covenants and agrees that all Warrant Shares which may be issued will, upon
issuance, be validly issued, fully paid, and non-assessable. The Company
further covenants and agrees that the Company will at all times have authorized
and reserved, free from preemptive rights, a sufficient number of shares of its
Common Stock to provide for the exercise of the Warrant in full.
Section
3. No
Stockholder Rights.
This
Warrant alone shall not entitle Holder hereof to any voting rights or other
rights as a stockholder of the Company.
Section
4. Transfer of
Securities.
(a) This Warrant
and the Warrant Shares and any shares of capital stock received in respect
thereof, whether by reason of a stock split or share reclassification thereof, a
stock dividend thereon, or otherwise, shall not be transferable except upon
compliance with the provisions of the Securities Act of 1933, as amended (the
“Securities Act”) and
applicable state securities laws with respect to the transfer of such
securities. The Holder, by acceptance of this Warrant, agrees to be bound
by the provisions of Section 4 hereof and to indemnify and hold harmless
the Company against any loss or liability arising from the disposition of this
Warrant or the Warrant Shares issuable upon exercise hereof or any interest in
either thereof in violation of the provisions of this Warrant.
(b) Each
certificate for the Warrant Shares and any shares of capital stock received in
respect thereof, whether by reason of a stock split or share reclassification
thereof, a stock dividend thereon or otherwise, and each certificate for any
such securities issued to subsequent transferees of any such certificate shall
(unless otherwise permitted by the provisions hereof) be stamped or otherwise
imprinted with a legend in substantially the following form:
“NEITHER
THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAW AND NEITHER MAY BE SOLD OR OTHERWISE TRANSFERRED UNTIL
(I) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT AND SUCH APPLICABLE
STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR
(II) THE COMPANY SHALL HAVE RECEIVED A WRITTEN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH SECURITIES
ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED TRANSFER.”
Section
5. Miscellaneous.
(a) The terms of
this Warrant shall be binding upon and shall inure to the benefit of any
successors or permitted assigns of Holder.
(b) Except as
otherwise provided herein, this Warrant and all rights hereunder are
transferable by the registered holder hereof in person or by duly authorized
attorney on the books of the Company upon surrender of this Warrant, properly
endorsed, to the Company. The Company may deem and treat the registered
holder of this Warrant at any time as the absolute owner hereof for all purposes
and shall not be affected by any notice to the contrary.
(c) Notwithstanding any
provision herein to the contrary, Holder may not exercise, sell, transfer, or
otherwise assign this Warrant unless the Company is provided with an opinion of
counsel satisfactory in form and substance to the Company, to the effect that
such exercise, sale, transfer, or assignment would not violate the Securities
Act or applicable state securities laws.
(d) This Warrant may be
divided into separate warrants covering one share of Common Stock or any whole
multiple thereof, for the total number of shares of Common Stock then subject to
this Warrant at any time, or from time to time, upon the request of the
registered holder of this Warrant and the surrender of the same to the Company
for such purpose. Such subdivided Warrants shall be issued promptly by the
Company following any such request and shall be of the same form and tenor as
this Warrant, except for any requested change in the name of the registered
holder stated herein.
(e) Any notices,
consents, waivers, or other communications required or permitted to be given
under the terms of this Warrant must be in writing and will be deemed to have
been delivered (a) upon receipt, when delivered personally, (b) upon receipt,
when sent by facsimile, provided a
copy is mailed by U.S. certified mail, return receipt requested, (c) three (3)
days after being sent by U.S. certified mail, return receipt requested, or (d)
one (1) day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the
same.
Notice to
Holder shall be provided to the registered address of Holder appearing on the
books of the Company. Each party shall provide five (5) days prior
written notice to the other party of any change in address, which change shall
not be effective until actual receipt thereof
(f) The corporate
laws of the State of New York shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Warrant shall be governed by the internal laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New
York. If any provision of this Warrant shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Warrant in that
jurisdiction or the validity or enforceability of any provision of this Warrant
in any other jurisdiction.
[Signatures
on the following page]
SIGNATURE
PAGE
TO
WARRANT
IN
WITNESS WHEREOF, Valcom, Inc. has caused this Warrant to be executed and to be
dated as of the date first above written.
|
By: __________________________________
|
|
ASSIGNMENT
(To be
Executed by the Registered Holder to effect a Transfer of the foregoing
Warrant)
FOR VALUE
RECEIVED, the undersigned hereby sells, and assigns and transfers unto
___________________________________________________________________________ the
foregoing Warrant and the rights represented thereto to purchase shares of
Common Stock of Valcom, Inc. in accordance with terms and conditions thereof,
and does hereby irrevocably constitute and appoint ________________ Attorney to
transfer the said Warrant on the books of the Company, with full power of
substitution.
Holder:
_______________________________
_______________________________
Address
Dated:
_____________________, 20__
EXERCISE
OR CONVERSION NOTICE
To:
Valcom, Inc.
The
undersigned Holder of the attached Warrant hereby irrevocably elects to exercise
on a cashless basis the Warrant for, and to purchase thereunder, ____ shares of
Common Stock of Valcom, Inc. issuable upon exercise of said Warrant and hereby
surrenders said Warrant.
The
undersigned herewith requests that the certificates for such shares be issued in
the name of, and delivered to the undersigned, whose address is 00 Xxxxxxxx Xxx,
Xxxxxxxx, XX 00000.
If
electronic book entry transfer, complete the following:
Account
Number:_________________________________
Transaction
Code Number:__________________________
Dated:
___________________
|
Holder:
ABLE
INCOME FUND LLC
By:_____________________________
Name:
Title:
|
NOTICE
The
signature above must correspond to the name as written upon the face of the
within Warrant in every particular, without alteration or enlargement or any
change whatsoever.
