Exhibit 10.2

COOL HOLDINGS, INC.

(A Maryland Corporation)

 

 

FORM OF WARRANT TO PURCHASE

SHARES OF COMMON STOCK

 

 

 

Effective: ________

 

 

THE OFFER AND SALE OF THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES
LAWS.  THE WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF UNLESS THE OFFER AND SALE THEREOF HAS BEEN REGISTERED
UNDER THOSE LAWS OR UNLESS COOL HOLDINGS, INC. (THE “COMPANY”) HAS RECEIVED AN
OPINION OF COUNSEL, SATISFACTORY TO IT, THAT SUCH DISPOSITION IS IN COMPLIANCE
WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

THIS CERTIFIES THAT, for value received, _______________________, or its
registered assigns (“Holder”), is entitled to purchase, subject to the
conditions set forth below, at any time or from time to time during the Exercise
Period (as defined in Section 1.2 below), _____________ (_____) shares
(“Shares”) of fully paid and non‑assessable common stock, par value $0.001 per
share (the “Common Stock”), of Cool Holdings, Inc., a Maryland corporation, at
the per share purchase price (the “Warrant Price”) set forth in Section 1.1
below, subject to the further provisions of this Warrant.

 

EXERCISE OF WARRANT

The terms and conditions upon which this Warrant may be exercised, and the
Shares subject hereto may be purchased, are as follows:

Section 1.1Warrant Price.  The Warrant Price shall be $3.56 per Share, subject
to adjustment as provided in Article IV below.

Section 1.2Method of Exercise.  Subject to the limitations in Section 1.3 below,
Holder may at any time beginning on the date which is six (6) months from the
effective date of this Warrant and for three (3) years from such date of
effectiveness, or such later date as the Company may in its sole discretion
determine (the “Exercise Period”), exercise in whole or in part the purchase
rights evidenced by this Warrant.  Such exercise shall be effected by:

the surrender of this Warrant, together with a duly executed copy of the form of
notice of exercise attached hereto as Exhibit A, to the Secretary of the Company
at its principal office;

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the payment to the Company, by cash, certified or cashier’s check payable to
Company’s order or wire transfer to the Company’s account, of an amount equal to
the aggregate Warrant Price for the number of Shares for which the purchase
rights hereunder are being exercised.  Alternatively if then permitted under
applicable securities laws, Holder may exercise this Warrant by delivering to
the Company: (i) a properly executed notice of exercise together with a copy of
irrevocable instructions (“Broker Instructions”) to a FINRA-member securities
broker-dealer to promptly deliver to the Company cash or a check payable to the
Company in the full amount of the Warrant Price for the total number of Shares
being purchased against the Company’s delivery of the Shares for which this
Warrant is exercised (if Holder and the securities broker comply with such
procedures and enter into such agreements of indemnity and other agreements as
the Company may reasonably prescribe as a condition of that payment procedure)
or (ii) shares of Common Stock, free and clear of any and all liens, claims and
encumbrances, having an aggregate Fair Market Value (as defined herein below)
equal to the full amount of the Warrant Price for the total number of Shares
being purchased.  Holder may also make payment in any combination of the
permissible forms of payment described in the preceding sentence.  Additionally,
if then permitted under applicable securities laws, if the Fair Market Value of
the Shares at time of exercise is greater than the Warrant Price, Holder may
exercise this Warrant or any portion hereof by indicating on the notice of
exercise that Holder elects to exercise this Warrant on a net exercise basis
(“Net Exercise Basis”).  The Company shall then issue to Holder a number of
Shares determined using the following formula:

 

X = Y (A-B)

   A

 

where

 

 

X =

the number of Shares to be issued to Holder.

 

 

Y =

the number of Shares covered by this Warrant in respect of which the net
exercise election is made pursuant to this Section.

 

 

A =

the Fair Market Value of one Share, as determined in accordance with the
provisions hereof, as of the date this Warrant is exercised.

 

 

B =

the Warrant Price in effect as of the date this Warrant is exercised.

 

“Fair Market Value” of a share of Common Stock (for purposes of this section)
means (a) if the Shares are traded on a national securities exchange, the
average of the closing prices for the twenty (20) trading days prior to the date
this Warrant is exercised; (b) if the Shares are traded on the OTC Bulletin
Board or another market or quotation system, or the prices for the shares are
published on the “Pink Sheets”, the average of the closing bid and ask prices
posted for the Shares during the twenty (20) trading days prior to the date this
Warrant is exercised; or (c) if the primary market for such Shares is not an
exchange or quotation system, the fair market value thereof as shall be
determined in good faith using appropriate valuation methods by the Board of
Directors of the Company as of the date this Warrant is exercised; and

(c)the delivery to the Company, if necessary in the discretion of counsel for
the Company, to assure compliance with the Securities Act of 1933, and
applicable state securities laws, of an instrument executed by Holder certifying
that the Shares are being purchased solely for the account of Holder and not
with a view to any resale or distribution in violation of the Securities Act or
applicable state securities laws.

Section 1.3Exercise Limitations.  Holder shall not have the right to exercise
any portion of this Warrant to the extent that after giving effect to the
issuance of Shares upon such exercise, Holder (together with Holders’s
affiliates, and any other persons acting as a group together with Holder or any
of Holders’s

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affiliates) would beneficially own in excess of 9.99% of the outstanding shares
of Common Stock of the Company.

Section 1.4Issuance of Shares and New Warrant.  If the purchase rights evidenced
by this Warrant are exercised in whole or in part, one or more certificates for
the purchased Shares shall be issued as soon as practicable thereafter to
Holder.  If the purchase rights evidenced by this Warrant are exercised only in
part, the Company shall also deliver to Holder at such time a new Warrant
evidencing the purchase rights regarding the number of Shares (if any) for which
the purchase rights under this Warrant remain unexercised and continue in force
and effect.  All new Warrants issued in connection with the provisions of this
Section 1.4 shall bear the same date as this Warrant and shall be substantially
identical in form and provisions to this Warrant except for the number of Shares
purchasable thereunder.  Each person in whose name any certificate for Shares is
to be issued shall for all purposes be deemed to have become the holder of
record of such Shares on the date on which this Warrant was surrendered and
payment of the Warrant Price was made, irrespective of the date of delivery of
such stock certificate, except that if the date of such surrender and payment is
a date when the stock transfer books of the Company are closed, such person
shall be deemed to have become the holder of such Shares at the close of
business on the next succeeding date on which the stock transfer books are open.

 

TRANSFERS

Section 2.1Transfers.  This Warrant and all rights hereunder are transferable in
whole or in part by Holder subject to the provisions of Article VII below.  The
transfer shall be recorded on the books of the Company upon (i) the surrender of
this Warrant (together with a duly executed and endorsed copy of the form of
transfer certificate attached hereto as Exhibit B) to the Secretary of the
Company at its principal offices, and (ii) the payment to the Company of all
transfer taxes and other governmental charges imposed on such transfer.  In the
event of a partial transfer, the Company shall issue to the several holders one
or more appropriate new Warrants.

Section 2.2Registered Holder.  Each holder of this Warrant agrees that until
such time as any transfer pursuant to Section 2.1 above is recorded on the books
of the Company, the Company may treat the registered Holder of this Warrant as
the absolute owner.

Section 2.3Form of New Warrants.  All new Warrants issued in connection with
transfers of this Warrant shall bear the same date as this Warrant and shall be
substantially identical in form and provisions to this Warrant except for the
number of Shares purchasable thereunder.

 

NO FRACTIONAL SHARES

Notwithstanding any adjustment (as required hereby) to the number of Shares
purchasable upon the exercise of this Warrant, the Company shall not be required
to issue any fraction of a Share upon exercise of this Warrant.  If, by reason
of any change made pursuant to Article IV below, Holder would be entitled, upon
the exercise of any rights evidenced hereby, to receive a fractional interest in
a Share, the Company shall, at its election, upon such proper exercise of this
Warrant, purchase such fractional interest for an amount in cash equal to the
Fair Market Value of such fractional interest, determined as of the date of such
exercise of this Warrant, or round up to the next whole share.

 

ANTIDILUTION PROVISIONS

Section 4.1Stock Splits and Combinations.  If the Common Stock shall at any time
be subdivided into a greater number of shares, then the number of Shares
purchasable upon exercise of this Warrant shall be

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proportionately increased and the Warrant Price shall be proportionately
decreased; and, conversely, if the Common Stock shall at any time be combined
into a smaller number of shares, then the number of Shares purchasable upon
exercise of this Warrant shall be proportionately reduced and the Warrant Price
shall be proportionately increased.  Any adjustments under this Section 4.1
shall become effective at the close of business on the date the subdivision or
combination becomes effective.

Section 4.2Reclassification, Exchange and Substitution.  If the Common Stock
shall be changed into shares of any other class or classes of stock or other
securities of the Company, whether by capital reorganization, reclassification,
or otherwise, Holder shall, upon exercise of this Warrant, be entitled to
purchase for the same aggregate consideration, in lieu of the Shares that Holder
would have become entitled to purchase but for such change, such number, class
and series of securities of the Company as would have been issuable in
connection with such event to a holder of that number of shares of Common Stock
purchasable upon exercise of this Warrant immediately prior to such
reorganization, reclassification or other change.  The Warrant Price shall be
appropriately adjusted to reflect that reorganization, reclassification or other
change.  Any adjustments under this Section 4.2 shall become effective at the
close of business on the date such change of the Common Stock into shares of any
other class or classes of stock or other securities of the Company becomes
effective.

Section 4.3Reorganizations, Mergers, Consolidations or Sale of Assets.  If at
any time there shall be a reorganization involving the Common Stock (other than
a stock split, combination, reclassification, exchange, or subdivision of shares
provided for in Sections 4.1 and 4.2 above) or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company’s assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, lawful provision shall be made so
that Holder shall thereafter be entitled to receive upon exercise of this
Warrant, in accordance with the terms hereof, in lieu of the Shares that Holder
would have become entitled to purchase but for such event, such other securities
or property of the Company, or of the successor corporation resulting from such
event, to which Holder would have been entitled in such reorganization, merger,
consolidation or sale if this Warrant had been exercised immediately before that
reorganization, merger, consolidation or sale.  In any such case, appropriate
adjustment (as determined in good faith by the Company’s Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of Holder after the reorganization, merger,
consolidation, or sale to the end that the provisions of this Warrant (including
adjustment of the Warrant Price then in effect and number of Shares purchasable
upon exercise of this Warrant) shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.  The Company shall provide Holder with
at least twenty (20) days’ prior written notice of any of the events described
in the first sentence of this Section 4.3.

Section 4.4Certificate as to Adjustments.  In the case of each adjustment
(including a readjustment) under this Article IV, the Company will promptly, and
in any event within thirty (30) days after the event requiring the adjustment,
compute such adjustment in accordance with the terms hereof and deliver or cause
to be delivered to Holder a certificate describing in reasonable detail the
event requiring the adjustment and setting forth such adjustment and the
calculations and results of such adjustment.

Section 4.5Reservation of Stock Issuable Upon Exercise.  The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock such number of shares of Common Stock as shall from time to time
be sufficient to effect the exercise of this Warrant.  If at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the exercise of this Warrant, the Company will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.

Section 4.6Method of Calculation.  All calculations under this Article IV shall
be made to the nearest one hundredth of a share.

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RIGHTS PRIOR TO EXERCISE OF WARRANT

This Warrant does not entitle Holder to any of the rights of a stockholder of
the Company, including (without limitation) the right to receive dividends or
other distributions, to vote or consent, or to receive notice as a stockholder
of the Company.  If, however, at any time prior to the expiration of this
Warrant and prior to its exercise,

the Company shall declare any dividend payable in any securities upon
outstanding shares of Common Stock or make any other distribution (other than a
regular cash dividend) to the holders of shares of Common Stock;

the Company shall offer to the holders of shares of Common Stock any additional
shares of Common Stock or securities convertible into or exchangeable for shares
of Common Stock or any right to subscribe for or purchase any thereof; or

a dissolution, liquidation or winding-up of the Company (other than in
connection with a reorganization, consolidation, merger, or sale of all or
substantially all of its assets as an entirety) shall be approved by the
Company’s Board of Directors,

then, in any one or more of such events the Company shall give notice in writing
of such event to Holder, at its address as it shall then appear on the Company’s
records, at least twenty (20) days prior to the date fixed as a record date or
the date of closing the transfer books for the determination of the stockholders
entitled to such dividends, distribution, or subscription rights, or for the
determination of stockholders entitled to vote on such proposed dissolution,
liquidation or winding-up.  Such notice shall specify such record date or the
date of closing the transfer books, as the case may be.

Any failure to give such notice or any defect therein, however, shall not affect
the validity of any action taken in connection with such dividend, distribution
or subscription rights, or such proposed dissolution, liquidation or winding-up.

 

SUCCESSORS AND ASSIGNS

The terms and provisions of this Warrant shall inure to the benefit of, and be
binding upon, the Company and its successors and assigns and Holder and its
successors and permitted assigns.

 

RESTRICTED SECURITIES

Section 7.1By acceptance of this Warrant, Holder hereby represents to the
Company that this Warrant is being acquired for investment for Holder’s own
account, not as a nominee or agent, and not with a view to the resale or
distribution thereof, and that Holder has no present intention of selling,
granting any participation in, or otherwise distributing this Warrant or the
Common Stock issuable upon exercise of this Warrant.  By acceptance of this
Warrant, Holder further represents that Holder does not presently have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to this Warrant or the Common Stock issuable upon exercise of this
Warrant.  Holder is an “accredited investor” as the term is defined in Rule
501(a) of Regulation D promulgated under the Securities Act and has sufficient
knowledge and experience in finance and business that it is capable of
evaluating the risks and merits of its investment in the shares subject to this
Warrant and Holder is able financially to bear the risks thereof.  Holder
understands that the offer and sale of this Warrant and the offer and sale of
the Common Stock issuable upon exercise of this Warrant have not been registered
under the

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Securities Act, by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of Holder’s
representations as expressed herein.  Holder further recognizes and acknowledges
that because the offer and sale of this Warrant and the offer and sale of the
Common Stock issuable upon exercise of this Warrant are unregistered, they may
not be eligible for resale, and may only be resold in the future pursuant to an
effective registration statement under the Securities Act and any applicable
state securities laws, or pursuant to a valid exemption from such registration
requirements and that Holder must, therefore, bear the economic risk of such
investment indefinitely.

Section 7.2Holder acknowledges that this Warrant is, and each of the Shares
issuable upon the exercise hereof will be, a restricted security, and that the
certificate or certificates evidencing such Shares will bear a legend
substantially similar to the following legend:

THE OFFER AND SALE OF THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE RESOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE OFFER AND SALE OF THE SECURITIES UNDER
THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY
THAT SUCH DISPOSITION IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS.

 

LOSS OR MUTILATION

Upon receipt by the Company of satisfactory evidence of the ownership of and the
loss, theft, destruction, or mutilation of this Warrant, and (i) in the case of
loss, theft, or destruction, upon receipt by the Company of indemnity
satisfactory to it, or (ii) in the case of mutilation, upon receipt of this
Warrant and upon surrender and cancellation of this Warrant, the Company shall
execute and deliver in lieu thereof a new Warrant representing the right to
purchase an equal number of Shares.

 

NOTICES

All notices, requests, demands and other communications under this Warrant shall
be in writing and shall be deemed to have been duly given on the date of receipt
(or refusal of receipt) if delivered personally or by courier by the party to
whom notice is to be given, or on the earlier of the third business day after
the date of mailing or receipt if mailed to the party to whom notice is to be
given by first class mail, registered or certified, postage prepaid, and
properly addressed as follows: if to Holder, at its address as shown in the
Company’s records; and if to the Company, at its principal office.  Either party
may change its address for purposes of this Article IX by giving the other party
written notice of the new address in the manner set forth above.

 

GOVERNING LAW; JURISDICTION

This Warrant shall be construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and performance
of this Warrant and all disputes arising hereunder shall be governed by, the
laws of the State of Florida, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Florida or any other
jurisdictions) that would cause the application

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of the laws of any jurisdictions other than the State of Florida.  Any suit,
action or proceeding seeking to enforce any provision of, or based on any
dispute or matter arising out of or in connection with, this Warrant must be
brought in the state and federal courts located in Miami, Florida.  The Company
and Holder each (a) consent to the exclusive jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding, (b) irrevocably waive, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum, (c) will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (d)
will not bring any action relating to this Warrant in any other court.

ARTICLE XI

Miscellaneous

This Warrant and any terms hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.  The
headings in this Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof.  The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any other provision.

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its
behalf by one of its officers thereunto duly authorized as of the date first set
forth above.

 

 

COOL HOLDINGS, INC.

 

 

 

By:

Name: ______________________

Title: _______________________

 

 

 

 

Signature Page to Warrant

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EXHIBIT A

 

NOTICE OF EXERCISE

 

Cool Holdings, Inc.
4435 Eastgate Mall, Suite 320

San Diego, California

Attention:  Vernon A. LoForti

 

Gentlemen:

 

The undersigned, _______________________, subject to the limitations set forth
in Section 1.3 of the Warrant, hereby elects to purchase, pursuant to the
provisions to the foregoing Warrant held by the undersigned, ____________ shares
of the Common Stock of the Company.

 

The undersigned (check one and complete):

 

______  herewith encloses the Warrant and (i) cash, (ii) a certified or
cashier’s check (drawn in favor of the Company), or (iii) has made a wire
transfer to the Company’s account in the amount of $__________ in payment of the
Warrant Price.

 

______  herewith encloses the Warrant and a copy of the applicable Broker
Instructions, as defined in Section 1.2 of the Warrant.

 

______ herewith encloses the Warrant and hereby elects to exercise the Warrant
on a Net Exercise Basis in accordance with the provisions of Section 1.2 of the
Warrant.

 

 

The undersigned hereby represents and warrants as follows:

 

(a)the undersigned is acquiring such shares of the Common Stock for his own
account for investment and not for resale or with a view to distribution thereof
in violation of the Securities Act and the regulations promulgated thereunder;
and

 

(b)the undersigned is an “accredited investor” as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act and, if an entity, was not
organized for the purpose of acquiring the Warrant or such shares of the Common
Stock.  The undersigned’s financial condition is such that he is able to bear
the risk of holding such securities for an indefinite period of time and the
risk of loss of his entire investment.  The undersigned has sufficient knowledge
and experience in investing in companies similar to the Company so as to be able
to evaluate the risks and merits of his investment in the Company.

 

Please issue a certificate or certificates for such shares of the Common Stock
in the following name or names and denominations and deliver such certificate or
certificates to the person or persons listed below at their respective address
set forth below:

 

Exhibit A

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If said number of shares of the Common Stock shall not be all the shares of the
Common Stock issuable upon exercise of the attached Warrant, a new Warrant is to
be issued in the name of the undersigned for the remaining balance of such
shares of the Common Stock less any fraction of a share of Common Stock paid in
cash pursuant to Article III of the attached warrant.

 

Capitalized terms used herein shall have the meaning given to such terms in the
Warrant.

 

DATED:______________, ___________.

 

Signature:

 

Address:

 

 

Exhibit A

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EXHIBIT B

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of Shares of
Common Stock set forth below:

 

 

 

Name and Address of Assignee

 

No. of Shares

Common Stock

 

_________________________________________

 

_____________

 

_________________________________________

 

 

 

_________________________________________

 

 

 

and does hereby irrevocably constitute and appoint as Attorney
________________________________ to register such transfer on the books of
_______________________________________ maintained for the purpose, with full
power of substitution in the premises.

 

Dated:__________________________, _______.

 

 

 

 

 

_______________________________________

Name:

 

NOTICE:The signature to this assignment must correspond with the name as written
upon the face of the within Warrant in every particular, without alternation or
enlargement or any change whatsoever.

 

 

 

 

Exhibit B