SECURITIES PURCHASE AGREEMENT
Exhibit
3.2
EXECUTION COPY
This
Securities Purchase Agreement (this “Agreement”) is dated as of January
10, 2018 among Bitzumi, Inc., a Delaware corporation (the
“Company”), and
the purchasers identified on the signature pages hereto (each, a
“Purchaser” and
collectively, the “Purchasers”).
WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities
Act”), the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires
to purchase from the Company, certain securities of the Company as
more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Company
and each of the Purchasers, severally and not jointly, agree as
follows:
ARTICLEI.
DEFINITIONS
1.1. Definitions. In addition to the
terms defined elsewhere in this Agreement, the following terms have
the meanings indicated:
“Affiliate” means any Person
that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144
under the Securities Act. With respect to a Purchaser, any
investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such
Purchaser.
“Business Day” means any day
other than Saturday, Sunday or other day on which the Federal
Reserve Bank of New York is closed.
“Change of
Control” means the
occurrence of any of the following in one or a series of related
transactions: (i) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in
Rule 13d-5(b)(1) under the Exchange Act) of more than 50% of the
voting rights or equity interests in the Company; (ii) a
replacement of more than one-half of the members of the
Company’s board of directors that is not approved by those
individuals who are members of the board of directors on the date
hereof (or other directors previously approved by such
individuals); (iii) a merger or consolidation of the Company or any
significant Subsidiary or a sale of more than one-half of the
assets of the Company in one or a series of related transactions,
unless following such transaction or series of transactions, the
holders of the Company’s securities prior to the first such
transaction continue to hold at least two-thirds of the voting
rights and equity interests in the surviving entity or acquirer of
such assets; (iv) a recapitalization, reorganization or other
transaction involving the Company or any significant Subsidiary
that constitutes or results in a transfer of more than one-half of
the voting rights or equity interests in the Company; (v)
consummation of a “Rule 13e-3 transaction” as defined
in Rule 13e-3 under the Exchange Act with respect to the Company,
or (vi) the execution by the Company or its controlling
stockholders of an agreement providing for or reasonably likely to
result in any of the foregoing events.
“Closing” means the closing
of the purchase and sale of the Shares and Warrants pursuant to
Section
2.1.
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“Closing Date” means the
date of the Closing.
“Closing Price” means, for
any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or
quoted on an Eligible Market or any other national securities
exchange, the closing price per share of the Common Stock for such
date (or the nearest preceding date) on the primary Eligible Market
or exchange on which the Common Stock is then listed or quoted;
(b) if prices for the Common Stock are then quoted on the OTC
Bulletin Board, the closing bid price per share of the Common Stock
for such date (or the nearest preceding date) so quoted;
(c) if prices for the Common Stock are then reported in the
“Pink Sheets” published by the National Quotation
Bureau Incorporated (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent closing bid
price per share of the Common Stock so reported; or (d) in all
other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
Purchasers holding a majority of the Securities.
“Commission” means the
Securities and Exchange Commission.
“Common Stock” means the
common stock of the Company, par value $0.0001 per
share.
“Common Stock Equivalents” means,
collectively, Options and Convertible Securities.
“Company Counsel” means The
Disclosure Law Group, counsel to the Company.
“Convertible Securities” means any
stock or securities (other than Options) convertible into or
exercisable or exchangeable for Common Stock.
“Effective Date” means the
date that the Registration Statement is first declared effective by
the Commission.
“Eligible Market” means any
of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, NASDAQ Global Market, the NASDAQ
Capital Market or the OTC Bulletin Board.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Filing Date” means
the 45th
day after the date of the IPO with respect to the initial
Registration Statement required to be filed hereunder, and, with
respect to any additional Registration Statements that may be
required pursuant to Section 6.1(b), the 60th day
following the date on which the Company first receives such
registration request from Purchasers.
“IPO” means the closing of
the share issuance set forth under the Company’s current
Regulation A offering circular filed with the
Commission.
“Lien” means any lien,
charge, claim, security interest, encumbrance, right of first
refusal or other restriction.
“Losses” means any and all
losses, claims, damages, liabilities, settlement costs and
expenses, including, without limitation, costs of preparation and
reasonable attorneys’ fees.
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“Options” means any rights,
warrants or options to subscribe for or purchase Common Stock or
Convertible Securities (including all Warrants and Additional
Warrants that can be issued under the Transaction
Documents).
“Person” means any
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or any court or other federal, state, local or
other governmental authority or other entity of any
kind.
“Per Unit Purchase Price”
means $1.875.
“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
“Prospectus” means the
prospectus included in the Registration Statement (including,
without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the
Prospectus including post effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference
in such Prospectus.
“Purchaser Counsel” has the
meaning set forth in Section 6.2(a).
“Registrable Securities”
means any Common Stock (including Underlying Shares) issued or
issuable pursuant to the Transaction Documents, together with any
securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect
to the foregoing and any Common Stock hereafter acquired by a
Purchaser (or issuable upon the conversion or exercise of any
warrant, right or other security that is hereafter issued to a
Purchaser).
“Registration Statement”
means each registration statement required to be filed under
Article VI, including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including
pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
“Restricted Person” means,
as of Closing, each of the executive officers of the Company and
each of the members of the Company’s board of
directors.
“Rule 144,” “Rule 415,” and “Rule 424” means Rule 144,
Rule 415 and Rule 424, respectively, promulgated by the Commission
pursuant to the Securities Act, as such Rules may be amended from
time to time, or any similar rule or regulation hereafter adopted
by the Commission having substantially the same effect as such
Rule.
“Securities” means the
Shares, the Warrant and the Underlying Shares.
“Shares” means the
shares of Common Stock, which are being issued and sold to the
Purchasers at the Closing.
“Subsidiary” means any
Person in which the Company, directly or indirectly, owns capital
stock or holds an equity or similar interest.
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“Trading Day” means (a) any
day on which the Common Stock is listed or quoted and traded on its
primary Trading Market, or (b) if the Common Stock is not then
listed or quoted and traded on its primary Trading Market, then a
day on which trading occurs on an Eligible Market (or any successor
thereto), or (c) if trading ceases to occur on an Eligible Market
(or any successor thereto), any Business Day.
“Trading Market” means any
Eligible Market, or any national securities exchange, market or
trading or quotation facility on which the Common Stock is then
listed or quoted.
“Transaction Documents”
means this Agreement, the Warrant and any other documents or
agreements executed in connection with the transactions
contemplated hereunder.
“Transfer Agent Instructions” means
the Irrevocable Transfer Agent Instructions executed by the Company
and delivered to and acknowledged in writing by the Company’s
transfer agent.
“Underlying Shares” means
the shares of Common Stock issuable upon exercise of the
Warrants.
“Unit” means (i) one (1)
Share, and (ii) a Warrant to acquire four (4) shares of Common
Stock,
“Warrant” means each Common Stock
purchase warrant in the form of Exhibit A.
ARTICLEII.
PURCHASE
AND SALE
2.1. Subject to the
terms and conditions set forth in this Agreement, at the Closing
the Company shall issue and sell to each Purchaser, and each
Purchaser shall, severally and not jointly, purchase from the
Company, the Shares and the Warrant for the purchase price set
forth on Schedule A
hereto under the heading “Purchase Price”. The Closing
shall take place at such location or time as the parties may
agree.
2.2. Closing
Deliveries.
(a) At the Closing, the
Company shall deliver or cause to be delivered to each Purchaser
the following:
(i) one or more stock
certificates, free and clear of all restrictive and other legends
(except as expressly provided in Section 4.1(b) hereof),
evidencing such number of Shares equal to the number of Units
indicated on Schedule
A hereto under the heading “Units”, registered
in the name of such Purchaser; and
(ii) a
Warrant, registered in the name of such Purchaser, pursuant to
which such Purchaser shall have the right to acquire such number of
Underlying Shares indicated on Schedule A hereto under the
heading “Warrant Shares”.
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(b) At the Closing,
each Purchaser shall deliver or cause to be delivered an amount
equal to the Per Unit Purchase Price multiplied by the number of
Units purchased, in United States dollars and in immediately
available funds, by wire transfer to the Company’s account
at:
Bank:
Bank of America
Account
Name: Bitzumi, Inc
Address: 00
0xx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx, XX 00000
Routing
#: 026-009593
A/C #:
4830704233755
The
total purchase price payable by each Purchaser shall be set forth
on Schedule A
hereto under the heading “Purchase Price.”
ARTICLEIII.
REPRESENTATIONS
AND WARRANTIES
3.1. Representations and Warranties of the
Company. The Company hereby represents and warrants to each
of the Purchasers as follows:
(a) Subsidiaries. The Company has
no direct or indirect Subsidiaries other than those listed in
Schedule 3.1(a). Except as disclosed in Schedule 3.1(a), the
Company owns, directly or indirectly, all of the capital stock or
comparable equity interests of each Subsidiary free and clear of
any Lien and all the issued and outstanding shares of capital stock
or comparable equity interest of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and
similar rights.
(b) Organization and Qualification.
Each of the Company and the Subsidiaries is an entity duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles
of incorporation, bylaws or otherorganizational or charter
documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not,
individually or in the aggregate, (i) adversely affect the
legality, validity or enforceability of any Transaction Document,
(ii) have or result in a material adverse effect on the results of
operations, assets, prospects, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole on
a consolidated basis, or (iii) adversely impair the Company’s
ability to perform fully on a timely basis its obligations under
any of the Transaction Documents (any of (i), (ii) or (iii), a
“Material Adverse
Effect”).
(c) Authorization; Enforcement. The
Company has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and
no further consent or action is required by the Company, its Board
of Directors or its stockholders. Each of the Transaction Documents
has been (or upon delivery will be) duly executed by the Company
and, assuming the due authorization, execution and delivery by the
other parties thereto, is, or when delivered in accordance with the
terms hereof, will constitute, the valid and binding obligation of
the Company enforceable against the Company in accordance with its
terms. Neither the Company nor any Subsidiary is in violation of
any of the provisions of its certificate or articles of
incorporation, bylaws or other organizational or charter
documents.
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(d) No Conflicts. The execution,
delivery and performance of the Transaction Documents by the
Company and the consummation by the Company of the transactions
contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, (ii) conflict with,
or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and
regulations and the rules and regulations of any self-regulatory
organization to which the Company or its securities are subject),
or by which any property or asset of the Company or a Subsidiary is
bound or affected.
(e) Issuance of the Securities. The
Securities (including the Underlying Shares) are duly authorized
and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens and shall not be subject
to preemptive rights or similar rights of stockholders. The Company
has reserved from its duly authorized capital stock the maximum
number of shares of Common Stock currently issuable upon exercise
of the Warrants.
(f) Capitalization. The number of
shares and type of all authorized, issued and outstanding capital
stock, options and other securities of the Company (whether or not
presently convertible into or exercisable or exchangeable for
shares of capital stock of the Company), as of January 10, 2018, is
set forth in Schedule 3.1(f). All outstanding shares of capital
stock are duly authorized, validly issued, fully paid and
nonassessable and have been issued in compliance with all
applicable securities laws. Except as set forth on Schedule 3.1(f),
there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal or
similar rights) or agreements, orally or in writing, to purchase or
acquire from the Company any shares of Common Stock or any
securities convertible into or exchangeable for shares of Common
Stock, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as set forth
herein, the Company is presently not under any obligation and has
not granted any rights to register under the Securities Act any of
its presently outstanding securities or any of its securities
issuable upon exercise or conversion of its currently outstanding
securities. To the Company’s knowledge, except as
contemplated in the Voting Agreement, no stockholder of the Company
has entered into any agreements with respect to the voting of
capital shares of the Company.
(g) Absence of Litigation. There is
no action, suit, claim, proceeding, inquiry or investigation before
or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its
Subsidiaries that is reasonably likely to, individually or in the
aggregate, have a Material Adverse Effect
(h) Certain Fees. No brokerage or
finder’s fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with
respect to the transactions contemplated by this Agreement, and the
Company has not taken any action that would cause any Purchaser to
be liable for any such fees or commissions.
(i) Private Placement. Neither the
Company nor any Person acting on the Company’s
behalf
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(j) has sold or offered
to sell or solicited any offer to buy the Securities by means of
any form of general solicitation or advertising. Neither the
Company nor any of its Affiliates nor any Person acting on the
Company’s behalf has, directly or indirectly, at any time
within the past six months, made any offer or sale of any security
or solicitation of any offer to buy any security under
circumstances that would (i) eliminate the availability of the
exemption from registration under Regulation D under the Securities
Act in connection with the offer and sale of the Securities as
contemplated hereby or (ii) cause the offering of the Securities
pursuant to the Transaction Documents to be integrated with prior
offerings by the Company for purposes of any applicable law,
regulation or stockholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market.
Assuming the accuracy of the Purchasers representations and
warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the
Securities by the Company to the Purchasers as contemplated hereby.
The Company is not, and is not an Affiliate of, an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company is not a
United States real property holding corporation within the meaning
of the Foreign Investment in Real Property Tax Act of
1980.
(k) Offering Circular. The
Preliminary Offering Circular filed by the Company with the
Commission on January 4, 2018 (the “Offering Circular”) complied in
all material respects with the requirements of federal law and all
rules and regulations thereunder, and did not contain any untrue
statement or omit a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
information contained in the Offering Circular, including the
financial statements of the Company, is true and accurate in all
material respects.
3.2. Representations and Warranties of the
Purchasers. Each Purchaser hereby, as to itself only and for
no other Purchaser, represents and warrants to the Company as
follows:
(a) Organization; Authority. Such
Purchaser is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization
with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The purchase by such Purchaser of the
Shares and the Warrants hereunder has been duly authorized by all
necessary action on the part of such Purchaser. This Agreement has
been duly executed and delivered by such Purchaser and, assuming
the due authorization, execution and delivery by the other parties
hereto, constitutes the valid and binding obligation of such
Purchaser, enforceable against it in accordance with its terms
except (i) as limited by laws of general application relating to
bankruptcy, insolvency and the relief of debtors and (ii) as
limited by rules of law governing specific performance, injunctive
relief or other equitable remedies and by general principles of
equity.
(b) No Conflicts. The execution and
delivery of the Transaction Documents by the Purchaser and the
consummation by such Purchaser of the transactions contemplated
hereby and thereby do not and will not (i) conflict with or violate
any provision of such Purchaser’s certificate or articles of
incorporation, bylaws or other organizational or charter documents;
(ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument or other
understanding to which such Purchaser is a party or by which any
property or asset of such Purchaser is bound or affected, or (iii)
result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or
governmental authority to which such Purchaser is
subject.
(c) Purchaser Status. At the time
such Purchaser was offered the Shares and the Warrants, it was, and
at the date hereof it is, an “accredited investor” as
defined in Rule 501(a) under the Securities Act.
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(d) Experience of such Purchaser.
Such Purchaser, either alone or together with its representatives,
has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment. Such Purchaser
is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete
loss of such investment.
3.3. Schedules. For purposes of the
Transaction Documents, disclosure of information in the Schedules
shall automatically constitute disclosure in all sections or
subsections of the Schedules to the
extent it is reasonably apparent from a reading of the disclosure
that such disclosure is applicable to such other sections and
subsections.
ARTICLEIV.
OTHER
AGREEMENTS OF THE PARTIES
4.1. Transfer
Restrictions.
(a) Securities may only
be disposed of pursuant to an effective registration statement
under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection
with any transfer of Securities other than pursuant to an effective
registration statement or to the Company or pursuant to Rule 144,
except as otherwise set forth herein, the Company may require the
transferor to provide to the Company an opinion of counsel selected
by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and
agrees to register on the books of the Company and with its
transfer agent, without any such legal opinion, any transfer of
Securities by a Purchaser to an Affiliate of such Purchaser,
provided that the transferee certifies to the Company that it is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act.
(b) The Purchasers
agree to the imprinting, so long as is required by this
Section 4.1(b), of
the following legend on any certificate evidencing
Securities:
[NEITHER] THESE
SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE] HAVE [NOT] 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 COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY
LAWS. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES.
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Certificates
evidencing Securities shall not be required to contain such legend
or any other legend (i) while a Registration Statement covering the
resale of such Securities is effective under the Securities Act,
(ii) following any sale of such Securities pursuant to Rule 144, or
(iii) if such legend is not required under applicable requirements
of the Securities Act (including judicial interpretations and
pronouncements issued by the Staff of the Commission). The Company
shall cause its counsel to issue the letter included in the
Transfer Agent Instructions to the Company’s transfer agent
on the Effective Date. Following the Effective Date or at such
earlier time as a legend is no longer required for certain
Securities, the Company will cause its transfer agent, no later
than three Trading Days following the delivery by a Purchaser to
the Company or the Company’s transfer agent of a legended
certificate representing such Securities, to deliver or cause to be
delivered to such Purchaser a certificate representing such
Securities that is free from all restrictive and other legends. The
Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the
restrictions on transfer set forth in this Section.
(c) The Company
acknowledges and agrees that a Purchaser may from time to time
pledge or grant a security interest in some or all of the
Securities in connection with a bona fide margin agreement or other
loan or financing arrangement secured by the Securities and, if
required under the terms of such agreement, loan or arrangement,
such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties that are accredited investors. Such a
pledge or transfer would not be subject to approval of the Company
and no legal opinion of the pledgee, secured party or pledgor shall
be required in connection therewith. Further, no notice shall be
required of such pledge. At the appropriate Purchaser’s
expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the
Securities, including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or
other applicable provision of the Securities Act to appropriately
amend the list of selling stockholders thereunder.
4.2. Furnishing of Information. As
long as any Purchaser owns Securities, the Company covenants to
timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange
Act. Upon the request of any Purchaser, the Company shall deliver
to such Purchaser a written certification of a duly authorized
officer as to whether it has complied with the preceding sentence.
As long as any Purchaser owns Securities, if the Company is not
required to file reports pursuant to such laws, it will prepare and
furnish to the Purchasers and make publicly available in accordance
with paragraph (c) of Rule 144 such information asis required for
the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any
holder of Securities may reasonably request to satisfy the
provisions of Rule 144 applicable to the issuer of securities
relating to transactions for the sale of securities pursuant to
Rule 144.
4.3. Integration. The Company shall
not, and shall use its commercially reasonable efforts to ensure
that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would
be integrated with the offer or sale of the Securities in a manner
that would require the registration under the Securities Act of the
sale of the Securities to the Purchasers or that would be
integrated with the offer or sale of the Securities for purposes of
the rules and regulations of any Trading Market.
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4.4. Board Seat. The Company shall
grant to the Purchasers a right to appoint one (1) independent
director to the Company’s Board of Directors within 90 days
of the date hereof. For so long as the Purchasers hold a number of
shares of Common Stock (including Common Stock issuable upon
exercise of warrants held by the Purchasers) equal to or greater
than one and one-half percent (1.5%) of the total issued and
outstanding shares of Common Stock of the Company, the Company
shall grant the Purchasers a right to appoint one (1) director to
the Company’s Board of Directors. In addition, for so long as
the Purchasers hold any shares of Common Stock, the Purchasers
shall have the right to have up to three (3) non-voting observers
who shall be present at the Company’s board meetings. In
connection therewith, the Company shall give such observers copies
of all notices, minutes, consents and other materials, financial or
otherwise, which the Company provides to its Board of Directors.
The Company shall compensate such observers in the same manner as
the members of its Board of Directors and reimburse such observers
for all reasonable out-of-pocket travel expenses incurred
(consistent with the Company’s travel policy) in connection
with attending meetings of the Board of Directors.
4.5. D&O Insurance. Prior to the
IPO, the Company and the Purchasers shall mutually agree on and
bind an acceptable directors and officer insurance policy with an
acceptable carrier.
4.6. Securities Laws Disclosure;
Publicity. The Company and Purchasers shall file a joint
press release acceptable to the Company and Purchasers disclosing
all material terms of the transactions contemplated hereby. The
Company and the Purchasers shall consult with each other in issuing
any press releases or otherwise making public statements or filings
and other communications with the Commission or any regulatory
agency or Trading Market with respect to the transactions
contemplated hereby, and neither party shall issue any such press
release or otherwise make any such public statement, filing or
other communication without the prior consent of the other, except
if such disclosure is required by law, in which case the disclosing
party shall promptly provide the other party with prior notice of
such public statement, filing or other communication.
4.7. Use of Proceeds. Except as set
forth on Schedule
4.7, the Company shall use the net proceeds from the sale of
the Securities hereunder for working capital purposes and other
general corporate purposes, but not (i) for the satisfaction of any
portion of the Company’s debt (other than payment of trade
payables and accrued expenses in the ordinary course of the
Company’s business and consistent with past practice), (ii)
to redeem any Company equity or equity-equivalent securities, or
(iii) to settle any outstanding litigation.
4.8. IPO Price. Without the written
consent of the Purchasers, the Company shall not sell its Common
Stock in the IPO for a price less than $2.50 per
share.
ARTICLEV.
CONDITIONS
5.1. Conditions Precedent to the
Obligations of the Purchasers. The obligation of each
Purchaser to acquire Securities at the Closing is subject to the
satisfaction or waiver by such Purchaser, at or before the Closing,
of each of the following conditions:
(a) Representations and Warranties.
The representations and warranties of the Company contained herein
shall be true and correct in all material respects as of the date
when made and as of the Closing as though made on and as of such
date;
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(b) Performance. The Company and
each other Purchaser shall have performed, satisfied and complied
in all material respects with all covenants, agreements and
conditions required by the Transaction Documents to be performed,
satisfied or complied with by it at or prior to the
Closing;
(c) No Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated
by the Transaction Documents;
(d) Adverse Changes. Since the date
of execution of this Agreement, no event or series of events shall
have occurred that reasonably would be expected to have or result
in a Material Adverse Effect.
(e) Voting Agreement. The Company
and the Major Stockholders (as defined in the Voting Agreement)
shall have executed and delivered the Voting Agreement in
substantially the form of Exhibit B attached hereto (the
“Voting
Agreement”).
5.2. Conditions Precedent to the
Obligations of the Company. The obligation of the Company to
sell Securities at the Closing is subject to the satisfaction or
waiver by the Company, at or before the Closing, of each of the
following conditions:
(a) Representations and Warranties.
The representations and warranties of the Purchasers contained
herein shall be true and correct in all material respects as of the
date when made and as of the Closing Date as though made on and as
of such date;
(b) Performance. The Purchasers
shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied
with by the Purchasers at or prior to the Closing; and
(c) No Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated
by the Transaction Documents.
ARTICLEVI.
REGISTRATION
RIGHTS
6.1. Registration
(a) As promptly as
possible, and in any event on or prior to the Filing Date, the
Company shall prepare and file with the Commission a Registration
Statement covering the resale of all Registrable Securities for an
offering to be made on a continuous basis pursuant to Rule 415. The
Registration Statement shall be on Form S-3 (except if the Company
is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on
Form S-1) and shall contain (except if otherwise directed by the
Purchasers) the plan of distribution.
(b) If at any time
prior to the five (5) years after the date of this Agreement, the
Company receives a request from Purchasers that the Company
file a Registration Statement
with respect to at least forty percent (40%) of the Registrable
Securities then outstanding and not registered under a previous
Registration Statement, then the Company shall as soon as
practicable, and in any event prior to the Filing Date, file on
Form S-3 (except if the Company is not then eligible to register
for resale the Registrable Securities on Form S-3, in which case
such registration shall be on Form S-1) registration statement covering
all Registrable Securities that the Purchasers requested to be registered.
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(c) The Company shall
use its commercially reasonable efforts to cause any Registration
Statement filed pursuant to this Section 6.1 to be declared
effective by the Commission as promptly as possible after the
filing thereof, and shall use its commercially reasonable efforts
to keep such Registration Statement continuously effective under
the Securities Act until the earlier of (i) the second anniversary
of the Effective Date, (ii) the date when all Registrable
Securities covered by such Registration Statement have been sold
publicly, or (iii) the date on which the Registrable Securities are
eligible for sale without registration pursuant to Rule 144 (the
“Effectiveness
Period”). The Company shall notify each Purchaser in
writing promptly (and in any event within one Business Day) after
receiving notification from the Commission that the Registration
Statement has been declared effective.
(d) The Company further
agrees that, in the event that the Registration Statement to be
filed pursuant to Section
6.1(a) has not been filed on the Filing Date (such event a
“Registration
Default”), the Company shall issue to the Purchasers
an aggregate number of shares of Common Stock at no cost to the
Purchasers equal to two and one-half percent (2.5%) of the maximum
number of Registrable Securities to be registered pursuant to the
Registration Statement on the date of the Registration Default and
shall continue to issue an aggregate number of shares of Common
Stock at no cost to the Purchasers equal to two and one-half
percent (2.5%) of the maximum number of Registrable Securities to
be registered pursuant to the Registration Statement for every
Delinquency Period in which the Company fails to file the
Registration Statement, as required;provided, however, that if the
Purchasers fail to provide the Company with any material
information that is reasonably required to be provided in such
Registration Statement with respect to such Purchasers as set forth
herein, then the date of Registration Default described above for
such Purchasers shall be extended until three (3) days following
the date of receipt by the Company of such required information.
The Company shall deliver said shares to the Purchasers by the
fifth (5th) day after the date
of the Registration Default and the fifth (5th) day after each
Delinquency Period, as applicable. Notwithstanding the foregoing,
nothing shall preclude the Purchasers from pursuing or obtaining
any available remedies at law, specific performance or other
equitable relief with respect to this Section 6.1(d) or otherwise in
accordance with applicable law. “Delinquency Period” shall mean
each ninety (90) day period after which a Registration Statement is
to be filed pursuant to Section 6.1(a).
6.2. Registration Procedures. In
connection with the Company’s registration obligations
hereunder, the Company shall:
(a) Not less than three
Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto
(including any document that would be incorporated or deemed to be
incorporated therein by reference), the Company shall (i) furnish
to each Purchaser and any counsel designated by any Purchaser
(each, a “Purchaser
Counsel”, and Acacia Research Corporation has
initially designated Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, P.C. as
Purchaser Counsel) copies of all such documents proposed to be
filed, which documents (other than those incorporated or deemed to
be incorporated by reference) will be subject to the review of each
Purchaser and Purchaser Counsel upon their request and on a
confidential basis strictly in accordance with Regulation FD
promulgated pursuant to the Exchange Act, and (ii) cause its
officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in
the reasonable opinion of respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
The Company shall not file a Registration Statement or any such
Prospectus or any amendments or supplements thereto to which
Purchasers holding a majority of the Registrable Securities shall
reasonably object. The Company shall list its Common Stock on an
Eligible Market prior to or concurrently with the filing of a
Registration Statement filed pursuant to Section 6.1.
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(b) (i) Prepare and
file with the Commission such amendments, including post-effective
amendments, to each Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable
Registrable Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements in
order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and
as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible, and in any event
within ten days, to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and
as promptly as reasonably possible provide the Purchasers true and
complete copies of all correspondence from and to the Commission
relating to the Registration Statement; and (iv) comply in all
material respectswith the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all Registrable
Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of
disposition by the Purchasers thereof set forth in the Registration
Statement as so amended or in such Prospectus as so
supplemented
(c) Notify the
Purchasers of Registrable Securities to be sold and Purchaser
Counsel as promptly as reasonably possible, and (if requested by
any such Person) confirm such notice in writing no later than one
Trading Day thereafter, of any of the following events: (i) the
Commission notifies the Company whether there will be a
“review” of any Registration Statement; (ii) the
Commission comments in writing on any Registration Statement (in
which case the Company shall deliver to each Purchaser a copy of
such comments and of all written responses thereto); (iii) any
Registration Statement or any post-effective amendment is declared
effective; (iv) the Commission or any other Federal or state
governmental authority requests any amendment or supplement to any
Registration Statement or Prospectus or requests additional
information related thereto; (v) the Commission issues any stop
order suspending the effectiveness of any Registration Statement or
initiates any Proceedings for that purpose; (vi) the Company
receives notice of any suspension of the qualification or exemption
from qualification of any Registrable Securities for sale in any
jurisdiction, or theinitiation or threat of any Proceeding for such
purpose; or (vii) the financial statements included in any
Registration Statement become ineligible for inclusion therein or
any statement made in any Registration Statement or Prospectus or
any document incorporated or deemed to be incorporated therein by
reference is untrue in any material respect or any revision to a
Registration Statement, Prospectus or other document is required so
that it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not
misleading.
(d) Use its
commercially reasonable efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the
effectiveness of any Registration Statement, or (ii) any suspension
of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, as soon as
possible.
(e) Furnish to each
Purchaser and Purchaser Counsel, without charge, at least one
conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by
reference, and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the
Commission.
(f) Promptly deliver to
each Purchaser and Purchaser Counsel, without charge, as many
copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such
Persons may reasonably request. The Company hereby consents to the
use of such Prospectus and each amendment or supplement thereto by
each of the selling Purchasers in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.
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(g) (i) In the
time and manner required by each Trading Market, prepare and file
with such Trading Market an additional shares listing application
covering all of the Registrable Securities; (ii) take all steps
necessary to cause such Registrable Securities to be approved for
listing on each Trading Market as soon as possible thereafter;
(iii) provide to the Purchasers evidence of such listing; and (iv)
maintain the listing of such Registrable Securities on each such
Trading Market or another Eligible Market.
(h) Prior to any public
offering of Registrable Securities, use its reasonable commercially
reasonable efforts to register or qualify or cooperate with the
selling Purchasers and each applicable Purchaser Counsel in
connection with the registration or qualification (or exemption
from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Purchaser
requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a
Registration Statement.
(i) Cooperate with the
Purchasers to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to
a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by this
Agreement, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered
in such names as any such Purchasers may request.
(j) Upon the occurrence
of any event described in Section 6.2(c)(vii), as
promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement
or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered,
neither the Registration Statement nor such Prospectus will contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
(k) Cooperate with any
due diligence investigation undertaken by the Purchasers in
connection with the sale of Registrable Securities, including,
without limitation, by making available any documents and
information; provided that the Company will not deliver or make
available to any Purchaser material, nonpublic information unless
such Purchaser specifically requests in advance to receive
material, nonpublic information in writing.
(l) If Holders of a
majority of the Registrable Securities being offered pursuant to a
Registration Statement select underwriters for the offering, the
Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including,
without limitation, by providing customary legal opinions, comfort
letters and indemnification and contribution
obligations.
(m) Comply with all
applicable rules and regulations of the Commission.
6.3. Registration Expenses. The
Company shall pay all fees and expenses incident to the performance
of or compliance with this Agreement by the Company, including
without limitation (a) all registration and filing fees and
expenses, including without limitation those related to filings
with the Commission, any Trading Market and in connection with
applicable state securities or Blue Sky laws, (b) printing expenses
(including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by
the Purchasers), (c) messenger, telephone and delivery expenses,
(d) fees and disbursements of counsel for the Company, (e) fees and
expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this
Agreement, and (f) all listing fees to be paid by the Company to
the Trading Market.
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6.4. Indemnification
(a) Indemnification by the Company.
The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Purchaser, the
officers, directors, partners, members, agents, brokers (including
brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of
Common Stock), investment advisors and employees of each of them,
each Person who controls any such Purchaser (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, partners, members, agents and
employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all Losses,
as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in the Registration
Statement, any Prospectus or anyform of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus,
or arising out of or relating to any omission or alleged omission
of a material fact required to be stated therein or necessary to
make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to
the extent, but only to the extent, that (i) such untrue
statements, alleged untrue statements, omissions or alleged
omissions are based solely upon information regarding such
Purchaser furnished in writing to the Company by such Purchaser
expressly for use therein, or to the extent that such information
relates to such Purchaser or such Purchaser’s proposed method
of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use
in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto or (ii) in the
case of an occurrence of an event of the type specified in
Section
6.2(c)(v)-(vii), the use by such Purchaser of an outdated or
defective Prospectus after the Company has notified such Purchaser
in writing that the Prospectus is outdated or defective and prior
to the receipt by such Purchaser of the Advice contemplated in
Section 6.5. The
Company shall notify the Purchasers promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware
in connection with the transactions contemplated by this
Agreement.
(b) Indemnification by Purchasers.
Each Purchaser shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses (asdetermined by a court of
competent jurisdiction in a final judgment not subject to appeal or
review) arising solely out of any untrue statement of a material
fact contained in the Registration Statement, any Prospectus, or
any form of prospectus, or in any amendment or supplement thereto,
or arising solely out of any omission of a material fact required
to be stated therein or necessary to make the statements therein
(in the case of any Prospectus or form of prospectus or supplement
thereto, in the light of the circumstances under which they were
made) not misleading to the extent, but only to the extent, that
such untrue statement or omission is contained in any information
so furnished in writing by such Purchaser to the Company
specifically for inclusionin such Registration Statement or such
Prospectus or to the extent that (i) such untrue statements or
omissions are based solely upon information regarding such
Purchaser furnished in writing to the Company by such Purchaser
expressly for use therein, or to the extent that such information
relates to such Purchaser or such Purchaser’s proposed method
of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Purchaser expressly for use
in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto or (ii) in the
case of an occurrence of an event of the type specified in
Section
6.2(c)(v)-(vii), the use by such Purchaser of an outdated or
defective Prospectus after the Company has notified such Purchaser
in writing that the Prospectus is outdated or defective and prior
to the receipt by such Purchaser of the Advice contemplated in
Section 6.5. In no
event shall the liability of any selling Purchaser hereunder be
greater in amount than the dollar amount of the net proceeds
received by such Purchaser upon the sale of the Registrable
Securities giving rise to such indemnification
obligation.
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(c) Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted
against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in writing,
and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred
in connection with defense thereof; provided, that the failure of
any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced
the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party or Parties unless: (i) the Indemnifying
Party has agreed in writing to pay such fees and expenses; or (ii)
the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or
(iii) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the
Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist
if the same counsel were to represent such Indemnified Party and
the Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for
any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding
in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of
such Proceeding.
All
fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner
not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten Trading Days of written
notice thereof to the Indemnifying Party (regardless of whether it
is ultimately determined that an Indemnified Party is not entitled
to indemnification hereunder; provided, that the Indemnifying Party
may require such Indemnified Party to undertake to reimburse all
such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to
indemnification hereunder).
(d) Contribution. If a claim for
indemnification under Section 6.4(a) or (b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then
each Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as
is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’
relative intent, knowledge, access to information and opportunity
to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in
Section 6.4(c), any
reasonable attorneys’ or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was
available to such party in accordance with its terms.
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The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4(d) were determined
by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to
in the immediately preceding paragraph. Notwithstanding the
provisions of this Section
6.4(d), no Purchaser shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the proceeds
actually received by such Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount
of any damages that such Purchaser has otherwise been required to
pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent
misrepresentation.
The
indemnity and contribution agreements contained in this Section are
in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6.5. Dispositions. Each Purchaser
agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the
Registration Statement. Each Purchaser further agrees that, upon
receipt of a notice from the Company of the occurrence of any event
of the kind described in Sections 6.2(c)(v),
(vi) or
(vii), such
Purchaser will discontinue disposition of such Registrable
Securities under the Registration Statement until such
Purchaser’s receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by
Section 6.2(j), or
until it is advised in writing (the “Advice”) by the Company
that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company
may provide appropriate stop orders and stop transfer instructions
to enforce the provisions of this paragraph.
6.6. Reports Under Exchange Act.
With a view to making available to Purchasers the benefits of Rule
144 of the Commission and any other rule or regulation of the
Commission that may at any time permit a Purchaser to sell
securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company
shall:
(a) make and keep
available adequate current
public information, as those terms are understood and defined in
Rule 144 of the Commission, at all times after the effective date
of the registration statement filed by the Company for the
IPO;
(b) use commercially
reasonable efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after the Company
has become subject to such reporting requirements);
and
(c) furnish to the
Purchasers, so long as Purchasers own any Registrable Securities,
forthwith upon request (i) to the
extent accurate, a written statement by the Company that it
has complied with the reporting requirements of Rule 144 of the
Commission (at any time after ninety (90) days after the effective
date of the registration statement filed by the Company for the
IPO), the Securities Act, and the Exchange Act (at any time after
the Company has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after the Company so qualifies);
(ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the
Company; and (iii) such other information as may be reasonably
requested in availing any Purchaser of any rule or regulation of
the Commission that permits the selling of any such securities
without registration (at any time after the Company has become
subject to the reporting requirements under the Exchange Act) or
pursuant to Form S-3 (at any time after the Company so qualifies to
use such form).
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6.7. Limitations
on Subsequent Registration Rights
. From
and after the date of this Agreement, the Company shall not,
without the prior written consent of the Purchasers, enter into any
agreement with any holder or prospective holder of any securities
of the Company that would provide to such holder the right to
include securities in any registration statement on other than
either a pro rata basis with respect to the Registrable Securities
or on a subordinate basis after the Purchasers have had the
opportunity to include in the registration and offering all shares
of Registrable Securities that they wish to so include. The Company
shall not (i) permit any holder or prospective holder to include
such securities in any registration statement unless, under the
terms of such agreement, such holder or prospective holder may
include such securities in any such registration statement only to
the extent that the inclusion of such securities will not reduce
the number of the Registrable Securities of the Purchasers that are
included; or (ii) allow such holder or prospective holder to
initiate a demand for registration of any securities held by such
holder or prospective holder.
ARTICLEVII.
MISCELLANEOUS
7.1. Termination. This Agreement may
be terminated by the Company or any Purchaser, by written notice to
the other parties, if the Closing has not been consummated by the
third Trading Day following the date of this Agreement; provided
that no such termination will affect the right of any party to xxx
for any breach by the other party (or parties).
7.2. Fees and Expenses. Each party
shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company
shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the issuance of the
Securities.
7.3. Entire Agreement. The
Transaction Documents, together with the Exhibits and Schedules
thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to
such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules. At or after the Closing,
and without further consideration, the Company will execute and
deliver to the Purchasers such further documents as may be
reasonably requested in order to give practical effect to the
intention of the parties under the Transaction
Documents.
7.4. 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 earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 6:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after
the date of transmission, if such notice or communication is
delivered via facsimile atthe facsimile number specified in this
Section on a day that is not a Trading Day or later than 6:30 p.m.
(New York City time) on any Trading Day, (c) the Trading Day
following the date of deposit with a nationally recognized
overnight courier service, or(d) upon actual receipt by the party
to whom such notice is required to be given. The addresses and
facsimile numbers for such notices and communications are those set
forth on the signature pages hereof, or such other address or
facsimile number as may be designated in writing hereafter, in the
same manner, by any such Person.
-18-
7.5. Amendments; Waivers. No
provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the
Company and Purchasers holding a majority of the Shares or, in the
case of a waiver, by the party against whom enforcement of any such
waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise
of any such right. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Purchasers under
Article VI and that
does not directly or indirectly affect the rights of other
Purchasers may be given by Purchasers holding at least a majority
of the Registrable Securities to which such waiver or consent
relates.
7.6. Construction. The headings
herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the
provisions hereof. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied
against any party.
7.7. Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may
not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser
may assign its rights under this Agreement to any Person to whom
such Purchaser assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions hereof that apply to the
“Purchasers.” Notwithstanding anything to the contrary
herein, Securities may be assigned to any Person in connection with
a bona fide margin account or other loan or financing arrangement
secured by such Securities.
7.8. No Third-Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto
and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by,
any other Person, except that each Indemnified Party is an intended
third party beneficiary of Section 6.4 and (in each case)
may enforce the provisions of such Sections directly against the
parties with obligations thereunder.
7.9. Governing Law; Venue; Waiver Of Jury
Trial. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. THE COMPANY AND PURCHASERS HEREBY IRREVOCABLY
SUBMIT TOTHE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE
ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY PURCHASER
HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY
IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY THE COMPANY OR ANY PURCHASER, ANY CLAIM
THATIT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH
PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED
MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH
PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS
AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED
HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND PURCHASERS
HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
-19-
7.10. Survival. The representations,
warranties, agreements and covenants contained herein shall survive
the Closing and the delivery and/or exercise of the Securities, as
applicable.
7.11. Execution. This Agreement may
be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall
become effective when counterparts have been signed by each party
and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force
and effect as if such facsimile signature page were an original
thereof.
7.12. Severability. If any provision
of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and
provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision
in this Agreement.
7.13. Rescission and Withdrawal
Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction
Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does
not timelyperform its related obligations within the periods
therein provided, then such Purchaser may rescind or withdraw, in
its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and
rights.
7.14. Replacement of Securities. If
any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity, if requested.
The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement
Securities.
7.15. Remedies. In addition to being
entitled to exercise all rights provided herein or granted by law,
including recovery of damages each of the Purchasers and the
Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any
breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be
adequate.
7.16. Payment Set Aside. To the
extent that the Company makes a payment or payments to any
Purchaser hereunder or pursuant to the Warrants or any Purchaser
enforces or exercises its rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company by a trustee, receiver or any otherPerson under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
7.17. Adjustments in Share Numbers and
Prices. In the event of any stock split, subdivision,
dividend or distribution payable in shares of Common Stock (or
other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly shares of Common
Stock), combination or other similar recapitalization or event
occurring after the date hereof, each reference in any Transaction
Document to a number of shares or a price per share shall be
amended to appropriately account for such event.
[SIGNATURE
PAGES TO FOLLOW]
-20-
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized signatories as of
the date first indicated above.
By:
__________________________
Name:
Xxxx
Xxxxx
Title:
Executive
Chairman
Address
for Notice:
00
0xx
Xxxxxx, Xxxxx 0000
Xxx
Xxxx, XX 00000
Facsimile
No.: 000-000-0000
Telephone
No.: 000-000-0000
Attn:
Xxxx Xxxxx, Executive Chairman
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOR PURCHASERS FOLLOW]
-21-
ACACIA
RESEARCH CORPORATION
By:
__________________________
Name:
Title:
Address
for Notice:
000
Xxxxxxx Xxxxxx Xx #0000
Xxxxxxx
Xxxxx, XX 00000
Attn:
Xxxxxx Xxxxxx, Executive Vice President General
Counsel
With a
copy to:
Xxxxxxxxx Xxxxx
Xxxxxxx & Xxxxx, P.C.
000
Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx
Xxxxx, XX 00000
Facsimile No.:
000-000-0000
Telephone
No.: 000-000-0000
Attn:
Xxxx X. Xxxxxx
-22-
Exhibits:
A
Form of
Warrant
B
Form of Voting
Agreement
-23-
Schedule A
Purchasers
|
Units
|
Warrant Shares
|
Purchase Price
|
Acacia
Research Corporation
|
533,333
|
2,133,333
|
$1,000,000
|
-24-
EXHIBIT A
NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE
SECURITIES ARE 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 COMPLIANCE WITH APPLICABLE STATE SECURITIES
OR BLUE SKY LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
WARRANT
Warrant
No. 1 Dated: January 10, 2018
Bitzumi, Inc., a
Delaware corporation (the “Company”), hereby certifies that,
for value received, Acacia Research Corporation or its registered
assigns (the “Holder”), is entitled to purchase
from the Company up to a total of 2,133,333 shares of common stock,
$0.0001 par value per share (the “Common Stock”), of the Company
(each such share, a “Warrant
Share” and all such shares, the “Warrant Shares”) at an exercise
price equal to $1.875 per share (as adjusted from time to time as
provided in Section
9, the “Exercise
Price”), at any time and from time to time from and
after the date hereof and through and including the date that is
three (3) days after the date of the IPO (as defined in the
Purchase Agreement) (the “Expiration Date”), and subject to
the following terms and conditions. This Warrant (this
“Warrant”) is
issued pursuant to that certain Securities Purchase Agreement,
dated as of January 10, 2018, by and among the Company and the
Purchasers identified therein (the “Purchase Agreement”). This warrant
is referred to herein as the “Warrant.”
ARTICLEVIII.
Definitions. In
addition to the terms defined elsewhere in this Warrant,
capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Purchase
Agreement.
ARTICLEIX.
Registration of
Warrant. 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.
ARTICLEX.
Registration of
Transfers. The Company shall register the transfer of any
portion of this Warrant in the Warrant Register, upon surrender of
this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Transfer Agent or to the Company at
its address specified herein. Upon any such registration or
transfer, a new warrant to purchase Common Stock, in substantially
the form of this Warrant (any such new warrant, a
“New Warrant”),
evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining
portion of this Warrant not so transferred, if any, shall be issued
to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of a
Warrant.
-25-
ARTICLEXI.
Exercise and Duration of
Warrants.
11.1. This Warrant shall
be exercisable by the registered Holder at any time and from time
to time on or after the date hereof to and including the Expiration
Date. At 6:30 P.M., New York City time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and
become void and of no value.
11.2. A Holder may
exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached hereto (the “Exercise Notice”), appropriately
completed and duly signed, and (ii) payment of the Exercise
Price for the number of Warrant Shares as to which this Warrant is
being, and the date such items are delivered to the Company (as
determined in accordance with the notice provisions hereof) is an
“Exercise Date.”
The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder.
ARTICLEXII.
Delivery of Warrant
Shares.
12.1. Upon exercise of
this Warrant, the Company shall promptly (but in no event later
than three Trading Days after the Exercise Date) issue or cause to
be issued and cause to be delivered to or upon the written order of
the Holder and in such name or names as the Holder may designate, a
certificate for the Warrant Shares issuable upon such exercise,
free of restrictive legends unless a registration statement
covering the resale of the Warrant Shares and naming the Holder asa
selling stockholder thereunder is not then effective and the
Warrant Shares are not freely transferable without volume
restrictions pursuant to Rule 144 under the Securities Act. The
Holder, or any Person so designated by the Holder to receive
Warrant Shares, shall be deemed to have become holder of record of
such Warrant Shares as of the Exercise Date. The Company shall,
upon request of the Holder, use its best efforts to deliver Warrant
Shares hereunder electronically through the Depository Trust
Corporation or another established clearing corporation performing
similar functions.
12.2. This Warrant is
exercisable, either in its entirety or, from time to time, for a
portion of the number of Warrant Shares. Upon surrender of this
Warrant following one or more partial exercises, the Company shall
issue or cause to be issued, at its expense, a New Warrant
evidencing the right to purchase the remaining number of Warrant
Shares.
12.3. The Company’s
obligations to issue and deliver Warrant Shares in accordance with
the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to
enforce thesame, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other
Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to the Holder in
connection with the issuance of Warrant Shares. 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.
ARTICLEXIII.
Charges, Taxes and
Expenses. Issuance and delivery of certificates for shares
of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding
tax, transfer agent fee or other incidental tax or expense in
respect of the issuance of such certificates, all of which taxes
and expenses shall be paid by the Company; provided, however, that
the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the registration of
any certificates for Warrant Shares or Warrants in a name other
than that of the Holder or an Affiliate thereof. The Holder shall
be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
ARTICLEXIV.
Replacement of
Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation hereof, or in
lieu of and substitution for this Warrant, a New Warrant, but only
upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction and customary and reasonable bond
or indemnity, if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe.
ARTICLEXV.
Reservation of Warrant
Shares. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized
but unissued and otherwise unreserved Common Stock, solely for the
purpose of enabling it to issue Warrant Shares upon exercise of
this Warrant as herein provided, the number of Warrant Shares which
are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other contingent
purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company
covenants that all Warrant Shares so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise
Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable. The Company
will take all such actions as may be necessary to assure that such
shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any
requirements of any securities exchange or automated quotation
system upon which the Common Stock may be listed.
ARTICLEXVI.
Certain
Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 9.
16.1. Stock Dividends and Splits. If
the Company, at any time while this Warrant is outstanding, (i)
pays a stock dividend on its Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, or (iii) combines
outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a
fractionof which the numerator shall be the number of shares of
Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and
any adjustment pursuant to clause (ii) or (iii) of this paragraph
shall become effective immediately after the effective date of such
subdivision or combination.
-26-
16.2. Pro Rata Distributions. If the
Company, at any time while this Warrant is outstanding, distributes
to all holders of Common Stock (i) evidences of its indebtedness,
(ii) any security (other than a distribution of Common Stock
covered by the preceding paragraph), (iii) rights or warrants
to subscribe for or purchase any security, or (iv) any other asset
(in each case, “Distributed
Property”), then in each such case the Exercise Price
in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution
shall be adjusted (effective on such record date) to equal the
product of such Exercise Price times a fraction of which the
denominator shall be the average of the Closing Prices for the five
Trading Days immediately prior to (but not including) such record
date (after the IPO or the fair market value of the Common Stock as
determined in good faith by the Board of Directors if before the
IPO) and of which the numerator shall be such average less the then
fair market value of the Distributed Property distributed in
respect of one outstanding share of Common Stock, as determined by
the Company’s independent certified public accountants that
regularly examine the financial statements of the Company (an
“Appraiser”). In
such event, the Holder, after receipt of the determination by the
Appraiser, shall have the right to select an additional appraiser
(which shall be a nationally recognized accounting firm), in which
case such fair market value shall be deemed to equal the average of
the values determined by each of the Appraiser and such appraiser.
As an alternative to the foregoing adjustment to the Exercise
Price, at therequest of the Holder delivered before the 90th day
after such record date the Company will deliver to such Holder, the
Distributed Property that such Holder would have been entitled to
receive in respect of the Warrant Shares for which this Warrant
could have been exercised immediately prior to such record date,
upon any exercise of the Warrant that occurs after such record
date.
16.3. Fundamental Transactions. If,
at any time while this Warrant is outstanding, (i) the Company
effects any merger or consolidation of the Company with or into
another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related
transactions, (iii) 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 (iv) 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
(other than as a result of a subdivision or combination of shares
of Common Stock covered by Section 9(a) above) (in any such case, a
“Fundamental
Transaction”), then the Holder shall have the right
thereafter to receive, upon exercise of this Warrant, the same
amount and kind of securities, cash or property as it would have
been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the
“Alternate
Consideration”). The aggregate Exercise Price for this
Warrant will not be affected by any such Fundamental Transaction,
but the Company shall apportion such aggregate 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. In the event of a
Fundamental Transaction, the Company or the successor or purchasing
Person, as the case may be, shall execute with the Holder a written
agreement providing that:
(x)
this Warrant shall
thereafter entitle the Holder to purchase the Alternate
Consideration in accordance with this section 9(c),
(y)
in the case of any
such successor or purchasing Person, upon such consolidation,
merger, statutory exchange, combination, sale or conveyance such
successor or purchasing Person shall be jointly and severally
liable with the Company for the performance of all of the
Company’s obligations under this Warrant and the Purchase
Agreement, and
-27-
(z)
if registration or
qualification is required under the Securities Act or applicable
state law for the public resale by the Holder of shares of stock
and other securities so issuable upon exercise of this Warrant, all
rights applicable to registration of the Common Stock issuable upon
exercise of this Warrant shall apply to the Alternate
Consideration.
If, in
the case of any Fundamental Transaction, the Alternate
Consideration includes shares of stock, other securities, other
property or assets of a Person other than the Company or any such
successor or purchasing Person, as the case may be, in such
Fundamental Transaction, then such written agreement shall also be
executed by such other Person and shall contain such additional
provisions to protect the interests of the Holder as the Board of
Directors of the Company shall reasonably consider necessary by
reason of the foregoing. At the Holder’s request, 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
purchase the Alternate Consideration for the aggregate Exercise
Price upon exercise thereof. 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 (c) and insuring that the Warrant (or
any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction. If
any Fundamental Transaction constitutes or results in a Change of
Control, then at the request of the Holder delivered before the
30th day
after such Fundamental Transaction, the Company (or any such
successor or surviving entity) will purchase the Warrant from the
Holder for a purchase price, payable in cash within five Trading
Days after such request (or, if later, on the effective date of the
Fundamental Transaction), equal to the Black-Scholes value
(calculated in accordance with Bloomberg, L.P. using a 180 day
historical volatility) of the remaining unexercised portion of this
Warrant on the date of such request in the case of a third party
tender offer, or, in the case of any other Fundamental Transaction,
on the date of the execution of definitive documentation governing
such Fundamental Transaction.
16.4. Number of Warrant Shares.
Simultaneously with any adjustments to the Exercise Price pursuant
to paragraphs (a) or (b) of this Section, the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the
increased or decreased number of Warrant Shares shall be the same
as the aggregate Exercise Price in effect immediately prior to such
adjustment.
16.5. Calculations. All calculations
under this Section
9 shall be made to the nearest cent or the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of
any such shares shall be considered an issue or sale of Common
Stock.
16.6. Notice of Adjustments. Upon the
occurrence of each adjustment pursuant to this Section 9, the Company at its
expense will promptly compute such adjustment in accordance with
the terms of this Warrant and prepare a certificate setting forth
such adjustment, including a statement of the adjusted Exercise
Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable),
describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based.
Upon written request, the Company will promptly deliver a copy of
each such certificate to the Holder and to the Company’s
Transfer Agent.
-28-
16.7. Notice of Corporate Events. If
the Company (i) declares a dividend or any other distribution of
cash, securities or other property in respect of its Common Stock,
including without limitation any granting of rights or warrants to
subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then the
Company shall deliver to the Holder a notice describing the
material terms and conditions of such transaction, at least 20
calendar days prior to the applicable record or effective date on
which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the
Company will take all steps reasonably necessary in order to insure
that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with
respect to such transaction.
ARTICLEXVII.
Payment of Exercise
Price. The Holder shall pay the Exercise Price in
immediately available funds.
ARTICLEXVIII.
Limitation on
Exercise. Notwithstanding anything to the contrary contained
herein, the number of shares of Common Stock that may be acquired
by the Holder upon any exercise of this Warrant (or otherwise in
respect hereof) shall be limited to the extent necessary to insure
that, following such exercise (or other issuance), the total number
of shares of Common Stock then beneficially owned by such Holder
and its Affiliates and any other Persons whose beneficial ownership
of Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act, does not exceed
9.999% (the “Maximum
Percentage”) of the total number of issued and
outstanding shares of Common Stock (including for such purpose the
shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance
with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. Each delivery of an Exercise
Notice hereunder will constitute a representation by the Holder
that it has evaluated the limitation set forth in this paragraph
and determined that issuance of the full number of Warrant Shares
requested in such Exercise Notice is permitted under this
paragraph. The Company’s obligation to issue shares of Common
Stock in excess of the limitation referred to in this Section shall
be suspended (and shall not terminate or expire notwithstanding any
contrary provisions hereof) until such time, if any, as such shares
of Common Stock may be issued in compliance with such limitation.
By written notice to the Company, the Holder shall have the right
at any time and from time to time to reduce its Maximum Percentage
immediately upon notice to the Company in the event and only to the
extent that Section 16 of the Exchange Act or the rules promulgated
thereunder (or any successor statute or rules) is changed to reduce
the beneficial ownership percentage threshold thereunder to a
percentage less than 9.999%. The limitations on exercise set forth
in this Section 11
shall terminate immediately prior to the consummation of a
Fundamental Transaction or any time thereafter if Holder provides
notice to the Company of its desire to terminate this Section 11.
ARTICLEXIX.
Fractional Shares.
The Company shall not be required to issue or cause to be issued
fractional Warrant Shares on the exercise of this Warrant. If any
fraction of a Warrant Share would, except for the provisions of
this Section, be issuable upon exercise of this Warrant, the number
of Warrant Shares to be issued will be rounded up to the nearest
whole share.
ARTICLEXX.
Notices. Any and
all notices or other communications or deliveries hereunder
(including without limitation any Exercise Notice) shall be in
writing and shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this
Section prior to 6:30 p.m. (New York City time) on a Trading Day,
(ii) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile
number specified in this Section on a day that is not a Trading Day
or later than 6:30 p.m. (New York City time) on any Trading Day,
(iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon
actual receipt by the party to whom such notice is required to be
given. The address for such notices or communications shall be as
set forth in the Purchase Agreement.
-29-
ARTICLEXXI.
Warrant Agent. The
Company shall serve as warrant agent under this Warrant. Upon 30
days’ notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall
be a party or any corporation to which the Company or any new
warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent
under this Warrant without any further act. Any such successor
warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid)
to the Holder at the Holder’s last address as shown on the
Warrant Register.
ARTICLEXXII.
Miscellaneous.
22.1. Subject to the
restrictions on transfer set forth herein, this Warrant may be
assigned by the Holder. This Warrant may not be assigned by the
Company except to a successor in the event of a Fundamental
Transaction. This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and
assigns. Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person other than the Company and
the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing
signed by the Company and the Holder or their successors and
assigns.
22.2. The Company will
not, by amendment of its governing documents 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 action as may be necessary or appropriate in order to
protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, theCompany (i) will not
increase the par value of any Warrant Shares above the amount
payable therefor on such exercise, (ii) will take all such action
as may be reasonably necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise of this Warrant, and (iii) will not
close its shareholder books or records in any manner which
interferes with the timely exercise of this Warrant.
22.3. Governing
Law; Venue; Waiver Of Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this
Warrant shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by any of
the Transaction Documents (whether brought against a party hereto
or its respective Affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York, Borough of
Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in
the City of New York, Borough of Manhattan for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of this Warrant), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Warrant and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Warrant or any of the
Transaction Documents or the transactions contemplated hereby or
thereby. If either party shall commence an action or proceeding to
enforce any provisions of this Warrant or any Transaction Document,
then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys fees and
other reasonable costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.
22.4. The headings herein
are for convenience only, do not constitute a part of this Warrant
and shall not be deemed to limit or affect any of the provisions
hereof.
22.5. In case any one or
more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any
way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which
shall be a commercially reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this
Warrant.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
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-31-
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated
above.
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By:
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Name:
Xxxx Xxxxx
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Title:
Executive Chairman
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-32-
FORM OF
EXERCISE NOTICE
(To be
executed by the Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)
To:
Bitzumi, Inc.
The
undersigned is the Holder of Warrant No. 1 (the “Warrant”) issued by Bitzumi, Inc.,
a Delaware corporation (the “Company”). Capitalized terms used
herein and not otherwise defined have the respective meanings set
forth in the Warrant.
22.5.0.0.1.
The Warrant is currently exercisable to purchase a total of
______________ Warrant Shares.
22.5.0.0.2.
The undersigned Holder hereby exercises its right to purchase
_________________ Warrant Shares pursuant to the
Warrant.
22.5.0.0.3.
Payment of the Exercise Price shall be made by wire in immediately
available funds in the sum of $____________ to the Company in
accordance with the terms of the Warrant.
22.5.0.0.4.
Pursuant to this exercise, the Company shall deliver to the holder
_______________ Warrant Shares in accordance with the terms of the
Warrant.
22.5.0.0.5.
Following this exercise, the Warrant shall be exercisable to
purchase a total of ______________ Warrant
Shares.
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Dated: ,
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Name of
Holder:
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(Print)
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By:
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Name:
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Title:
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(Signature
must conform in all respects to name of holder as specified on the
face of the Warrant)
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-33-
FORM OF
ASSIGNMENT
[To be
completed and signed only upon transfer of Warrant]
FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the
within Warrant to purchase ____________ shares of Common Stock of
Bitzumi, Inc. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of
Bitzumi, Inc. with full power of substitution in the
premises.
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Dated: ,
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(Signature
must conform in all respects to name of holder as specified on the
face of the Warrant)
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Address
of Transferee
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In the
presence of:
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-34-
EXHIBIT A
NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE
SECURITIES ARE 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 COMPLIANCE WITH APPLICABLE STATE SECURITIES
OR BLUE SKY LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
BITZUMI,
INC.
WARRANT
Warrant
No. 2 Dated: January 10, 2018
Bitzumi, Inc., a
Delaware corporation (the “Company”), hereby certifies that,
for value received, Acacia Research Corporation or its registered
assigns (the “Holder”), is entitled to purchase
from the Company up to a total of 30,000,000 shares of common
stock, $0.0001 par value per share (the “Common Stock”), of the Company
(each such share, a “Warrant
Share” and all such shares, the “Warrant Shares”) at an exercise
price equal to $0.01 per share (as adjusted from time to time as
provided in Section
9, the “Exercise
Price”), at any time and from time to time from and
after the date hereof and through and including the three year
anniversary of the date hereof (the “Expiration Date”), and subject to
the following terms and conditions; provided however, that if the
Holder shall be prohibited by Section 11 from exercising this
Warrant for all of the remaining Warrant Shares on the Expiration
Date, the Expiration Date shall be automatically extended until the
earlier of (i) thirty (30) days after the time when the exercise of
this Warrant shall no longer be limited by the Maximum Percentage
pursuant to Section
11 and (ii) 5 years from the date of this Warrant. This
Warrant (this “Warrant”) is issued pursuant to
that certain Joint Venture and Service Agreement, dated as of
January 10, 2018, by and among the Company and the Holder (the
“Joint Venture
Agreement”). This warrant is referred to herein as the
“Warrant.”
ARTICLEXXIII.
Definitions. In
addition to the terms defined elsewhere in this Warrant,
capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Joint Venture
Agreement.
ARTICLEXXIV.
Registration of
Warrant. 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.
-35-
ARTICLEXXV.
Registration of
Transfers. The Company shall register the transfer of any
portion of this Warrant in the Warrant Register, upon surrender of
this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Transfer Agent or to the Company at
its address specified herein. Upon any such registration or
transfer, a new warrant to purchase Common Stock, in substantially
the form of this Warrant (any such new warrant, a
“New Warrant”),
evidencing the portion of this Warrant so transferred shall be
issued to the transferee and a New Warrant evidencing the remaining
portion of this Warrant not so transferred, if any, shall be issued
to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations of a holder of a
Warrant.
ARTICLEXXVI.
Exercise and Duration of
Warrants.
26.1. This Warrant shall
be exercisable by the registered Holder at any time and from time
to time on or after the date hereof to and including the Expiration
Date. At 6:30 P.M., New York City time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and
become void and of no value.
26.2. A Holder may
exercise this Warrant by delivering to the Company (i) an exercise
notice, in the form attached hereto (the “Exercise Notice”), appropriately
completed and duly signed, and (ii) payment of the Exercise
Price for the number of Warrant Shares as to which this Warrant is
being, and the date such items are delivered to the Company (as
determined in accordance with the notice provisions hereof) is an
“Exercise Date.”
The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder.
ARTICLEXXVII.
Delivery of Warrant
Shares.
27.1. Upon exercise of
this Warrant, the Company shall promptly (but in no event later
than three Trading Days after the Exercise Date) issue or cause to
be issued and cause to be delivered to or upon the written order of
the Holder and in such name or names as the Holder may designate, a
certificate for the Warrant Shares issuable upon such exercise,
free of restrictive legends unless a registration statement
covering the resale of the Warrant Shares and naming the Holder as
a selling stockholder thereunder is not then effective and the
Warrant Shares are not freely transferable without volume
restrictions pursuant to Rule 144 under the Securities Act. The
Holder, or any Person so designated by the Holder to receive
Warrant Shares, shall be deemed to have become holder of record of
such Warrant Shares as of the Exercise Date. The Company shall,
upon request of the Holder, use its best efforts to deliver Warrant
Shares hereunder electronically through the Depository Trust
Corporation or another established clearing corporation performing
similar functions.
27.2. This Warrant is
exercisable, either in its entirety or, from time to time, for a
portion of the number of Warrant Shares. Upon surrender of this
Warrant following one or more partial exercises, the Company shall
issue or cause to be issued, at its expense, a New Warrant
evidencing the right to purchase the remaining number of Warrant
Shares.
27.3. The Company’s
obligations to issue and deliver Warrant Shares in accordance with
the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other
Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to the Holder in
connection with the issuance of Warrant Shares. 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.
-36-
ARTICLEXXVIII.
Charges, Taxes and
Expenses. Issuance and delivery of certificates for shares
of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding
tax, transfer agent fee or other incidental tax or expense in
respect of the issuance of such certificates, all of which taxes
and expenses shall be paid by the Company; provided, however, that
the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the registration of
any certificates for Warrant Shares or Warrants in a name other
than that of the Holder or an Affiliate thereof. The Holder shall
be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
ARTICLEXXIX.
Replacement of
Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation hereof, or in
lieu of and substitution for this Warrant, a New Warrant, but only
upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction and customary and reasonable bond
or indemnity, if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe.
ARTICLEXXX.
Reservation of Warrant
Shares. The Company covenants that it will at all times
reserve and keep available out of the aggregate of its authorized
but unissued and otherwise unreserved Common Stock, solely for the
purpose of enabling it to issue Warrant Shares upon exercise of
this Warrant as herein provided, the number of Warrant Shares which
are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights or any other contingent
purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 9). The Company
covenants that all Warrant Shares so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise
Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable. The Company
will take all such actions as may be necessary to assure that such
shares of Common Stock may be issued as provided herein without
violation of any applicable law or regulation, or of any
requirements of any securities exchange or automated quotation
system upon which the Common Stock may be listed.
ARTICLEXXXI.
Certain Adjustments. The
Exercise Price and number of Warrant Shares issuable upon exercise
of this Warrant are subject to adjustment from time to time as set
forth in this Section
9.
31.1. Stock Dividends and Splits. If
the Company, at any time while this Warrant is outstanding, (i)
pays a stock dividend on its Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, or (iii) combines
outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of
Common Stock outstanding immediately before such event and of which
the denominator shall be the number of shares of Common Stock
outstanding immediately after such event. Any adjustment made
pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and
any adjustment pursuant to clause (ii) or (iii) of this paragraph
shall become effective immediately after the effective date of such
subdivision or combination.
-37-
31.2. Pro Rata Distributions. If the
Company, at any time while this Warrant is outstanding, distributes
to all holders of Common Stock (i) evidences of its indebtedness,
(ii) any security (other than a distribution of Common Stock
covered by the preceding paragraph), (iii) rights or warrants
to subscribe for or purchase any security, or (iv) any other asset
(in each case, “Distributed
Property”), then in each such case the Exercise Price
in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution
shall be adjusted (effective on such record date) to equal the
product of such Exercise Price times a fraction of which the
denominator shall be the average of the Closing Prices for the five
Trading Days immediately prior to (but not including) such record
date and of which the numerator shall be such average less the then
fair market value of the Distributed Property distributed in
respect of one outstanding share of Common Stock, as determined by
the Company's independent certified public accountants that
regularly examine the financial statements of the Company (an
“Appraiser”). In
such event, the Holder, after receipt of the determination by the
Appraiser, shall have the right to select an additional appraiser
(which shall be a nationally recognized accounting firm), in which
case such fair market value shall be deemed to equal the average of
the values determined by each of the Appraiser and such appraiser.
As an alternative to the foregoing adjustment to the Exercise
Price, at the request of theHolder delivered before the 90th day
after such record date the Company will deliver to such Holder, the
Distributed Property that such Holder would have been entitled to
receive in respect of the Warrant Shares for which this Warrant
could have been exercised immediately prior to such record date,
upon any exercise of the Warrant that occurs after such record
date.
31.3. Fundamental Transactions. If,
at any time while this Warrant is outstanding, (i) the Company
effects any merger or consolidation of the Company with or into
another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related
transactions, (iii) 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 (iv) 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
(other than as a result of a subdivision or combination of shares
of Common Stock covered by Section 9(a) above) (in any such case, a
“Fundamental
Transaction”), then the Holder shall have the right
thereafter to receive, upon exercise of this Warrant, the same
amount and kind of securities, cash or property as it would have
been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the
“Alternate
Consideration”). The aggregate Exercise Price for this
Warrant will not be affected by any such Fundamental Transaction,
but the Company shall apportion such aggregate 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. In the event of a
Fundamental Transaction, the Company or the successor or purchasing
Person, as the case may be, shall execute with the Holder a written
agreement providing that:
(x)
this Warrant shall
thereafter entitle the Holder to purchase the Alternate
Consideration in accordance with this section 9(c),
(y)
in the case of any
such successor or purchasing Person, upon such consolidation,
merger, statutory exchange, combination, sale or conveyance such
successor or purchasing Person shall be jointly and severally
liable with the Company for the performance of all of the Company's
obligations under this Warrant and the Purchase Agreement,
and
-38-
(z)
if registration or
qualification is required under the Securities Act or applicable
state law for the public resale by the Holder of shares of stock
and other securities so issuable upon exercise of this Warrant, all
rights applicable to registration of the Common Stock issuable upon
exercise of this Warrant shall apply to the Alternate
Consideration.
If, in
the case of any Fundamental Transaction, the Alternate
Consideration includes shares of stock, other securities, other
property or assets of a Person other than the Company or any such
successor or purchasing Person, as the case may be, in such
Fundamental Transaction, then such written agreement shall also be
executed by such other Person and shall contain such additional
provisions to protect the interests of the Holder as the Board of
Directors of the Company shall reasonably consider necessary by
reason of the foregoing. At the Holder’s request, 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
purchase the Alternate Consideration for the aggregate Exercise
Price upon exercise thereof. 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 (c) and insuring that the Warrant (or
any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction. If
any Fundamental Transaction constitutes or results in a Change of
Control, then at the request of the Holder delivered before the
30th day
after such Fundamental Transaction, the Company (or any such
successor or surviving entity) will purchase the Warrant from the
Holder for a purchase price, payable in cash within five Trading
Days after such request (or, if later, on the effective date of the
Fundamental Transaction), equal to the Black-Scholes value
(calculated in accordance with Bloomberg, L.P. using a 180 day
historical volatility) of the remaining unexercised portion of this
Warrant on the date of such request in the case of a third party
tender offer, or, in the case of any other Fundamental Transaction,
on the date of the execution of definitive documentation governing
such Fundamental Transaction.
31.4. Number of Warrant Shares.
Simultaneously with any adjustments to the Exercise Price pursuant
to paragraphs (a) or (b) of this Section, the number of Warrant
Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the
increased or decreased number of Warrant Shares shall be the same
as the aggregate Exercise Price in effect immediately prior to such
adjustment.
31.5. Calculations. All calculations
under this Section
9 shall be made to the nearest cent or the nearest 1/100th
of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of
any such shares shall be considered an issue or sale of Common
Stock.
31.6. Notice of Adjustments. Upon the
occurrence of each adjustment pursuant to this Section 9, the Company at its
expense will promptly compute such adjustment in accordance with
the terms of this Warrant and prepare a certificate setting forth
such adjustment, including a statement of the adjusted Exercise
Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable),
describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based.
Upon written request, the Company will promptly deliver a copy of
each such certificate to the Holder and to the Company’s
Transfer Agent.
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31.7. Notice of Corporate Events. If
the Company (i) declares a dividend or any other distribution of
cash, securities or other property in respect of its Common Stock,
including without limitation any granting of rights or warrants to
subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then the
Company shall deliver to the Holder a notice describing the
material terms and conditions of such transaction, at least 20
calendar days prior to the applicable record or effective date on
which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the
Company will take all steps reasonably necessary in order to insure
that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with
respect to such transaction.
ARTICLEXXXII.
Payment of Exercise
Price. The Holder shall pay the Exercise Price in
immediately available funds.
ARTICLEXXXIII.
Limitation on
Exercise. (a) Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be
acquired by the Holder upon any exercise of this Warrant (or
otherwise in respect hereof) shall be limited to the extent
necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other
Persons whose beneficial ownership of Common Stock would be
aggregated with the Holder’s for purposes of Section 13(d) of
the Exchange Act, does not exceed 9.999% (the “Maximum Percentage”) of the total
number of issued and outstanding shares of Common Stock (including
for such purpose the shares of Common Stock issuable upon such
exercise). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. Each delivery of
an Exercise Notice hereunder will constitute a representation by
the Holder that it has evaluated the limitation set forth in this
paragraph and determined that issuance of the full number of
Warrant Shares requested in such Exercise Notice is permitted under
this paragraph. The Company’s obligation to issue shares of
Common Stock in excess of the limitation referred to in this
Section shall be suspended (and shall not terminate or expire
notwithstanding any contrary provisions hereof) until such time, if
any, as such shares of Common Stock may be issued in compliance
with such limitation. By written notice to the Company, the Holder
shall have the right at any time and from time to time to reduce
its Maximum Percentage immediately upon notice to the Company in
the event and only to the extent that Section 16 of the Exchange
Act or the rules promulgated thereunder (or any successor statute
or rules) is changed to reduce the beneficial ownership percentage
threshold thereunder to a percentage less than 9.999%. The
limitations on exercise set forth in this Section 11 shall terminate
immediately prior to the consummation of a Fundamental Transaction
or any time thereafter if Holder provides notice to the Company of
its desire to terminate this Section 11.
ARTICLEXXXIV.
Fractional Shares.
The Company shall not be required to issue or cause to be issued
fractional Warrant Shares on the exercise of this Warrant. If any
fraction of a Warrant Share would, except for the provisions of
this Section, be issuable upon exercise of this Warrant, the number
of Warrant Shares to be issued will be rounded up to the nearest
whole share.
ARTICLEXXXV.
Notices. Any and
all notices or other communications or deliveries hereunder
(including without limitation any Exercise Notice) shall be in
writing and shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this
Section prior to 6:30 p.m. (New York City time) on a Trading Day,
(ii) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile
number specified in this Section on a day that is not a Trading Day
or later than 6:30 p.m. (New York City time) on any Trading Day,
(iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon
actual receipt by the party to whom such notice is required to be
given. The address for such notices or communications shall be as
set forth in the Purchase Agreement.
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ARTICLEXXXVI.
Warrant Agent. The
Company shall serve as warrant agent under this Warrant. Upon 30
days' notice to the Holder, the Company may appoint a new warrant
agent. Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall
be a party or any corporation to which the Company or any new
warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent
under this Warrant without any further act. Any such successor
warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid)
to the Holder at the Holder's last address as shown on the Warrant
Register.
ARTICLEXXXVII.
Miscellaneous.
37.1. Subject to the
restrictions on transfer set forth herein, this Warrant may be
assigned by the Holder. This Warrant may not be assigned by the
Company except to a successor in the event of a Fundamental
Transaction. This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and
assigns. Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person other than the Company and
the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing
signed by the Company and the Holder or their successors and
assigns.
37.2. The Company will
not, by amendment of its governing documents 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 action as may be necessary or appropriate in order to
protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, the Company (i) will not
increase the par value of any Warrant Shares above the amount
payable therefor on such exercise, (ii) will take all such action
as may be reasonably necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise of this Warrant, and (iii) will not
close its shareholder books or records in any manner which
interferes with the timely exercise of this Warrant.
37.3. Governing
Law; Venue; Waiver Of Jury Trial. All questions concerning
the construction, validity, enforcement and interpretation of this
Warrant shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by any of
the Transaction Documents (whether brought against a party hereto
or its respective Affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York, Borough of
Manhattan. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in
the City of New York, Borough of Manhattan for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of this Warrant), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party heretohereby irrevocably waives
personal service of process and consents to process being served in
any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party atthe address in effect for notices to
it under this Warrant and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to
serve process inany manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Warrant or any of the
Transaction Documents or the transactions contemplated hereby or
thereby. If either party shall commence an action or proceeding to
enforce any provisions of this Warrant or any Transaction Document,
then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys fees and
other reasonable costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.
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37.4. The headings herein
are for convenience only, do not constitute a part of this Warrant
and shall not be deemed to limit or affect any of the provisions
hereof.
37.5. In case any one or
more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any
way be affected or impaired thereby and the parties will attempt in
good faith to agree upon a valid and enforceable provision which
shall be a commercially reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this
Warrant.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated
above.
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BITZUMI, INC.
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By:
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Name:
Xxxx Xxxxx
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Title:
Executive Chairman
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FORM OF
EXERCISE NOTICE
(To be
executed by the Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)
To:
Bitzumi, Inc.
The
undersigned is the Holder of Warrant No. 2 (the “Warrant”) issued by Bitzumi, Inc.,
a Delaware corporation (the “Company”). Capitalized terms used
herein and not otherwise defined have the respective meanings set
forth in the Warrant.
37.5.0.0.1.
The Warrant is currently exercisable to purchase a total of
______________ Warrant Shares.
37.5.0.0.2.
The undersigned Holder hereby exercises its right to purchase
_________________ Warrant Shares pursuant to the
Warrant.
37.5.0.0.3.
Payment of the Exercise Price shall be made by wire in immediately
available funds in the sum of $____________ to the Company in
accordance with the terms of the Warrant.
37.5.0.0.4.
Pursuant to this exercise, the Company shall deliver to the holder
_______________ Warrant Shares in accordance with the terms of the
Warrant.
37.5.0.0.5.
Following this exercise, the Warrant shall be exercisable to
purchase a total of ______________ Warrant
Shares.
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Dated: ,
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Name of
Holder:
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(Print)
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By:
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Name:
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Title:
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(Signature
must conform in all respects to name of holder as specified on the
face of the Warrant)
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FORM OF
ASSIGNMENT
[To be
completed and signed only upon transfer of Warrant]
FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the
within Warrant to purchase ____________ shares of Common Stock of
Bitzumi, Inc. to which the within Warrant relates and appoints
________________ attorney to transfer said right on the books of
Bitzumi, Inc. with full power of substitution in the
premises.
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Dated: ,
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(Signature
must conform in all respects to name of holder as specified on the
face of the Warrant)
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Address
of Transferee
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In the
presence of:
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