WARRANT TO PURCHASE PREFERRED STOCK OF MTM TECHNOLOGIES, INC. Dated June 11, 2008
Exhibit
10.5
THIS
WARRANT AND THE SHARES OF PREFERRED STOCK WHICH MAY BE PURCHASED PURSUANT TO THE
EXERCISE OF THIS WARRANT (AND THE SHARES OF COMMON STOCK WHICH MAY BE ISSUED
UPON CONVERSION OF SUCH SHARES OF PREFERRED STOCK) HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND SUCH SECURITIES
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND THE RULES AND
REGULATIONS THEREUNDER.
THE
SECURITIES REPRESENTED HEREBY MAY BE SUBJECT TO THE TERMS AND CONDITIONS OF AN
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT WHICH MAY PLACE CERTAIN RESTRICTIONS
ON THE VOTING OF SUCH SECURITIES (INCLUDING THE GRANT OF AN IRREVOCABLE PROXY
RELATIVE TO VOTING MATTERS). A COPY OF SUCH AGREEMENT WILL BE
FURNISHED TO THE RECORD HOLDER OF THIS SECURITY WITHOUT CHARGE UPON WRITTEN
REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS.
| No. W-P[ ] |
Void
After Expiration Date
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(as defined
below)
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WARRANT
TO
PURCHASE PREFERRED STOCK OF
Dated
June 11, 2008
THIS
WARRANT CERTIFIES THAT, for value received,
[ ]. or its permitted transferees (the “Holder”) is entitled
to purchase from MTM TECHNOLOGIES, INC., a New York corporation (the “Company”), up to the
number of fully paid and nonassessable shares (the “Shares”) of the next
series of preferred stock, $0.001 par value, per share of the Company, to be
designated by the Company after the date hereof, (“Preferred Stock”), as
further described and defined below.
Section 1. Number of
Shares. The maximum number of shares of Preferred Stock which
may be purchased upon the exercise of this Warrant is
[ ]. This Warrant shall not be exercised prior to
the date upon which the Company designates the next series of preferred
stock.
Section 2. Exercise
Price. The price per share at which the Holder may purchase
the Shares shall be $0.375 per share (the “Exercise
Price”).
Section 3. Expiration
Date. This Warrant shall expire at 5:00 p.m. New York Time on
June 11, 2012 (the “Expiration
Date”). On the Expiration Date, all rights of the Holder to
purchase Preferred Stock pursuant to this Warrant shall immediately
terminate.
Section 4. Exercise and
Payment.
Section 4.1 Exercise. The
purchase rights represented by this Warrant may be exercised by the Holder, in
whole or in part at any time, by the surrender of this Warrant (together with a
duly executed notice of exercise in the form attached hereto as Exhibit A-1) at the
principal office of the Company, and by the payment to the Company, by wire
transfer of immediately available funds, of an amount equal to the aggregate
Exercise Price of the Shares being purchased.
Section 4.2 Net Issue
Election. The Holder may elect to receive, without the payment
by the Holder of any additional consideration, shares equal to the value of this
Warrant or any portion hereof by the surrender of this Warrant or such portion
(together with a duly executed notice of exercise in the form attached hereto as
Exhibit A-2) at
the principal office of the Company. Thereupon, the Company shall
issue to the Holder such number of shares of Preferred Stock as is computed
using the following formula:
2
X = Y (A-B)
A
Where
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X
=
|
the
number of shares of Preferred Stock to be issued to the Holder pursuant to
this Section 4.2.
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Y
=
|
the
number of shares of Preferred Stock covered by this Warrant in respect of
which the net issue election is made pursuant to this Section 4.2.
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A
=
|
the
Fair Market Value of one share of Preferred Stock, as determined by the
board of directors of the Company (the “Board of
Directors”), as at the time the net issue election is made pursuant
to this Section 4.2.
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B
=
|
the
Exercise Price in effect under this Warrant at the time the net issue
election is made pursuant to this Section 4.2.
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Section 4.3 Stock
Certificates. In the event of the exercise of all or any
portion of this Warrant, certificates for the shares of Preferred Stock so
purchased shall be delivered to the Holder by the Company at the Company's own
expense (including the payment by the Company of any applicable issue taxes or
governmental charges imposed in connection with the issuance or delivery of the
Preferred Stock) within a reasonable time, which shall in no event be later than
ten (10) days thereafter and, unless this Warrant has been fully exercised or
has expired, a new Warrant representing the Shares with respect to which this
Warrant shall not have been exercised shall also be issued to the Holder within
such time.
If this
Warrant shall be surrendered for exercise within any period during which the
transfer books for shares of the Preferred Stock or other securities purchasable
upon the exercise of this Warrant are closed for any purpose, the Company shall
not be required to make delivery of certificates for the securities purchasable
upon such exercise until the date of the reopening of said transfer
books.
Section 5. Stock Fully Paid;
Reservation of Shares. All of the Shares issuable upon the
exercise of this Warrant will, upon issuance and receipt of the Exercise Price
therefor, be duly authorized, validly issued, fully paid and nonassessable with
no personal liability attaching to the ownership thereof, and free and clear of
all taxes, liens, encumbrances and charges with respect to the issue
thereof. During the period within which this Warrant may be
exercised, the Company shall at all times have authorized and reserved for
issuance sufficient shares of its Preferred Stock to provide for the exercise of
this Warrant.
Section 6. Adjustment of Exercise Price
and Number of Shares. The number and kind of securities
purchasable upon the exercise of this Warrant and the Exercise
Price
3
therefor
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
Section 6.1 Adjustments for Subdivisions
of Preferred Stock. If the number of shares of Preferred Stock
outstanding at any time is increased by a stock dividend payable in shares of
Preferred Stock or by a subdivision or split up of stock, then the Exercise
Price then in effect shall, concurrently with the effectiveness of such
dividend, subdivision or split up, be proportionately decreased and the number
of shares of Preferred Stock issuable upon exercise of this Warrant shall be
increased in proportion to such increase of outstanding shares of Preferred
Stock.
Section 6.2 Adjustments for Combinations
Preferred Stock. If the number of shares of Preferred Stock
outstanding at any time is decreased by a combination of the outstanding shares
of Preferred Stock, then the Exercise Price then in effect shall, concurrently
with the effectiveness of such combination, be proportionately increased and the
number of shares of Preferred Stock issuable upon exercise of this Warrant shall
be decreased in proportion to such decrease in outstanding shares of Preferred
Stock.
Section 6.3 Adjustments for
Reclassification, Exchange and Substitution. Upon a Notice
Event (as defined below), if the Preferred Stock issuable upon exercise of this
Warrant shall be changed into the same or a different number of shares of any
other class or classes of stock, whether by capital reorganization, merger,
reclassification or otherwise (other than a subdivision or combination of shares
provided for above) this Warrant shall thereafter be exercisable into, in lieu
of the number of shares of Preferred Stock which the Holder would otherwise have
been entitled to receive, a number of shares of such other class or classes of
stock equivalent to the number of shares of Preferred Stock that would have been
subject to receipt by the Holder upon exercise of this Warrant immediately
before that change.
Section 6.4 Notice of Certain
Events. In
the event (each, a “Notice
Event”): (a) the Company authorizes the issuance to all
holders of Common Stock and/or Preferred Stock rights or warrants to subscribe
for or purchase shares of its capital stock, or any other subscription rights or
warrants; (b) the Company authorizes the distribution to all holders of
Common Stock and/or Preferred Stock evidences of indebtedness or assets or other
securities; (c) of any capital reorganization or reclassification of Common
Stock and/or Preferred Stock, other than a subdivision or combination of the
outstanding Common Stock and/or Preferred Stock and other than a change in par
value of the Common Stock and/or Preferred Stock; (d) of any liquidation or
merger to which the Company is a party and for which approval of any of the
Company's holders of Common Stock and/or Preferred Stock is required, other than
a consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or change of the shares of
Preferred Stock issuable upon the exercise of this Warrant; (e) of the
conveyance or transfer of the Company's properties and assets, substantially as
an entirety; or (f) of the Company's voluntary or involuntary dissolution,
liquidation or winding-up; then, in each case, the Company shall cause to be
mailed by certified mail to the Holder, at least 10 days prior to the
applicable record or effective date hereinafter
4
specified,
a notice stating the material terms relating to the exercise of the Warrants,
the name, title and telephone number of a Company representative who shall be
available to answer any questions relating to such exercise and the dates as of
which (i) the holders of Common Stock and/or Preferred Stock of record will be
entitled to receive any such rights, warrants or distributions are to be
determined, (ii) such Notice Event is expected to become effective and
(iii) that Holders of record of Warrants shall be entitled to exchange or
sell their shares of Preferred Stock issuable upon the exercise of this Warrant
for securities or other property, if any, deliverable upon such Notice
Event. In addition, if the Company receives written notice that a
purchase, tender or exchange offer has been made to the holders of more than 50%
of the outstanding Common Stock and/or Preferred Stock, the Company shall give
the Holder reasonable notice (but will not be required to give not more than 10
days notice) thereof.
Section 7. Fractional
Shares. No fractional shares of Preferred Stock will be issued
in connection with any exercise hereunder. In lieu of such fractional
shares the Company shall make a cash payment therefor based upon the fair market
value of the Preferred Stock on such date as determined by the Board of
Directors.
Section 8. Preemptive
Rights.
(a) The Holder shall be entitled to
purchase its pro rata share (calculated by multiplying the number of securities
to be issued in such equity offering including those issued pursuant to this
Section 8 by a fraction, the numerator of which is the number of shares of
Common Stock held by the Holder on a Fully Diluted Basis and the denominator of
which is the number of shares of Common Stock held by all holders of securities
of the Company on a Fully Diluted Basis) of any future private equity offering
by the Company. "Fully Diluted Basis"
means when used in reference to the number of shares of Common Stock held by a
Person at any time, a number of shares of Common Stock equal to the sum of (x)
the number of issued and outstanding shares of Common Stock then held by or such
Person, plus (y) the total number of shares of Common Stock issuable upon the
exercise, conversion or exchange of all warrants or other rights to subscribe
for or to purchase, or any options for the purchase of, Common Stock or any
stock or security convertible into or exchangeable for Common Stock (such
warrants, rights or options being called “Options” and such
convertible or exchangeable stock or securities being called “Convertible
Securities”) issued and outstanding at such time that are then held by
such Person.
(b) Notwithstanding anything contained
in Section 8(a) to the contrary, the preemptive rights of the Holder shall not
apply to (a) shares of Common Stock sold to, or options to purchase Common Stock
granted by the Company to, employees, consultants, officers, or directors of the
Company pursuant to any option plan, agreement or other arrangement duly adopted
by the Company and approved by a majority of the Board of Directors; (b) any
shares of Common Stock issued upon the conversion of shares of Series A
Preferred Stock; (c) any additional shares of Series A Preferred Stock issued as
a result of the exercise price adjusted under Section 6; (d) any
shares of Common Stock issued pursuant to the exchange, conversion or exercise
of any Options or Convertible
5
Securities
that have previously been incorporated into computations hereunder on the date
when such Options or Convertible Securities were issued; (e) the issuance and
sale of securities in connection with a strategic investment or similar
transaction approved by a majority of the Board of Directors; (f) securities
issued for consideration other than cash pursuant to a merger, consolidation or
similar business combination or acquisition of assets as approved by a majority
of the Board of Directors; (g) the issuance of shares in connection with a
firm commitment underwritten public offering of Common Stock with a nationally
recognized investment banking firm at a price per share offered to the public of
at least $5.00 per share of Common Stock which results in gross cash proceeds to
the Company of at least $25,000,000; (h) any shares of Series A Preferred Stock
issued in the form of a dividend to any holder of Series A Preferred Stock; and
(i) any shares of Common Stock issued on exercise of any warrants issued by the
Company, on or prior to the date of issuance of this Warrant and warrants issued
in connection with subordinated debt of the Company outstanding on the date of
issuance of this Warrant.
Section 9. Restrictions on
Transfer.
Section 9.1 Transfer. The
Holder may transfer this Warrant and the shares of Preferred Stock issuable upon
exercise of this Warrant, and the rights and obligations attached thereto, so
long as any such transfer(s) comply with applicable securities laws
Section 9.2 Restrictive
Legend. Unless a registration statement is in effect with
respect thereto, each certificate representing (i) the Shares and (ii) any other
securities issued in respect of the Shares upon any stock split, stock dividend
or recapitalization (collectively, the “Restricted
Securities”), shall be endorsed as follows:
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER THE ACT AND THE RULES AND REGULATIONS THEREUNDER.
THIS
SECURITY MAY BE SUBJECT TO THE TERMS AND CONDITIONS OF AN AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT WHICH MAY PLACE CERTAIN RESTRICTIONS ON THE VOTING OF
SUCH SECURITIES (INCLUDING THE GRANT OF AN IRREVOCABLE PROXY RELATIVE TO VOTING
MATTERS). A COPY OF SUCH AGREEMENT WILL BE FURNISHED TO THE RECORD
HOLDER OF THIS SECURITY WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT
ITS PRINCIPAL PLACE OF BUSINESS.
Section 10. No Rights of
Stockholders. This Warrant does not entitle the Holder to any
voting rights as a stockholder of the Company prior to the exercise of the
Warrant.
6
Nothing
in this Warrant shall obligate the Holder to exercise this Warrant, it being
understood that the decision as to whether to exercise the Warrant shall be made
exclusively by the Holder.
Section 11. No
Impairment. The Company will not, by amendment of its
Certificate of Incorporation, as amended and restated, 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 to be observed or performed
hereunder by the Company, but it will at all times in good faith assist in the
carrying out of all of the provisions of this Warrant and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder of this Warrant against impairment.
Section 12. Loss, Theft, Destruction or
Mutilation of Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like tenor and dated as of such cancellation, in lieu of this
Warrant.
Section 13. Saturdays, Sundays,
Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a
Saturday or a Sunday or shall be a legal holiday, then such action may be taken
or such right may be exercised on the next succeeding day not a Saturday or a
Sunday or a legal holiday.
Section 14. Miscellaneous.
Section 14.1 Governing
Law. This Warrant shall be governed by and construed in all
respects in accordance with the laws of the State of New York, without giving
effect to the conflicts of laws provisions thereof.
Section 14.2 Entire Agreement;
Amendment. Each party hereby acknowledges that no other party
or any other person or entity has made any promises, warranties, understandings
or representations whatsoever, express or implied, not contained in this Warrant
and acknowledges that it has not executed this Warrant in reliance upon any such
promises, representations, understandings or warranties not contained herein and
that this Warrant supersede all prior agreements and understandings between the
parties with respect thereto. There are no promises, covenants or
undertakings other than those expressly set forth or provided for in this
Warrant. Neither this Warrant nor any term hereof may be amended,
waived, discharged, or terminated other than by a written instrument signed by
the parties hereto.
Section 14.3 Successors and
Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the permitted
successors and assigns, heirs, executors, and administrators of the Company and
the Holder.
7
Section 14.4 Severability. Whenever
possible, each provision of this Warrant will be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other jurisdiction,
but this Warrant will be reformed, construed and enforced in such jurisdiction
to the greatest extent possible to carry out the intentions of the parties
hereto.
Section 14.5 Notices,
etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, by overnight courier, or otherwise delivered by
hand or by messenger or sent by facsimile and confirmed by mail,
addressed:
(i) if
to the Company, at to MTM Technologies, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Executive Officer; and
(ii) if
to the Holder, c/o
[ ].
All
notices shall be effective upon receipt.
Section 14.6 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
Section 14.7 Titles and
Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
8
IN
WITNESS WHEREOF, the undersigned have executed this Warrant as of the date first
above written.
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By:
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Name:
▇. ▇. ▇▇▇▇▇▇▇▇, III
Title:
Senior Vice President and Chief Financial
Officer
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WARRANT HOLDER:
[ ].
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By:
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[ ]
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By:
_______________________
Name:
Title:
THE
EXERCISE OF THIS WARRANT IS SUBJECT TO THE APPLICABLE
PROVISIONS OF THE ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED
PROVISIONS OF THE ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED
EXHIBIT
A-1
NOTICE OF
EXERCISE
TO: MTM
Technologies, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
1. The
undersigned hereby elects to purchase _________ shares of Preferred Stock, par
value $0.001 per share, of MTM TECHNOLOGIES, INC. pursuant to the terms of this
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please
issue a certificate or certificates representing said shares of Preferred Stock
in the name of the undersigned or in such other name as is specified
below:
______________________________
(Name)
______________________________
______________________________
(Address)
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___________________________________ (Signature) |
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Title:_______________________________
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_________________________
(Date)
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A-1
THE
EXERCISE OF THIS WARRANT IS SUBJECT TO THE APPLICABLE
PROVISIONS OF THE ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED
PROVISIONS OF THE ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED
EXHIBIT
A-2
NET ISSUE NOTICE OF
EXERCISE
TO:
MTM Technologies, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
1. The undersigned
hereby elects to purchase _________ shares of Preferred Stock, par value $0.001
per share, of MTM TECHNOLOGIES, INC. pursuant to the terms of this Warrant, and
hereby elects under Section 4.2 of this Warrant to surrender the right to
purchase _______ shares of Preferred Stock pursuant to this Warrant for a net
issue exercise with respect to ________ shares of Preferred Stock.
2. Please issue a
certificate or certificates representing said shares of Preferred Stock in the
name of the undersigned or in such other name as is specified
below:
______________________________
(Name)
______________________________
______________________________
(Address)
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___________________________________ (Signature) |
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Title:_______________________________
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_________________________
(Date)
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A-2
EXHIBIT
B
ASSIGNMENT
FORM
(To be
signed only upon transfer of Warrant)
FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
______________________________, whose address is _____________________, the
right represented by the attached Warrant to purchase _________ shares of
Preferred Stock of MTM TECHNOLOGIES, INC., to which the attached Warrant
relates.
Dated:____________________
____________________________________
(Signature must conform in all
respects to
name of Holder as specified on the
face of
the Warrant)
____________________________________
(Address)
Signed in
the presence of:
_____________________________
B-1