Document:

ex42.htm

Exhibit 4.2

 

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS 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 ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

BEYOND COMMERCE, INC.

 

 

Warrant Shares: _____                                                                                     Initial
Exercise Date: ______

 

THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received, OmniReliant, Inc.  (the “ Holder ”) is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “ Initial Exercise Date ”) and on or prior to the close of business on the five year anniversary of the Initial Exercise Date (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from Beyond Commerce, Inc., a Nevada corporation
(the “ Company ”), up to ____ shares (the “ Warrant Shares ”) of Common Stock.  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1 .     Definitions .  Capitalized terms used and not otherwise defined herein shall have the meanings set forth
in that certain Amended and Restated Securities Purchase Agreement (the “ Purchase Agreement ”), dated July 30, 2009, among the Company and the purchasers signatory thereto.

 

 

 

 

  

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Section 2 .     Exercise .

 

a)   Exercise of Warrant .  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such
other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto; and, within 3 Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received  payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United
States bank.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within 3 Trading Days of the date the final Notice of Exercise is delivered to the Company.  Partial exercises of this Warrant resulting in
purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases.  The Company shall deliver any objection to any Notice of Exercise Form within 1 Business Day of receipt of such
notice.  In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.

 

b)   Exercise Price .  The exercise price per share of the Common Stock under this Warrant shall be $0.70 , subject to adjustment hereunder (the “ Exercise
Price ”).

 

c)   Cashless Exercise .  If at any time after the Initial Exercise Date  there is no effective registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also
be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the VWAP on the Trading Day immediately preceding the date of such election;

 

(B) = the Exercise Price of this Warrant, as adjusted; and

 

(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

 

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

 

 

 

  

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d)   Exercise Limitations .

 

i.   Holder’s Restrictions .  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise,
to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other person or entity acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates
shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other  Common
Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(d)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 2(d)(i) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a
Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.   In addition, a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 2(d)(i), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report, as the case may be, (B) a more recent public announcement by the Company or (C) any other notice by the Company or the Transfer Agent setting forth
the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding
shares of Common Stock was reported.  The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(d)(i), provided
that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(d)(i) shall continue to apply.  Any such increase or decrease will not be effective until the 61 st day after such notice is delivered to the Company.  The provisions
of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d)(i) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

 

 

 

 

  

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e)   Mechanics of Exercise .

 

i . Delivery of Certificates Upon Exercise .  Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission (“ DWAC ”) system if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the resale of the Warrant Shares by the Holder or (B) the shares are eligible for resale without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading
Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above (the “ Warrant Share Delivery Date ”).  This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company.  The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated
to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vi) prior to the issuance of such shares, have been paid. If the Company fails for any reason to deliver to the Holder certificates evidencing the Warrant Shares subject to a Notice of Exercise by
the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each 1,000 of Warrant Shares subject to such exercise, $100 per Trading Day (increasing to $300 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such certificates are delivered.

 

ii.   Delivery of New Warrants Upon Exercise .  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.   Rescission Rights .  If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(e)(i) by the Warrant Share Delivery Date, then, the Holder will
have the right to rescind such exercise.

 

iv.   Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise .  In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates
representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “ Buy-In ”),
then the Company shall (A) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving
rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  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.

 

v.   No Fractional Shares or Scrip .  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise,
the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

 

  

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vi.   Charges, Taxes and Expenses .  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto
duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

vii.   Closing of Books .  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

Section 3 .     Certain Adjustments .

 

a)   Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section
3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

 

 

 

  

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b)   Subsequent Equity Sales . If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any
offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the “ Base Share Price ” and such issuances collectively, a “ Dilutive Issuance ”) (if the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive
Issuance), then, the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment.  Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing,
no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance.  The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive
Issuance Notice ”).  For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.

 

c)   Subsequent Rights Offerings .  If the Company, at any time while the Warrant is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the VWAP at the record date mentioned below, then, the Exercise Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of the total number of shares so offered (assuming receipt by the Company in full of all consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants.

 

 

 

 

  

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d)   Pro Rata Distributions .  If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets (including cash and cash dividends)
or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such
record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith.  In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment
shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

e)   Fundamental Transaction . 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 (each “ Fundamental
Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate
Consideration ”) receivable as a result of such merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the 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.  To
the extent necessary to effectuate the foregoing provisions, 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 exercise such warrant into Alternate Consideration. 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 Section
3(e) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange, the Nasdaq Global Select
Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any successor entity shall pay at the Holder’s option, exercisable at any time concurrently with or within 30 days after the consummation of the Fundamental Transaction, an amount of cash equal to the value of this Warrant as determined in accordance with the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. using (A) a price per share of Common Stock equal to the VWAP of the Common
Stock for the Trading Day immediately preceding the date of consummation of the applicable  Fundamental Transaction, (B) the risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of the date of consummation of the applicable Fundamental Transaction, (C) an expected volatility equal to the 100 day volatility obtained from the “HVT” function on Bloomberg L.P. determined as of the Trading Day immediately following the public
announcement of the applicable Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of such transaction and the Termination Date.

 

 

 

 

  

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f)   Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given
date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

g)   Notice to Holder .

 

i.   Adjustment to Exercise Price . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment. If the Company enters into a Variable Rate Transaction, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised.

 

ii.   Notice to Allow Exercise by Holder . If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice.

 

 

 

 

  

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Section 4 .     Transfer of Warrant .

 

a)   Transferability .  Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without
limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)   New Warrants . This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)   Warrant Register . 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.

 

d)   Transfer Restrictions . If , at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act
and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section [5.7 of the Purchase Agreement.

 

 

 

 

  

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Section 5 .     Miscellaneous .

 

a)   No Rights as Stockholder Until Exercise .  This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(e)(i).

 

b)   Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)   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 not be a Business Day, then, such action may be taken or such right may be exercised on the
next succeeding Business Day.

 

d)   Authorized Shares .  The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise
of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without
violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

 

 

 

  

10

  

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation 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 actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)   Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

f)   Restrictions .  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

g)   Nonwaiver and Expenses .  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the
fact that all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.

 

h)   Notices .  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

i)   Limitation of Liability .  No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability
of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j)   Remedies .  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

 

 

 

  

11

  

 

 

k)   Successors and Assigns .  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of
Holder.  The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)   Amendment .  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m)   Severability .  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n)   Headings .  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

(Signature Pages Follow)

 

 

12

 

  

12

  

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

	  	
BEYOND COMMERCE, INC.
	  
	  	  	  	  
	  	
By:
	/s/ 	  
	  	  	
Name: Robert McNulty

Title: Chief Executive Officer
	  
	  	  	  	  
	  	  	  	  

 

 

 

  

13

  

 

NOTICE OF EXERCISE

TO:           [_______________________

(1)   The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)   Payment shall take the form of (check applicable box):

 

[  ] in lawful money of the United States; or

 

[ ] [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)   Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below: 

 

 _______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 _______________________________

 _______________________________

 _______________________________

 (4)   Accredited Investor .  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended. 

[SIGNATURE OF HOLDER]

 

	 Name of Investing Entity:
	 Signature of Authorized Signatory of Investing Entity :
	 Name of Authorized Signatory:
	 Title of Authorized Signatory: 
	 Date:

 

 

 

 

 

  

 

  

 

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

 

Dated:  ______________, _______

 

Holder’s Signature:                                  _____________________________

 

Holder’s Address:                                   _____________________________

 

_____________________________

Signature Guaranteed:  ___________________________________________

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.ex101.htm

Exhibit 10.1

 

 

This Agreement is made effective the 15th Day of May 2009.

 

 

BETWEEN:

Alliance Networks Communications Inc.

502 East John Street

Carson City, Nevada

89706

 

 

Hereinafter referred to as Alliance

 

(also referred to as the Supplier)

 

 - and -

 

TMI Transformers Inc.

7051 West Wilson Ave,

Norridge, Illinois

60706

 

Hereinafter referred to as TMI

 

(also referred to as the Purchaser)

 

THIS AGREEMENT will be made effective the 15th     day of May               , 2009  with “TMI”) and sets out the terms and conditions under which
“TMI” agrees to purchase certain services and materials. It is understood that this is a general umbrella agreement and that there be an agreed to provision to allow Alliance “first right of refusal” in supplying manufactured finished goods to TMI (subject to clause(s) no.) by means of purchase orders placed in accordance with this Agreement.

 

1. Definitions

 

In this Agreement and the schedules hereto, the following terms shall have the following meanings:

 

	
  
	
a) "Agreement Documents" means the memorandum of agreement, Schedules "A" through "L", attached and made a part of this Agreement, and all Purchase Orders and Amending agreements issued after the execution of this Agreement with the Supplier. In the event of any conflict between terms and conditions in any Schedule or Purchase Order(s) and the terms and conditions in this Agreement, this Agreement shall prevail;

 

	
  
	
b) "Affiliate" Corporation means a company that may be included to provide finished goods or sub- assemblies in conjunction with goods required pursuant to this agreement;

 

c) "Alliance" means Alliance and any/or any of its affiliates.

 

	
  
	
d) "Business Day" means any day Monday to Friday between the hours of 0800 and 1600 (not inclusive of Alliance) designated holidays;

 

e) "Product" means the materials as outlined in Schedule "A" to be provided by the Supplier (Alliance ) to the purchaser (TMI) pursuant to this agreement.

 

f) "Documentation" means the documentation related to or required for the utilization of the Product as identified in Schedule "A" which may take the form of word documents, drawings, schematics or flow diagrams,

 

	
  
	
g) "Delivery Date(s)" means the date set out in each Purchase Order by which the Product described are to be delivered;

 

 

 

 

1

 

 

h) "Delivery Site(s)" means the location(s) to which the Products are to be delivered as specified in each Purchase Order; (subject to negotiated freight terms and conditions)

 

i) "Purchase Order" means the document, a copy of which is attached as Schedule "E", to be used by TMI to order Product from the Supplier.

 

j) "Change Order" means the document to be used by TMI as a written order authorizing a change in the Purchase Order;

 

k) "Supplier" means Alliance as selected to be the prime or Supplier;

 

1) "Schedule" means the schedules included as part of this agreement and further listed in "Section 3- Interpretation";

 

m) "Services" mean~ the manufacturing, packaging, supply and delivery of the Products, andrelated customer service;

 

n) "Warranty Period" means a period of six (6) years from the Delivery Date,

 

0) "Deficiencies" means a failure of the Product to comply with the Specifications;

 

p) "Specifications" means the information included, but not limited to, the specifications set forth  in Schedule "F" hereto, including the Supplier's standard specifications for the Product incorporated herein, and any other specifications TMI and the Supplier may mutually agree upon in writing.

 

2. Term

 

The term of this Agreement shall commence on May 15th, 2009 and terminate on May15 th, 2012 unless otherwise terminated as provided
in this Agreement. This Agreement may be extended in one- (1) year increments up to a maximum of three (3) years, subject to such amendments of this

Agreement, as the parties may agree.

 

3. Scope

 

	
  
	
a) This Agreement covers the terms and conditions for the Purchase of the Supplier's Products and related Service(s) specified. Additional Product(s) and/or Services may be ordered from time to time, as mutually agreed upon, which will be subject to the terms and conditions of this Agreement.

 

	
  
	
b) This Agreement is nonexclusive.

 

c) This Agreement is intended to cover the purchase of Products and Services from the Supplier by either TMI Affiliates, or distributors authorized by TMI in writing.

 

4. Interpretation

 

In the event of any conflict between terms and conditions in any Purchase Order and the terms and conditions in this Agreement, this Agreement shall prevail.

 

This Agreement contains the following Schedules:

 

Schedule "A"- Unit Prices

Schedule "B" - Quality Service Standards

Schedule "D"- Specifications & Attached Samples

Schedule "E"- Purchase Order/Change Order Form

Schedule "F" - Design Change

Schedule "G" - Warranty Replacement

Schedule "H" - General Packaging and Delivery

Schedule "1"- Standard Manufacturing Testing at Suppliers Plant Schedule "J"- Non-Compliance Forms

Schedule "K" –Alliance Holidays

Schedule "L"- Disaster Recovery Plan

 

 

 

 

 

2

 

 

5. Services

 

	
  
	
a)
	
The intention is to include in this Agreement all labor and services for the design, packaging, supply and delivery of the Products. All Services shall be performed and provided in accordance with standards provided by Alliance.

 

	
  
	
b)
	
During the term of this Agreement, TMI shall be notified of any changes in the Supplier's policy or organization which could affect meeting either TMI or the Supplier's obligations outlined in this Agreement.

 

6. Purchase and Sale

 

	
a)  
	
This Agreement does not by itself order any Product or Service.

 

	
b)  
	
TMI shall order Product or Service by means of a Purchase Order. Subject to the terms and conditions of this Agreement, TMI shall purchase from the Supplier and the Supplier shall sell to TMI such Product(s) as are required by TMI during the term of this Agreement.

 

	
c) 
	
And Product(s) shall be ordered from time to time by means of a Purchase Order to the Supplier. The Purchase Order shall specify, at minimum, the Products, Quantity, Delivery Site, Delivery Date, price, F.O.B. terms, and freight terms, as ordered by TMI, to be supplied by the Supplier. It is understood and agreed that the requirements for Product are not fixed and that the various quantities of Product purchased
pursuant to this Agreement shall be those quantities for which a Purchase Order is forwarded to the Supplier.

 

7. Change Notice

 

TMI may, without invalidating this Agreement, make changes by altering, adding to, or deleting, Product(s) or Services associated with this Agreement. All such changes shall be approved by means of
a written Change Notice. The Supplier shall make any claim for extension of time caused by the change at the time it receives a Purchase Order and such claim shall not be valid until TMI has given its approval in writing.

 

8. Unit Prices and Price Warranties  (See Schedule A)

 

	
  
	
a)
	
The prices payable by TMI for the Product(s) shall be the unit prices set out in Schedule "A". Prices shall be those in effect at the time Alliance transmits the Purchase Order electronically or verbally supplies a Purchase Order number to the Supplier. There shall be no minimum purchase requirement either for quantity or dollar volume imposed by the Supplier for any Purchase Order.

 

	
  
	
b)
	
All dollar amounts referred to in this Agreement are in US funds.

 

	
  
	
c)
	
Unit Prices include the following:

 

(i) Manufacture of  Modular AC Protection Products and/or equipment supplied by

 

(ii) Delivery; F.O.B. (freight on board) from assigned manufacturing/assembly facility (located in NAFTA recognized territories).

 

	
  
	
d)
	
The Supplier shall provide a certificate of origin, (if required) with each shipment. Supplier shall advise as

 

13. Rush Emergency Orders

 

Rush or emergency orders may be transmitted electronically or verbally to the Supplier and will be handled on an individual basis.

 

14. Change Management

 

Any request to changes in the business requirements must be made in writing to the designated Supplier account manager. Changes will be accepted only when properly authorized by TMI

designated client contact person and/or TMI Contract Management.

 

 

 

3

 

 

15. Price/ Payment Terms

 

	
  
	
 a)
	
The prices to be paid by TMI for all Products and Service(s) are that prices specified in Schedule "A" - Pricing. There shall be no minimum purchase requirements either for quantity or dollar volume imposed by the Supplier for any Purchase Order.

 

	
  
	
 b)
	
The Supplier agrees to hold pricing firm for each Product in Schedule "A" during the initial twelve (12) month period or duration thereof (if agreement is less than 1 year) of this Agreement.

	
 
	
 

 

	
  
	
 c)
	
After the Product(s) has been delivered, the Supplier shall receive payment by company cheque referencing the applicable Purchase Order provided by LLC for the Product(s). Each invoice shall contain an itemized summary of the Purchase Order being billed and such other payment information as the Supplier may reasonably require.

 

	
  
	
 d)
	
Subject to verification of the invoice and in the event the entries itemized on the invoice reflect, in the reasonable opinion of TMI , the Product supplied by the Supplier, payment will be issued to meet Net 35 terms of payment;

 

	
 e)  
	
Due performance by the Supplier of all of its obligations hereunder is a condition precedent to all payments under this Agreement.

 

	
    f)  
	
Neither payment made to the Supplier, nor partial or complete use of the Product by TMI shall be construed as an acceptance, of any Product not in accordance with this Agreement. Acceptance of final payment by the Supplier shall constitute a waiver by it of all claims for further reimbursement except those claims previously made by the Supplier in writing
and subject to dispute.

 

16. Title and Risk of Loss

 

Title and risk of loss or damage to the Product delivered to the Delivery Site shall pass to TMI upon such delivery of the Product as instructed in the Purchase Order. Upon receipt of damaged goods TMI shall promptly file a damage claim with the freight
carrier on the Supplier's behalf.

 

17. Delivery & Delivery Sites

 

	
  
	
a)
	
The Supplier shall deliver the Product on the delivery date. The Supplier warrants that the Product shall be delivered to the Delivery Site on the Delivery Date provided that TMI and the Supplier have not agreed in writing to a later Delivery Date.

 

	
  
	
b)
	
The Supplier shall promptly process Purchase Order(s) issued by TMI in accordance with this Agreement. If the Delivery Date indicated on the Purchase Order is more than three (3) Business Days after the Supplier's receipt of the Purchase Order, the Supplier shall meet the Delivery Date specified. If the Delivery Date indicated on the Purchase Order is less than three (3) Business Days after the Supplier's receipt
of the Purchase Order, the Supplier shall confirm the Delivery Date or advise TMI of the new Delivery Date within one (1) Business Day after the Supplier's receipt of the Purchase Order.

 

18. Inspection and Acceptance

 

	
  
	
a)
	
All Products shall be subject to inspection by TMI after delivery to determine function and quality, TMI Purchase Order or Supplier's advertised or published specifications. Unless otherwise mutually agreed, TMI shall have a period of sixty (30) days following arrival of Product at the Delivery Site to inspect the Product for conformity and to provide the Supplier with written notice of any discrepancy or rejection.
If the Product is to be installed by TMI, TMI shall have the longer of thirty (30) days following such installation or following completion of any testing period within which to complete such inspection, provided the installation shall occur not more than thirty (30) days from the actual date of delivery. Following the notification by TMI if the Supplier is unable to repair or replace Product that does not conform in whole or part within a reasonable period of time, TMI may return the Product to the Supplier,
at the Supplier's risk and expense, and receive a refund of all amounts paid with respect to the returned Product. For such Product returns, TMI shall notify the Supplier and arrange for the return of the Product.

 

	
  
	
b)
	
Inspection or failure to inspect on any occasion shall not affect TMI rights under "Warranty" provisions of this Agreement or any other rights or remedies available to TMI under this Agreement.

 

19. Standards

 

All Product(s) supplied shall comply with the applicable requirements of Underwriters’ Laboratories Rules and Regulations. All installation and repairs shall also comply with the above rules, regulations and requirements.

 

20. Precedence of Documents

 

	
a)
	
All quotations, Purchase Orders, acknowledgements and invoices issued pursuant to this Agreement shall be subject to the provisions contained within this Agreement. The terms and conditions of this Agreement will prevail over any conflicting or inconsistent terms contained in any quotation, Purchase Order, acknowledgement or invoice.

 

	
b)  
	
No additional terms contained in any quotation, Purchase Order, acknowledgement or invoice shall be valid for a specific transaction, unless agreed in writing by authorized representatives from both parties.

 

21. Invoicing

 

  a)      TMI requires the following in order to verify and analyze invoices as required:

 

	
  
	
(i)
	
The Supplier will be required to provide backup documentation for each item on the invoice.

 

	
  
	
(ii)
	
The cost of any invoicing, invoicing documentation and transmission of these items are at the expense of the Supplier. Any credits/adjustments on the invoice from the Supplier will be in the same detail as the original invoice along with supporting documentation.

 

22. Invoice Disputes and Resolution

 

Invoice disputes and resolutions will be handled as follows:

 

	
  
	
(a)
	
TMI will pay undisputed items within the terms negotiated after receipt of goods;

 

	
  
	
(b)
	
TMI will provide written notification of disputed items within fifteen (30) days of receipt of invoice;

 

	
   (c)
	
 TMI requires that all billing disputes be resolved within sixty (30) days from the date of notification. Any disputes beyond sixty (30) days will be resolved through Dispute Resolution of this Agreement as provided for in this Agreement;

 

	
  
	
(d)
	
TMI will not be assessed late charges during Dispute Resolution.

 

 

 

4

 

 

 

23. Records and Reports

 

	
  
	
a)
	
The Supplier shall maintain complete and accurate records of all invoices, and amounts billable to and payments made by TMI , in accordance with US GAAP (Generally Accepted Accounting Practices). The Supplier shall retain and make available upon request such records for a period of three (3) years from the date of final shipment of Product or rendering of Services covered by. this Agreement.

 

	
  
	
b)
	
When requested by TMI , the Supplier shall, for all Purchase Orders placed directly with the Supplier, provide a monthly purchase report by ordering location, listing Product and Service purchased under this Agreement, including description, part number, quantities shipped and associated list and net prices.

 

	
  
	
24. Representations and Warranties

 

	
  
	
a)
	
The Supplier represents and warrants:

 

	
  
	
(i)
	
that the Product is free from defective material, faulty workmanship and faulty

	
  
	
design;

 

	
  
	
(ii)
	
that the Warranty Period begins on the date of the original shipment and is in effect provided the Product is used for the purpose intended and is handled, stored, and used in accordance with Product instructions.

 

	
  
	
(iii)
	
that it has the resources, skills and ability to manufacture and/or supply the Product in accordance with this Agreement Documents.

 

	
  
	
b)
	
The warranties, conditions and indemnities provided herein are in lieu of and exclude all other liabilities, warranties, guarantees or conditions written or oral, statutory, common law, expressed or implied, including warranty or implied condition as to merchantability or fitness for a particular purpose and shall constitute the Supplier's sole obligation and liability and TMI sole remedy in contract, tort or otherwise
in respect of Products and Services, except as may be set forth in Article 35 and Article 36.

 

	
  
	
c)
	
No other warranties are expressed or implied except as set forth herein. All other warranties, including warranties of merchantability and fitness for a particular purpose, are expressly excluded from the warranty.

 

	
  
	
d)
	
The Supplier warrants and guarantees the work and materials covered by this Agreement and agree to make good, at its own expense, any defect that may occur in materials or workmanship that may occur or develop or may be condemned or ordered modified by any municipal or other government inspector.

 

	
  
	
e)
	
During the Warranty Period, TMI shall promptly notify the Supplier of any claims against the warranties provided. TMI shall return the Product for replacement by the Supplier in accordance with the Warranty Replacement procedures set out in Schedule "G".

 

 

 

 

5

 

 

25. Quality Products

 

The Supplier shall deliver to TMI quality products that meet TMI ’s expectations in Schedule "A" for the various Products outlined in Schedule "A".

 

26. Continuity of Supply

 

The Supplier shall set up a process that will monitor this Agreement to ensure stock is available to meet TMI supply requirements

 

27. Supplier Performance

 

The performance of the Supplier shall be measured and rated in the areas of Product, delivery, price and customer service on an on going basis.

 

28. Termination

 

	
  
	
a)
	
Notwithstanding anything to the contrary contained in this Agreement, this Agreement may be terminated by TMI prior to the expiration date effective immediately upon written notice:

 

	
  
	
(i)
	
if the Supplier breaches any term, condition, or provision of this Agreement, unless the Supplier remedies such breach within one (1) Business Days written notice of such breach;

 

	
  
	
if the Product supplied by the Supplier does not conform to the requirements set out in paragraph 27 above.

 

	
  
	
(ii)
	
if the Supplier becomes insolvent, takes the benefit of any Act in force for insolvent persons, is adjudged a bankrupt, makes a general assignment for the ,benefit of creditors, or takes the benefit of any Act in force for insolvent persons;

 

	
  
	
(iii)
	
if the Supplier ceases to do business as a going concern;

 

	
  
	
(iv)
	
if a receiver or receiver/manager is appointed for the Supplier; or

 

	
  
	
(v)
	
if the Supplier takes the benefit of any Act in force for the winding up or liquidation of

	
  
	
corporations.

 

	
  
	
b)
	
At any time prior to the expiration of this Agreement, TMI and/or Alliance may terminate this Agreement upon sixty- (60) calendar day's written notice to the Supplier. In the event of such termination, TMI shall pay to the supplier, subject to the provisions in this Agreement relating to payment, the amount due the Supplier for Services
performed and Product supplied up to the effective date of such termination.

 

	
c)  
	
  Termination of this Agreement by TMI/Alliance shall not deprive either party of any of its rights, remedies or actions against the each other for damages or costs. In the event of termination, except as provided elsewhere in this Agreement, Both parties shall be discharged from and have no further obligations under this Agreement.

 

29. Confidentiality

 

	
  
	
a)
	
The Supplier and /or purchaser shall not disclose to anyone or use any information which it has acquired as a result of this Agreement concerning TMI/Alliance plans, business, objectives, customers, products, processes, work or services, or the provisions of this Agreement, without prior written consent. This restriction shall not apply if such information has become generally known without the fault of the Supplier
or is rightfully obtained from a third party or is known or developed by the Supplier independent of both parties.

 

	
  
	
b)
	
The obligation in regard to confidentiality shall not restrict the Supplier/purchaser from any disclosure pursuant to any applicable law or by order of any Court or government agency provided that the Supplier/purchaser shall give such notice to both parties as may be reasonable in the circumstances.

 

c)     This provision shall survive for a period of five (3) years following expiration or termination of this Agreement.

 

30. General Indemnity

 

The Supplier agrees to indemnify and save harmless TMI, its servants, agents and employees from any and all losses, damages, expenses, claims, actions, causes of action, liens, suits, judgments or costs of whatsoever nature that may arise directly or indirectly out of any negligent or willful act or omission of the Supplier, any of the
Supplier's subcontractors, or their respective servants, agents or employees, in the performance of this Agreement, except where such loss or damage is caused by the negligence of TMI, its servants, agents or employees.

 

31. Indemnification for Infringement

 

The Supplier represents and warrants that the Products do not and shall not infringe upon or violate any patent, copyright, trade secret, trade name, trademark, or any other proprietary right of any third party enforceable in the state of Nevada  (an "Intellectual Property Right"). The Supplier shall defend, at its own expense,
any claim by a third party against TMI asserting or involving an Intellectual Property Right which concerns the Products, provided that the claim does not arise out of a breach By TMI, its servants, agents or employees. However, the Supplier must be notified by TMI in writing within a reasonable time after TMI first receives written notice of any
claim, action or allegation of infringement. The Supplier shall be bound by and shall pay the amount of any

settlement, compromise, final determination or judgment reached while the Supplier was conducting the defense, and, in any event, provided that TMI is in compliance with this Article, the Supplier shall indemnify and hold TMI harmless Item and against any
and all liabilities, losses, damages, costs and expenses (including legal fees and ,expenses on a solicitor and his own client basis) associated with any such claim or action brought against TMI. In the event an injunction or order is obtained against use of
the Products or any of their elements by reason of the allegations or if, in the Supplier's opinion, the Products or any of their elements are likely to become the subject of a claim of infringement or violation of a patent, copyright, trade secret, trade
name, trademark, or any other proprietary right of a third party, the Supplier shall at its expense.

 

The Supplier shall have no liability whatsoever to hereunder for any infringement claims based solely upon any modifications to any of the Products, by TMI or Suppliers or Subcontractors so as to cause the Products to become infringing.

 

32. Insurance

 

	
  
	
a)
	
The Supplier shall, without limiting its obligations or liabilities under this Agreement, at its own expense, obtain and maintain in full force and effect, throughout the entire term of this Agreement, all of the following insurance coverage, in a form acceptable to TMI:

 

	
  
	
(i)
	
Comprehensive general liability insurance including products and completed operations in an amount not less than two million dollars ($2,000,000.00) inclusive per occurrence , against
liability for bodily injury, personal injury, death and property damage including loss of use. Such insurance shall insure all subcontractors and anyone employed directly or indirectly by the Supplier or its subcontractors to perform a part or parts of the Services and shall include blanket contractual liability coverage; and

	
  
	
 

 

	
  
	
(ii)
	
The Supplier shall have the insurance required in full force and effect prior to execution of this Agreement and prior to the commencement of the provision of Services. 36. Notices

 

6

 

 

	
b)  
	
Any notice, request, demand or other communication given or made by a party to this Agreement shall be duly given or made when communicated in writing to the party to which notice, request, demand or other communications is required or permitted to be given or made under this Agreement:

 

From: Alliance Networks Communications Inc. (Supplier)

 

502 East John Street

Carson City, Nevada

89706

 

 

To:

TMI Transformers Inc.

 

	
  
	
c)
	
The form of communication and the time at which a communication shall be deemed for  the purposes of this Agreement to have been received are:

 

	
  
	
(i)
	
personal delivery, on the Business Day of actual receipt;

 

	
  
	
(ii)
	
prepaid registered mail, on the fourth Business Day following the date of deposit  by post, or

 

	
(iii)  
	
facsimile, on receipt of answerback generated by the receiving facsimile equipment.

 

33. Contract with Others

 

The relationship created by this Agreement is non-exclusive, however it is mutually agreed by both parties that Alliance will have “first right of refusal for the products it manufactures”. The following criteria must be met in order adhere to this stipulation:

 

Competitive Pricing policy congruent with industry standards Reasonable delivery of products (within agreement of time period by both parties) Alliance is capable of delivering
said product with required customer support

 

With consideration of the above mentioned criteria, if Alliance is unable and or unwilling to supplied product(s) TMI shall have an unrestricted right to obtain Product in such ways and through such means as it may from time to time deem necessary.

 

34. Amendments

 

Any amendment of this Agreement shall require a written Amending Agreement, duly signed by authorized officers or representatives of both parties, whereupon such Amending Agreement shall be deemed incorporated into and made part of this Agreement.

 

35. Gender and Number

 

This Agreement shall be read with all changes of gender and number required by the context. Any reference to the term of this Agreement shall, unless the, context otherwise requires, be deemed to include any renewals or extensions.

 

36. Severability

 

If any article or articles or part or parts of any provision in this Agreement are illegal or unenforceable, it or they shall be considered separate and severable from this Agreement and the remaining provisions of this Agreement shall remain in full force and effect and shall be binding upon the parties as though the said articles or
part or parts of any provision had never been included.

 

37. Waiver of Agreement

 

Failure by either party to insist upon the strict performance of any of the covenants, agreements, terms, provisions or conditions contained in this Agreement Documents or to exercise any election

shall not be construed as a waiver or relinquish TMI of such covenant, agreement, term, provision or condition but the same shall continue and remain in full force. No waiver shall be deemed to have been made unless expressed in writing.

 

38. Force Majeure

 

	
  
	
a)
	
Neither party shall be responsible for any failure to comply with any of the terms of this Agreement where such failure is directly or indirectly caused by or results from events of force majeure beyond the control of either party. These events shall include, but not be limited to, fire, flood, earthquake, accident, civil disturbances, war, rationing, embargoes, strikes or labor problems, acts of God, or acts of
government, but lack of finances shall in no event be deemed to be a cause beyond a party's control.

 

	
  
	
b)
	
In the event that performance of this Agreement in the reasonable opinion of either party is made impossible by force majeure, then such party shall so notify the other in writing and TMI shall either terminate this Agreement, or authorize the Supplier to complete the provision of the Services with such adjustments as are required by the existence of the force majeure and are agreed upon by both parties.

 

39. Entire Agreement

 

This Agreement Documents constitute the entire agreement between the Supplier and TMI pertaining to the subject matter and supersedes all prior agreements, understandings," negotiations, representations
and discussions whether oral or written.

 

 

 

7

 

 

40. Governing Law

 

This Agreement shall be governed by, construed and interpreted in accordance with the laws of the Province of Alberta, excluding the United Nations Convention on Contracts for the International Sale of Goods and, for that purpose each party hereby submits to the jurisdiction of the State of Nevada.

 

  41. Survival

 

The provisions titled Representations and Warranties, Confidentiality, General Indemnity, Indemnification Infringement and Governing Law shall survive expiration or termination of this Agreement.

 

42. Subcontractor

 

TMI shall recognize the Supplier only. The Supplier agrees to bind every subcontractor by the terms of this Agreement Documents as far as applicable to the work to be performed by the subcontractor and shall be fully responsible to TMI for the acts and omissions of any subcontractors and of persons directly or indirectly employed by
them.  Nothing contained in this Agreement shall create any contractual relationship between a subcontractor and TMI.

 

43. Headings

 

	
  
	
a)
	
The headings contained in this Agreement are for convenience of reference only and shall not affect the interpretation or meaning of this Agreement.

 

	
  
	
b)
	
In the event of a conflict between the main body of this Agreement and any schedule hereto, the main body shall prevail. Terms defined in this Agreement shall have the same meaning in any and all schedules hereto unless there is something patently inconsistent with such meaning in the context in which the term occurs.

 

44. Arbitration

 

	
  
	
a)
	
In the event that a dispute arises between TMI and the Supplier as to the compensation to be paid to the Supplier or as to the interpretation, application, operation or alleged violation of this Agreement or any of the provisions contained in this Agreement Schedules, such dispute or termination shall be determined by arbitration in accordance with the following conditions:

 

	
  
	
(i)
	
The party desiring to refer a dispute for arbitration shall notify the other party in writing

	
  
	
of the details of the nature and extent of the dispute;

 

	
  
	
(ii)
	
Within three (3) Business Days of receipt of such notice, the opposite party shall, by written notice, advise the party desiring to refer the dispute to arbitration of all matters referred to in the initial notice except those for which any notified party admits responsibility and proposes to take remedial action and such party shall then take such remedial action. In the event of a failure to respond, the party
failing to respond shall be deemed to dispute everything set out in the notice to arbitrate;

 

	
  
	
(iii)
	
The terms of reference for arbitration shall be those of dispute referred to in the initial notice which remains in dispute or those areas deemed to be in dispute hereunder;

	
  
	
 

 

	
  
	
(iv)
	
The parties hereto shall, within three (3) Business Days of the terms of reference pursuant to (c) above, jointly appoint a single arbitrator, provided further that if the parties cannot agree on an arbitrator then the parties or anyone of them may apply to a Judicial Authorities in the State of Nevada to have the arbitrator appointed;

 

	
  
	
(v)
	
Within thirty (30) Business Days of the appointment of the arbitrator, or such further period as may be agreed upon by the parties, the arbitrator shall resolve all matters and disputes accorded in the terms of reference;

 

	
  
	
(vi)
	
The decision of the arbitrator shall be binding and final upon TMI and the Supplier;

 

 

8

 

 

 

 

	
(vii)  
	
 The costs of the arbitrator shall be borne by the parties as determined by the arbitrator;

 

	
(viii)
	
The arbitrator shall not alter, amend or change the terms or conditions of this Agreement, and;

 

	
  
	
(ix)
	
All arbitration proceedings hereunder shall be conducted at Carson City, Nevada.

 

	
  
	
(x)
	
This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada. The Courts of the State of Nevada shall have exclusive jurisdiction over any disputes that are not within the jurisdiction of an arbitrator, including any dispute where a party is seeking equitable relief and each party hereby submits to the jurisdiction of the Nevada State Courts.

 

	
  
	
(xi)
	
Disputes related to intellectual property infringements shall not be referred to the arbitrator.

 

 

Schedule “A”

 

Whereby TMI agrees to purchase for resale to Starbridge (a telecom protection solution provider) a unit referred to as an “Active AC Surge Blocking protection device” Part No. ASB–AC1 (single port). Said device has been designed to shunt harmful over-voltage/current transients to ground, thereby providing all inclusive
protection for sensitive modems, used in the transmission of audio/visual, & data signals to the customer premise.

 

TMI agrees to purchase quantities up to and including $500K on an annual basis of said protectors based on the following provisions;

 

	
1)  
	
Products are received in good working order

	
2)  
	
Viability of market remains consistent, based on demand of product

	
3)  
	
Pricing of product remains relative to that offered by competitors (target price of $7.20 per unit)

 

 

 

	For: Alliance Networks Communications Inc. 	 	For: TMI Transformers Inc.	 
	 	 	 	 	 
	
/s/  Harj Manhas  
	 	
By: 
	/s/  Alex A. Gianaras	 
	(signed) 	 	 	(signed)	 
	Printed Name and Title: 	 	 	Printed Name and Title:	 
	Date: May 22, 2009  	 	 	Date: May 15, 2009	 

 

 

 

 

 

 

 

 

 

 

9

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