Document:

crwgexhibit101.htm

EXHIBIT 10.1

 

SUBSCRIPTION AGREEMENT

CrowdGather, Inc.

20300 Ventura Blvd. Suite 330

Woodland Hills, CA 91364

Gentlemen:

1. Subscription. On the terms and subject to the conditions of this Subscription Agreement (“Subscription Agreement”), ___________ (“Investor”) hereby subscribes for four hundred twenty eight thousand five hundred seventy one (428,571) shares of $.001 par value common stock (“Shares”) of CrowdGather, Inc., a Nevada corporation (“Company”), at a purchase price of Four Hundred Fifty Thousand Dollars ($450,000), or $1.05 per share (“Per Share Price”). In connection with the Shares being issued pursuant to the Subscription Agreement, the Investor shall receive two hundred fifteen thousand two hundred eighty five (215,285) warrants which will provide to the Investor the right to purchase two hundred fifteen thousand two hundred eighty five (215,285) shares of the Company’s common stock at a purchase price of $1.17 per share and which warrant shall expire three years from the date that the Company accepts the subscription contemplated by the provisions of this Subscription Agreement. The Warrant Agreement attached hereto as Exhibit A. The Per Price Share is subject to the anti-dilution provisions of Section 3 of this Subscription Agreement.

The Investor shall send:  (1) an executed copy of this Subscription Agreement; and (2) a wire transfer in immediately available U.S. funds for the full amount of the purchase price of the Shares for which the Investor is subscribing plus all wire transfer fees to:

 

	 	
Bank Name

	  	 
	 	
ABA Routing No.:

	  	 
	 	
Account Name:

	  	 
	 	
Account No.:

	  	 
	 	
Reference:

	
Name of Investor

	 

2.           Representations and Warranties.  In order to induce the Company to accept this subscription, the Investor hereby represents and warrants to, and covenants with, the Company as follows:

(a)           The Investor has received and carefully reviewed such information and documentation relating to the Company that the Investor has requested, including without limitation, the Company’s filings with the U.S. Securities and Exchange Commission;

(b)           The Investor has had a reasonable opportunity to ask questions of and receive answers from the Company concerning the Company and terms and conditions of his or her proposed investment in the Company, and all such questions, if any, have been answered to the full satisfaction of the Investor;

 

  

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(c)           The Investor has such knowledge and expertise in financial and business matters that the Investor is capable of evaluating the merits and risks involved in an investment in the Shares;

(d)           The Investor understands that the Company has determined that the exemption from the registration provisions of the Securities Act of 1933, as amended (the “Securities Act”), provided by Regulation S with respect to non U.S. purchasers is applicable to the offer and sale of the Shares, based, in part, upon the representations, warranties and agreements made by the Investor herein;

(e)           Except as set forth herein, no representations or warranties have been made to the Investor by the Company or any agent, employee or affiliate of the Company and in entering into this transaction the Investor is not relying upon any information, other than the results of independent investigation by the Investor;

(f)           The Investor acknowledges that it has been called to his or her attention by those persons with whom the Investor has dealt in connection with his or her proposed investment in the Company, that the Company has a limited operating history with limited revenues and the Company may never have any significant revenues or earnings, and that the Investor’s proposed investment in the Company involves significant risks which may result in the loss of that investment, or a portion thereof;

(g)           The Investor has full power and authority to execute and deliver this Subscription Agreement and to perform the obligations of the Investor hereunder and this Subscription Agreement is a legally binding obligation of the Investor in accordance with its terms; and

 

  

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(h)           Regulation S.

(i)           The Investor understands and acknowledges that (A) the Shares acquired pursuant to this Subscription Agreement have not been registered under the Securities Act and are being sold in reliance upon an exemption from registration afforded by Regulation S; and that such Shares have not been registered with any state securities commission or authority; (B)  pursuant to the requirements of Regulation S, the Shares may not be transferred, sold or otherwise exchanged unless in compliance with the provisions of Regulation S and/or pursuant to registration under the Securities Act, or pursuant to an available exemption thereunder; and (C) other than as set forth in this Subscription Agreement between the Company and the Investor, the Company is under no obligation to register the Shares under the Securities Act or any state securities law, or to take any action to make any exemption from any such registration provisions available.

(ii)           (A) The Investor is not a U.S. person and is not acquiring the Shares for the account of any U.S. person; (B) if a corporation, it is not organized or incorporated under the laws of the United States; (C) if a corporation, no director or executive officer is a national or citizen of the United States; and (D) it is not otherwise deemed to be a “U.S. Person” within the meaning of Regulation S.

(iii)           The Investor, if not an individual, was not formed specifically for the purpose of acquiring the Shares purchased pursuant to this Subscription Agreement.

(iv)           The Investor is purchasing the Shares for its own account and risk and not for the account or benefit of a U.S. Person as defined in Regulation S and no other person has any interest in or participation in the Shares or any right, option, security interest, pledge or other interest in or to the Shares. The Investor understands, acknowledges and agrees that it must bear the economic risk of its investment in the Shares for an indefinite period of time and that prior to any such offer or sale, the Company may require, as a condition to effecting a transfer of the Shares, an opinion of counsel, acceptable to the Company, as to the registration or exemption therefrom under the Securities Act and any state securities acts, if applicable.

(v)           The Investor will, after the expiration of the restricted period, as set forth under Rule 903 of Regulation S, offer, sell, pledge or otherwise transfer the Shares only in accordance with Regulation S, or pursuant to an available exemption under the Securities Act and, in any case, in accordance with applicable state securities laws.  The transactions contemplated by this Subscription Agreement have neither been pre-arranged with a purchaser who is in the United States or who is a U.S. Person, nor are they part of a plan or scheme to evade the registration provisions of the United States federal securities laws.

(vi)           The offer leading to the sale evidenced hereby was made in an “offshore transaction.”  For purposes of Regulation S, the Investor understands that an “offshore transaction” as defined under Regulation S is any offer or sale not made to a person in the United States and either (A) at the time the buy order is originated, the purchaser is outside the United States, or the seller or any person acting on his behalf reasonably believes that the purchaser is outside the United States; or (B) for purposes of (1) Rule 903 of Regulation S, the transaction is executed in, or on or through a physical trading floor of an established foreign exchange that is located outside the United States or (2) Rule 904 of Regulation S, the transaction is executed in, on or through the facilities of a designated offshore securities market, and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States.

(vii)           Neither the Investor nor any affiliate of the Investor or any person acting on its behalf, has made or is aware of any “directed selling efforts” in the United States, which is defined in Regulation S to be any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for any of the Shares being purchased hereby.

 

  

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(viii)           The Investor understands that the Company is the seller of the Shares which are the subject of this Subscription Agreement, and that, for purpose of Regulation S, a “distributor” is any underwriter, dealer or other person who participates, pursuant to a contractual arrangement, in the distribution of securities offered or sold in reliance on Regulation S and that an “affiliate” is any partner, officer, director or any person directly or indirectly controlling, controlled by or under common control with any person in question.  The Investor agrees that it will not, during the restricted period set forth under Rule 903 of Regulation S, act as a distributor, either directly or though any affiliate, nor shall it sell, transfer, hypothecate or otherwise convey the Shares other than to a non-U.S. Person.

(ix)           The Investor acknowledges that the Shares will bear a legend in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN OFFERED AND SOLD IN AN “OFFSHORE TRANSACTION” IN RELIANCE UPON REGULATION S AS PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION. ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) AND MAY NOT BE TRANSFERRED OTHER THAN IN ACCORDANCE WITH REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRA­TION UNDER THE SECURITIES ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.  THE SECURITIES REPRESENTED BY THIS CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE SECURITIES ACT.

3. Anti-Dilution Provisions.

(a) Anti-Dilution Adjustment for Sale of Discounted Common Stock.

(i) Subject to Section 3(a)(iii), if the Company shall, following the date of this Subscription Agreement, sell shares of its common stock for a consideration per share less than the Per Share Price, then the Per Share Price shall be adjusted immediately thereafter so that it shall equal the price per share of the common stock in such offering. Whenever any adjustment is made pursuant to this Section 3(a)(i), the number of shares of common stock issuable pursuant to this Subscription Agreement shall be adjusted pursuant to Section 3(c) hereof, and such additional shares shall be delivered to the Investor pursuant to Section 3(e) hereof.

(ii) Adjustments to the Per Share Price pursuant to this Section 3(a) shall be made successively whenever an issuance of shares triggering such an adjustment is made, subject to Section 3(f) hereof.

(iii) Notwithstanding anything to the contrary in this Section 3(a), no adjustment to the Per Share Price shall be made pursuant to this Section 3(a) in the case of shares issued: (i) in connection with any dividend or distribution on, or subdivision, reclassification or combination of, the outstanding shares of Common Stock of the Company; (ii) upon the exercise of options granted to the Company's officers, directors, employees and consultants under a plan or plans adopted by the Company's Board of Directors and approved by its stockholders, if such shares would otherwise be included in this Section 3(a); (iii) upon the exercise of stock options, warrants, convertible securities and convertible debentures outstanding as of the date hereof; (iv) to shareholders of any corporation which merges into the Company in proportion to their stock holdings of such corporation immediately prior to such merger, upon such merger; (v) pursuant to any other anti-dilution provision affecting the Company securities; or (vi) in connection with acquisitions.

 

  

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(b) Anti-Dilution Adjustment for Sale of Discounted Convertible Stock.

(i) Subject to Section 3(b)(iii), if the Company shall, following the date of this Subscription Agreement, issue any equity or debt securities convertible or exercisable into or exchangeable for its common stock (a “Convertible Stock Issuance”) for a consideration per share of common stock initially deliverable upon conversion or exchange of such securities (as determined as provided in Section 3(d) below, the “Convertible Stock Per Share Price”) less than the Per Share Price, then the Per Share Price shall be adjusted immediately thereafter so that it shall equal the Convertible Stock Per Share Price. Whenever any adjustment is made pursuant to this Section 3(b)(i), the number of shares of common stock issuable pursuant to this Subscription Agreement shall be adjusted pursuant to Section 3(c) hereof, and such additional shares shall be delivered to the Investor pursuant to Section 3(e) hereof.

(ii) Adjustments to the Per Share Price pursuant to this Section 3(b) shall be made successively whenever an issuance of shares triggering such an adjustment is made, subject to Section 3(f) hereof.

(iii) Notwithstanding anything to the contrary in this Section 3(b), no adjustment to the Per Share Price shall be made pursuant to this Section 3(b) in the case of securities issued: (i) in transactions where the Company has fixed a record date for the issuance of rights or warrants to all holders of its common stock entitling them to subscribe for or purchase shares of common stock (or securities convertible into common stock) at a price (or having a conversion price per share) less than the Per Share Price on such record dates; or (iii) any of the transactions described in Section 3(a)(iii) hereof (with any reference in Section 3(a)(iii) to price or quantity of shares issued being understood, for purposes of this Section 3(b)(iii), to refer to the aggregate price or quantity, as applicable, of the shares of common stock into which such securities are convertible or exchangeable).

(c) Adjustment of Securities. Whenever the Per Share Price is adjusted pursuant to Sections 6(a) and 6(b) above, the number of shares of common stock issuable pursuant to this Subscription Agreement shall simultaneously be adjusted by multiplying the number of shares of common stock issuable hereunder by the Per Share Price and dividing the product so obtained by the Per Share Price, as adjusted.

(d) Computation of Certain Consideration. For purposes of any computation with respect to the consideration received pursuant to Sections 6(a) and 6(b) above, the following shall apply:

(i) in the case of the issuance of shares of common stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith;

(ii) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company (irrespective of the accounting treatment thereof), whose determination shall be conclusive; and

(iii) in the case of a Convertible Stock Issuance, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof (the consideration in each case to be determined in the same manner as provided in clauses (i) and (ii) of this Section 3(d)).

 

  

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(e) Notice of Adjustment. Whenever the Per Share Price is adjusted as herein provided, the Company shall promptly, but no later than 10 days after any request for such an adjustment by the Investor, cause a notice setting forth the adjusted Per Share Price and adjusted number of shares of common stock issuable hereunder, and, if requested, information describing the transactions giving rise to such adjustments, to be mailed to the Investor at its address set forth below, and shall cause a certified copy thereof to be mailed to its transfer agent, if any. The Company may retain a firm of independent certified public accountants selected by its Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by this Section 3, and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment. The Company shall, within fifteen (15) days of any anti-dilution adjustment pursuant to this Section 3, issue and deliver to the Investor a certificate evidencing the shares of common stock to be issued pursuant to this Section 3.

(f) Termination of Anti-Dilution Provisions. The provisions of Sections 6(a) through 6(e) shall terminate and be of no further force or effect on April 28, 2011.

4. The Investor understands that this subscription is not binding upon the Company until the Company accepts it, which acceptance is at the sole discretion of the Company and is to be evidenced by the Company’s execution of this Subscription Agreement where indicated.  This Subscription Agreement shall be null and void if the Company does not accept it as aforesaid.  The Investor further understands that all the offering proceeds will be placed directly in the Company’s bank account.  In the event the Company does not accept the offering proceeds, the offering will not be completed and all offering proceeds will thereafter be promptly returned to investors without interest or deduction.

5. The Investor has no right to require that the Shares be registered pursuant to the provisions of the Securities Act, or otherwise.  The Investor further acknowledges and agrees that the Company has no obligation to assist the Investor in obtaining any exemption from any registration requirements imposed by applicable law. The Investor also acknowledges and agrees that he or she shall be responsible for compliance with all conditions on transfer imposed by a securities administrator or similar person of any state, province or territory.

6. The Investor understands that the Company may, in its sole discretion, reject this subscription, in whole or in part, and/or reduce this subscription in any amount and to any extent, whether or not pro rata reductions are made of any other investor’s subscription.

7. The Investor agrees to indemnify the Company and hold it harmless from and against any and all losses, damages, liabilities, costs and expenses which it may sustain or incur in connection with the breach by the Investor of any representation, warranty or covenant made by the Investor.

8. Neither this Subscription Agreement nor any of the rights of the Investor hereunder may be transferred or assigned by the Investor.

9. Except as otherwise provided herein, this Subscription Agreement (i) may only be modified by a written instrument executed by the Investor and the Company; (ii) sets forth the entire agreement of the Investor and the Company with respect to the subject matter hereof; (iii) shall be governed by the laws of the State of Nevada applicable to contracts made and to be wholly performed therein; and (iv) shall inure to the benefit of, and be binding upon the Company and the Investor and their respective heirs, legal representatives, successors and permitted assigns.

 

  

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10. Unless the context otherwise requires, all personal pronouns used in this Subscription Agreement, whether in the masculine, feminine or neuter gender, shall include all other genders.

11. All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or mailed by certified or registered mail, return receipt requested, postage prepaid, as follows:  if to the Investor, to the address set forth on the signature page hereto; and if to the Company, to 20300 Ventura Blvd. Suite 330, Woodland Hills, CA 91364, Attention: President or to such other address as the Company or the Investor shall have designated to the other by like notice.

  

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SIGNATURE PAGE

IN WITNESS WHEREOF, the Investor has executed this Subscription Agreement this ___ day of April 2010.

Number of Shares Subscribed for           428,571                                                                                     

Subscription Amount:           $450,000                                                                           

 

	  	
Organization Signature:

	  	
Individual Signature:

	  

	 	 	 	 	 	 
	  	  	  	 	
 

	  
	  	  	  	 	

Signature

	  
	  	
By:

	  	 	
 

	  
	  	
Name:

	  	 	 Print Name	  
	  	
Title:

	  	 	  	  
	  	  	  	 	
Additional Signature of Joint Owner

	  
	  	  	  	 	  	  
	  	  	  	 	
Print Name

	  

(All Subscribers should please print information below exactly

as you wish it to appear in the records of the Company)

 

	 	 	 	 	 	 
	  	 Name	  	 	

Social Security Number of Individual

	  
	  	  	  	 	

or other Taxpayer I.D. Number

	  
	  	
 

	  	 	
 

	  
	  	
Address: 

	  	 	 Address for notices if different:	  
	  	
 

	  	 	  	  
	  	Number and Street  	  	 	
Number and Street

	  
	  	  	  	 	  	  
	  	City                                 Country   Postal Code   	  	 	
City                                    Country   Postal Code

	  

Please check the box to indicate form of ownership (if applicable):

	
tenants-in-common ÿ

(Both Parties must sign above)

	
joint tenants with right of survivorship ÿ

(Both Parties must sign above)

	
community property ÿ

(Both Parties must sign above)

  

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ACCEPTANCE OF SUBSCRIPTION

The foregoing subscription is hereby accepted by CrowdGather, Inc. this _________ day of April 2010.

 

	  	
CrowdGather, Inc.

	  
	  	  	  	  
	
 

	
By:

	  /s/ Sanjay Sabnani	  
	  	  	
Sanjay Sabnani

Chief Executive Officer

	  

 

9crwgexhibit102.htm

EXHIBIT 10.2

 

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR QUALIFIED UNDER ANY APPLICABLE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER SUCH STATE SECURITIES LAWS OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR QUALIFICATION IS NOT REQUIRED.

 

CROWDGATHER, INC.

 

WARRANT AGREEMENT

April 29, 2010

THIS CERTIFIES THAT, for value received, __________ (the “Investor”), or Investor’s assigns (Investor and Investor’s assigns being the “Holder”), is entitled to subscribe for and purchase at any time during the Exercise Period from CrowdGather, Inc., a Nevada corporation, with an office located at 20300 Ventura Blvd., Suite 330, Woodland Hills, CA 91364 (the “Company”), a number of shares of Common Stock equal to the Share Number at a per share price equal to the Exercise Price in effect at such time. This Warrant is issued in conjunction with the shares of the Company’s Common Stock issued pursuant to the Subscription Agreement dated as of April 29, 2010, by and between the Company and the Investor.

 

1. Definitions. As used herein, the following terms shall have the following respective meanings:

 

(a)  “Aggregate Warrant Price” shall mean the dollar value obtained by multiplying $1.17 by 215,285.

 

(b)  “Common Stock” shall mean the common stock of the Company.

 

(c)  “Exercise Period” shall mean the period commencing on April 29, 2010, and ending on April 29, 2013.

 

(d)  “Exercise Price” shall mean $1.17 per share of Common Stock.

 

(e)  “Exercise Shares” shall mean any Common Stock acquired upon exercise of this Warrant.

 

(f)  “Share Number”, at any time, shall mean (i) the Aggregate Warrant Price minus the aggregate exercise price previously paid upon exercise of this Warrant, divided by (ii) the Exercise Price then in effect.

 

  

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2. Exercise of Warrant.

 

2.1  General; Exercise of Warrant .

 

(a)  The rights represented by this Warrant may be exercised as a whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder):

 

(i)           An executed Notice of Exercise in the form attached hereto;

 

(ii)           Payment of the Exercise Price either in cash or by check; and

 

(iii)           This Warrant.

 

(b)  Upon the exercise of the rights represented by this Warrant, a certificate or certificates for the Exercise Shares so purchased, registered in the name of the Holder or persons affiliated with the Holder, if the Holder so designates (and such designation is in compliance with applicable securities laws and any stockholders, investor rights or similar agreement), shall be issued and delivered to the Holder as promptly as practicable after the rights represented by this Warrant shall have been so exercised.

 

(c)  The person in whose name any certificate or certificates for Exercise Shares are to be issued upon exercise of this Warrant shall 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 Exercise Price was made, irrespective of the date of delivery of such certificate or certificates, 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.

 

2.2  Net Issue Exercise .

 

(a)  In lieu of paying the Exercise Price in cash or by check as provided in Section 2.1, the Holder may elect a “Net Issue Exercise” pursuant to which the Holder will receive Exercise Shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company together with an executed Notice of Exercise in the form attached hereto in which event the Company shall issue to the Holder a number of Exercise Shares computed using the following formula:

 

X = Y (A-B)

A

Where:

 

X = the number of Exercise Shares to be issued to the Holder;

 

  

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Y = the number of Exercise Shares purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such exercise);

 

A = the Fair Market Value of one share of the Company’s Common Stock (at the date of such exercise); and

 

B = the Exercise Price (as adjusted to the date of such exercise).

 

(b)  For purposes of the above calculation, “Fair Market Value” shall be determined as follows:

 

(i)  If the Common Stock is listed on any established stock exchange or a national market system, including, without limitation, The Nasdaq Stock Market’s Global Select or Global Market, the Fair Market Value of a share of Common Stock will be the average closing sales price for such stock (or the closing bid, if no sales are reported) as quoted on that system or exchange (or the system or exchange with the greatest volume of trading in Common Stock), over the five (5) trading day period ending on the trading day immediately preceding the day the Warrant is being exercised, as reported in the Wall Street Journal or any other source the Company considers reliable.

 

(ii)  If the Common Stock is quoted on The Nasdaq Stock Market ( but not on The Nasdaq Stock Market’s Global Select or Global Market) or is regularly quoted elsewhere by recognized securities dealers but selling prices are not reported, the Fair Market Value of a share of Common Stock will be the average mean between the high bid and low asked prices for the Common Stock over the five (5) trading day period ending on the trading day immediately preceding the day the Warrant is being exercised, as reported in the Wall Street Journal or any other source the Company considers reliable.

 

(iii)  If the Common Stock is not traded as set forth above, the Fair Market Value will be determined in good faith by the Board of Directors of the Company.

 

(c)  If this Warrant is not exercised in full by a Net Issue Exercise, then, the “Share Number” in effect immediately after such partial exercise shall be appropriately adjusted to take into account the effect of the Net Issue Exercise.

 

  

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3. Covenants of the Company.

 

3.1  Covenants as to Exercise Shares . The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof. The Company further covenants and agrees that the Company will at all times during the Exercise Period have authorized and reserved, free from preemptive rights, a sufficient number of shares of its Common Stock to provide for the exercise of the rights represented by this Warrant. If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock shall not be sufficient to permit 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 purposes.

 

3.2  No Impairment . Except and to the extent as waived or consented to by the Holder, the Company will not, by amendment of its Articles 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 to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment.

 

3.3  Notices of Record Date . In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend which is the same as cash dividends paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least ten (10) days prior to the date specified herein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.

 

4. Representations of Holder.

 

4.1  Acquisition of Warrant for Personal Account . The Holder represents and warrants that it is acquiring the Warrant and any shares of capital stock issued or issuable upon exercise or conversion of the Warrant for investment purposes only and not with a view to or for resale in connection with any distribution or public offering thereof within the meaning of the Act (as defined below). The Holder also represents that the entire legal and beneficial interests of the Warrant and Exercise Shares the Holder is acquiring is being acquired for, and will be held for, the account of the Holder only.

 

4.2  Accredited Investor; Off-Shore Transaction; Not a U.S. Person . The Holder represents and warrants that, unless not a “U.S. Person” as defined below, the Holder it is an “accredited investor” as such term is defined in Rule 501 under the Securities Act of 1933, as amended (the “ Act ”). The Holder shall provide the Company with such additional information as the Company may reasonably request with respect to the Holder’s status as an “accredited investor.” The exercise of this Warrant and the transactions contemplated herein may constitute an “off-shore transaction,” as that term is defined in Rule 902(h) of Regulations S promulgated under the Securities Act. If the Holder is not an accredited investor, then the Holder is not a “U.S. Person,” as that term is defined in Rule 902(k) of Regulation S promulgated under the Securities Act.

 

  

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4.3  Securities Are Not Registered .

 

(a)  The Holder understands that the Warrant and the Exercise Shares have not been registered under the Act, on the basis that no distribution or public offering of the stock of the Company is to be effected, or registered or qualified under any applicable state securities laws. The Holder realizes that the basis for the exemption may not be present if, notwithstanding its representations, the Holder has a present intention of acquiring the securities for a fixed or determinable period and, in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The Holder has no such present intention.

 

(b)  The Holder recognizes that the Warrant and the Exercise Shares must be held indefinitely unless they are subsequently registered under the Act or an exemption from such registration is available. The Company has no obligation to register the Warrant or the Exercise Shares of the Company, or to comply with any exemption from such registration.

 

(c)  The Holder is aware that neither the Warrant nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Act unless certain conditions are met, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale following the required holding period under Rule 144 and the number of shares being sold during any three (3) month period not exceeding specified limitations. For so long as the Warrants are outstanding and for the two-year period thereafter, the Company will use its best efforts to satisfy these conditions.

 

(d)  The Holder is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company. The Holder is experienced in making investments of this type and has such knowledge and background in financial and business matters that the Holder is capable of evaluating the merits and risks of this investment and protecting its own interests. The Holder has had an opportunity to ask questions of, and receive answers from, the Company and its officers and employees regarding the business, financial affairs and other aspects of the Company, and has further had the opportunity to obtain information (to the extent the Company possesses or can acquire such information without unreasonable effort or expense) which the Holder deems necessary to evaluate an investment in the Company and to verify the accuracy of information otherwise provided to the Holder.

 

4.4  Disposition of Warrant and Exercise Shares .

 

(a)  Except for transfers by the Holder to its affiliates in compliance with all applicable securities laws, the Holder further agrees not to make any disposition of all or any part of the Warrant or Exercise Shares in any event unless and until:

 

(i)  The Company shall have received a letter secured by the Holder from the Securities and Exchange Commission stating that no action will be recommended to the Commission with respect to the proposed disposition; or

 

(ii)  There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with said registration statement; or

 

  

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(iii)  The Holder shall have shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, for the Holder to the effect that such disposition will not require registration of such Warrant or Exercise Shares under the Act or any applicable state securities laws.

 

(b)  The Holder understands and agrees that all certificates evidencing the Exercise Shares to be issued to the Holder may bear the following legend (in addition to any legend required under applicable state securities laws, the Company’s Bylaws, or as provided elsewhere in this Warrant):

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR QUALIFIED UNDER ANY APPLICABLE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER SUCH STATE SECURITIES LAWS OR AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR QUALIFICATION IS NOT REQUIRED.

 

5. Adjustments and Notices. The Exercise Price and the number of Exercise Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time in accordance with this Section 5.

 

5.1  Subdivision, Stock Dividends or Combinations . In case the Company shall at any time after the commencement of the Exercise Period subdivide the outstanding Common Stock or shall issue a stock dividend with respect to the Common Stock, the Exercise Price in effect immediately prior to such subdivision or the issuance of such dividend shall be proportionately decreased, and in case the Company shall at any time after the commencement of the Exercise Period combine the outstanding shares of Common Stock, the Exercise Price in effect immediately prior to such combination shall be proportionately increased, in each case effective at the close of business on the date of such subdivision, dividend, or combination, as the case may be.

 

5.2  Reclassification, Exchange, Substitution, In-Kind Distribution . Upon any reclassification, exchange, substitution or other event after the commencement of the Exercise Period that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this Warrant or upon the payment after the commencement of the Exercise Period of a dividend in securities or property other than shares of Common Stock, the Holder shall be entitled to receive, upon exercise or conversion of this Warrant, the number and kind of securities and property that Holder would have received if this Warrant had been exercised or converted immediately before the record date for such reclassification, exchange, substitution, or other event or immediately prior to the record date for such dividend. The Company or its successor shall promptly issue to Holder a new warrant for such new securities or other property. The new warrant shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5, including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise or conversion of the new warrant. The provisions of this Section 5.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events and successive dividends.

 

  

6

  

 

5.3  Consolidation, Merger, Sale and the Like . In case of any (i) merger or consolidation of the Company into or with another corporation where the Company is not the surviving corporation (but including a merger for the purpose of reincorporating in a new domicile) (ii) sale, transfer or lease (but not including a transfer or lease by pledge or mortgage to a bona fide lender) of all or substantially all of the assets of the Company or (iii) sale by the Company’s stockholders of 50% or more of the Company’s outstanding securities in one or more related transactions, the Company, or such successor or purchasing corporation, as the case may be, shall duly execute and deliver to the Holder hereof a new warrant so that the Holder shall have the right to receive upon exercise or conversion of the unexercised or unconverted portion of this Warrant, at a total purchase price not to exceed that payable upon the exercise or conversion of the unexercised or unconverted portion of this Warrant, and in lieu of shares of Common Stock theretofore issuable upon exercise or conversion of this Warrant, the kind and amount of shares of stock, or other securities, money and other property in lieu of such shares of stock, receivable upon or as a result of such reorganization, merger, or sale by a holder of the number of shares of Common Stock for which this Warrant is exercisable or convertible immediately prior to such event. Such new warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 5. The provisions of this Section 5.3 shall similarly apply to successive reorganizations, mergers, and sales.

 

5.4  In each case of an adjustment or readjustment of the Exercise Price pursuant to this Section 5, the Company, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to the Holder at the Holder’s address as shown in the Company’s books. The certificate shall set forth such adjustment or readjustment, showing in reasonable detail the facts upon which such adjustment or readjustment is based, including a statement of, if applicable, the type and amount, if any, of other property which at the time would be received upon exercise of this Warrant.

 

6. Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. No payments shall be made by the Company in respect of any fractional shares otherwise issuable pursuant to this Warrant.

 

7. No Stockholder Rights. This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company.

 

8. Transfer of Warrant. Subject to applicable laws, the restriction on transfer set forth on the first page of this Warrant and in Section 4.4 and the terms of any applicable stockholders, investor rights, or similar agreements, this Warrant and all rights hereunder are transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto to any transferee designated by Holder, provided that the transferee shall have signed an investment letter in form and substance satisfactory to the Company and agreed to be bound by the provisions of this Warrant. Notwithstanding anything to the contrary, no partial transfer of this Warrant shall be permitted.

 

  

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9. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated, or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.

 

 

10.  Notices, Etc. All notices and other communications required or permitted hereunder shall be in writing and shall be sent by express mail or other form of rapid communications, if possible, and if not then such notice or communication shall be mailed by first-class mail, postage prepaid, addressed in each case to the party entitled thereto at the following addresses: (a) if to the Company, to CrowdGather, Inc., Attention: President, 20300 Ventura Blvd. Suite 330, Woodland Hills, CA 91364, and (b) if to the Holder, to such address as originally furnished to the Company by the Holder, or at such other address as one party may furnish to the other in writing. Notice shall be deemed effective on the date dispatched if by personal delivery, two days after mailing if by express mail, or three days after mailing if by first-class mail.

 

11.  Amendment. This Warrant may be amended or otherwise modified only by a writing signed by the Company and the Holder.

 

12. Acceptance. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

 

13.  Governing Law; Forum. This Warrant and all rights, obligations, and liabilities hereunder shall be governed by the internal laws of the State of Nevada and any actions related hereto shall be brought in a court of competent jurisdiction located in the County of Clark, State of Nevada.

 

[NEXT PAGE IS SIGNATURE PAGE]

  

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

 

 

	  	
CROWDGATHER, INC.

	  	
a Nevada corporation

	  	  
	  	  
	  	
By: /s/ Sanjay Sabnani             

	  	
Name: Sanjay Sabnani

	  	
Title: President

 

	
Name of Holder:

	  	  
	  	  	  
	  	  	  
	  	  	  
	
Address:

	  	  
	  	  	  
	  	  	  
	
Telephone:

	  	  
	
Facsimile:

	  	  
	  	  	  

              

  

9

  

NOTICE OF EXERCISE

 

To:           CrowdGather, Inc.

 

1.  The undersigned hereby elects to purchase ________ shares of the Common Stock of CrowdGather, Inc. (the “Company”) pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full pursuant to the terms of Section 2.1 of the attached Warrant, or by net issue exercise pursuant to the terms of Section 2.2 of the attached Warrant, together with all applicable transfer taxes, if any.

 

2.  Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

 

	  	
________________________

	  	
(Name)

	  	
________________________

	  	
(Address)

 

3.  The undersigned represents that (i) the aforesaid shares of Common Stock are being acquired for the account of the undersigned for investment purposes only and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding its investment in the Company; (iii) the undersigned is experienced in making investments of this type and has such knowledge and background in financial and business matters that the undersigned is capable of evaluating the merits and risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned is an “accredited investor” as defined in Rule 501 under the Securities Act of 1933, as amended (the “ Securities Act ”); (v) the undersigned understands that the shares of Common Stock issuable upon exercise of this Warrant have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and, because such securities have not been registered under the Securities Act, they must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available; (vi) the undersigned is aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met and until the undersigned has held the shares for the number of years prescribed by Rule 144; and (vii) the undersigned agrees not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and until there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with said registration statement, or the undersigned has provided the Company with an opinion of counsel satisfactory to the Company, stating that such registration is not required.

	
________________________

	
________________________

	
(Date)

	
(Signature)

	  	  
	  	
________________________

	  	
(Print name)

 

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