Document:

ex10_2.htm

Exhibit 10.2

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF

1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  NO TRANSFER OF THIS

NOTE SHALL BE VALID OR EFFECTIVE UNLESS MADE IN

ACCORDANCE WITH THE APPLICABLE REQUIREMENTS OF

THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND STATE

SECURITIES LAWS, OR ANY AVAILABLE

EXEMPTION THEREUNDER.

 

SELLER PROMISSORY NOTE

 

	
$445,000

	
September 24, 2014

FOR VALUE RECEIVED, the undersigned, PROFESSIONAL DIVERSITY NETWORK, INC., a Delaware corporation (the “Maker”), hereby promises to pay to MATTHEW B. PROMAN (together with any permitted transferee of this Note, the “Payee”) the principal sum of Four Hundred Forty Five Thousand ($445,000) Dollars, together with interest on the outstanding principal balance hereunder accrued from the date hereof at the rate of 0.35% per annum (computed on the basis of a 360-day year of twelve 30-day months).  All payments of principal and/or interest shall be paid as set forth below, and each such payment shall be made in lawful money of the United States of America.  This Seller Promissory Note (this “Note”) is delivered by the Maker to the Payee pursuant to that certain Agreement and Plan of Merger, dated as of July 11, 2014 (the “Merger Agreement”), among the Maker, Merger Sub, Inc. and NAPW, Inc. (“NAPW”).

 

	
  

	
1.

	
Payments of Principal and Interest.

 

(a)           The principal amount of this Note shall be due and payable in quarterly installments of $137,500 on each of November 15, 2014, February 15, 2015, May 15, 2015, and $32,500 on August 15, 2015 (or the next succeeding business day and, if any such installment is deferred pursuant to Section 1(b) below, each subsequent November 15, February 15, May 15 and August 15, each an “Installment Payment Date”), together with all unpaid accrued interest hereunder at each Installment Payment Date.

 

(b)           Anything elsewhere contained in this Note to the contrary notwithstanding, if on any Installment Payment Date, as of the end of the fiscal quarter of NAPW then most recently ended, NAPW (on a stand-alone basis) failed to maintain both (i) annualized gross revenue for the period from June 30, 2014 to such fiscal quarter end (for the avoidance of doubt, such “annualized gross revenue” shall be determined (A) as of the September 30, 2014 fiscal quarter end, by multiplying NAPW’s gross revenue for the quarter then ended by 4, (B) as of the December 31, 2014 fiscal quarter end, by multiplying NAPW’s gross revenue for the two fiscal quarter period then ended by 2, (C) as of the March 31, 2015 fiscal quarter end, by multiplying NAPW’s gross revenue for the three fiscal quarter period then ended by 4/3, and (D) as of each fiscal quarter end thereafter, by determining NAPW’s gross revenue for the four quarter period then ended) of at least $20,000,000 and (ii) positive net cash  from operations less capital expenditures (“cash flow from operations”) for the fiscal quarter then ended of at least an amount equal to the sum of $137,500 plus all interest that will have accrued hereunder to such Installment Payment Date (“Performance Failure”), as determined by 

 

  

 

  

 

PDN’s independent registered public accounting firm within 45 days after such fiscal quarter end, then (1) except as provided in the following proviso, payment of the quarterly principal installment of this Note and all unpaid accrued interest hereunder on such Installment Payment Date shall be deferred to the Installment Payment Date that follows the next fiscal quarter end of NAPW that NAPW (on a stand-alone basis) has maintained both annualized gross revenue of at least $20,000,000 as of such fiscal quarter end and  positive cash flow from operations for the fiscal quarter then ended of at least an amount equal to the sum of $137,500 plus all interest that will have accrued hereunder to such Installment Payment Date, (2) not more than $137,500 principal amount of this Note shall be due on any such deferred Installment Payment Date, and (3) the maturity date of this Note shall be correspondingly extended until such time as this Note may be paid in full; provided, however, that, on any Installment Payment Date following a fiscal quarter end of NAPW that NAPW (on a stand-alone basis) has maintained both annualized gross revenue of at least $20,000,000 as of such fiscal quarter end and positive cash flow from operations for the fiscal quarter then ended that is less than an amount equal to the sum of $137,500 plus all interest that will have accrued hereunder to such Installment Payment Date, the Maker shall pay to the Payee an aggregate amount on such Installment Payment Date equal to the amount of such positive cash flow from operations to be applied as follow: (x) first to pay accrued and unpaid interest hereunder until all accrued and unpaid interest hereunder to such Installment Payment Date has been paid in full and (y) thereafter, any remaining portion of such aggregate amount shall be applied to repay the outstanding principal of this Note and shall  reduce the scheduled principal installments hereunder in the reverse order of maturity.

 

	
  

	
2.

	
Prepayment.

 

The Maker shall have the right to prepay, without premium or penalty, at any time or times after the date hereof, all or any portion of the outstanding principal balance of this Note, together with accrued interest on the principal amount prepaid.

 

	
  

	
3.

	
Events of Default.

 

The following are Events of Default hereunder:

 

(a)           any failure by the Maker to pay when due all or any principal or accrued interest hereunder (unless such failure is by reason of a Performance Failure pursuant to Section 1(b) above); or

 

(b)           if the Maker shall (i) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator for the Maker or any of its property, (ii) admit in writing its inability to pay its debts as they mature, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent or be the subject of an order for relief under Title 11 of the United States Code, or (v) file a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (vi) take any action in furtherance of or for the purpose of effecting any of the foregoing; or

 

  

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(c)           if any order, judgment or decree shall be entered, without the application, approval or consent of the Maker, by any court of competent jurisdiction, approving a petition seeking reorganization of the Maker or appointing a receiver, trustee, custodian, liquidator or other such official of the Maker, or of all or a substantial part of its assets, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty (60) days; or

 

(d)           the occurrence of any “Event of Default” (or any similar term) utilized in any agreement or instrument evidencing indebtedness for money borrowed by the Maker, the effect of which is to cause the holders of indebtedness for money borrowed by the Maker in a principal amount in excess of $1,000,000 to declare such indebtedness due and payable prior to its stated maturity; or

 

(e)           the Maker hereafter incurs any additional indebtedness for money borrowed ranking senior or pari passu to this Note, provided, however, that the Maker may hereafter incur any such indebtedness (i) for working capital lines of credit as same may exist from time to time, (ii) for capital expenditures, or (iii) for the financing of business acquisitions on a senior secured or senior unsecured basis, in each case, to any banks or other financial institutions (each a “senior lender”) (and the Payee, by acceptance of this Note, agrees to enter into any subordination and inter-creditor agreement reasonably requested by any such senior lender to effect the subordination of the Maker’s payment obligations hereunder to the Maker’s payment obligations under any such senior indebtedness, so long as the Payee will be entitled to receive and retain the stated payment of principal and interest under this Note so long as no “Event of Default” (or other comparable term) has occurred and is continuing under the Maker’s agreement with such senior lender as would permit such senior lender to accelerate any of the senior indebtedness); provided, further, that the Maker may not issue any promissory notes or other evidences of indebtedness to the seller of any stock or assets of another company acquired by the Maker as sole or partial consideration for such acquisition unless the Maker’s payment obligations under such indebtedness have been subordinated to the Maker’s payment obligations under this Note on terms satisfactory to the Payee, so long as such seller will be entitled to receive and retain the  stated payment of principal and interest under such notes or other evidence of indebtedness so long as no Event of Default has  occurred and is continuing hereunder ; or

 

(f)           any dissolution, liquidation or winding up of the Maker (provided that any merger or consolidation involving the Maker, or any sale of assets by the Maker which does not have the practical effect of liquidating or winding up the Maker’s business, shall not be deemed a dissolution, liquidation or winding up for purposes of this Section 3(f)).

 

	
  

	
4.

	
Remedies on Default.

 

If any Event of Default shall occur and be continuing, then, (a) if such event is of the type described in Section 3(b) or 3(c) above, this Note shall automatically become due and payable, or (b) in any other such event, and at any time thereafter, if such event shall then be continuing, the holder of this Note may, by written notice to the Maker, declare due and payable the principal of, and interest on, this Note, whereupon the same shall be immediately due and payable.  In the event that this Note becomes or is declared due and payable prior to its stated maturity, the same shall become due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived.

 

  

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5.

	
Investment Representations.

 

The Payee hereby acknowledges that this Note is not being registered (a) under the Act on the ground that the issuance of the Note is exempt from registration under Section 4(a)(2) of the Act as not involving any public offering, or (b) under any applicable state securities law because the issuance of this Note does not involve any public offering; and that the Maker’s reliance on the Section 4(a)(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations hereby made to the Maker by the Payee that it is acquiring this Note for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, provided, nevertheless, subject to any requirement of law that the disposition of its property shall at all times be within its control.

 

	
  

	
6.

	
Certain Waivers.

 

Except as otherwise expressly provided in this Note, the Maker hereby waives diligence, demand, presentment for payment, protest, dishonor, nonpayment, default, and notice of any and all of the foregoing.

 

	
  

	
7.

	
Amendments.

 

This Note may not be changed orally, but only by an agreement in writing and signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.

 

	
  

	
8.

	
Governing Law; Waiver of Jury Trial.

 

This Note shall be deemed to be a contract made under the laws of the State of New York and shall be governed by, and construed in accordance with, the laws of the State of New York.  THE MAKER HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING FOR THE ENFORCEMENT OR COLLECTION OF THIS NOTE.

 

	
  

	
9.

	
Assignment.

 

This Note may not be assigned by the Payee without (a) the prior written consent of the Maker and (b) the execution by any such assignee of an acknowledgment and agreement to the terms of any subordination and inter-creditor agreement referred to in Section 3(e).

 

	
  

	
10.

	
Collection Costs.

 

In the event that the Payee shall, after the occurrence and during the continuance of an Event of Default, turn this Note over to an attorney for collection, the Maker shall further be obligated to the Payee for the Payee’s reasonable attorneys’ fees and expenses incurred in connection with such collection.

 

  

4

  

 

	  	
PROFESSIONAL DIVERSITY NETWORK, INC.

	  	  
	  	  
	  	
By:

	/s/ James Kirsch
	  	  	
Name: James Kirsch

	  	  	
Title: Chief Executive Officer

5Unassociated Document

Exhibit 10.3

 

Representative’s Warrant Agreement

 

THE REGISTERED HOLDER OF THIS PURCHASE WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER THAN (I) AEGIS CAPITAL CORP. OR AN UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR PARTNER OF AEGIS CAPITAL CORP. OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER.

 

THIS PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO SEPTEMBER 24, 2015. VOID AFTER 5:00 P.M., EASTERN TIME, SEPTEMBER 24, 2019.

 

COMMON STOCK PURCHASE WARRANT

 

For the Purchase of 6,000 Shares of Common Stock

of

PROFESSIONAL DIVERSITY NETWORK, INC.

 

1. Purchase Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of David Bocchi (“Holder”), as registered owner of this Purchase Warrant, to Professional Diversity Network, Inc., a Delaware corporation (the “Company”), Holder is entitled, at any time or from time to time from September 24, 2015 (the “Commencement Date”), and at or before 5:00 p.m., Eastern time, on September 24, 2019 (the “Expiration Date”), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to 6,000 shares of common stock of the Company, par value $.01 per share (the “Shares”), subject to adjustment as provided in Section 6 hereof. If the Expiration Date is a day on which banking institutions are authorized by law to close, then this Purchase Warrant may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees not to take any action that would terminate the Purchase Warrant. This Purchase Warrant is initially exercisable at $4.00 per Share; provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Warrant, including the exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price” shall mean the initial exercise price or the adjusted exercise price, depending on the context.

 

	
2.

	
Exercise.

 

2.1 Exercise Form. In order to exercise this Purchase Warrant, the exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Warrant and payment of the Exercise Price for the Shares being purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern Time, on the Expiration Date, this Purchase Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire.

 

2.2 Cashless Exercise. If at any time after the Commencement Date there is no effective registration statement registering, or no current prospectus available for, the resale of the Shares by the Holder, then in lieu of exercising this Purchase Warrant by payment of cash or check payable to the order of the Company pursuant to Section 2.1 above, Holder may elect to receive the number of Shares equal to the value of this Purchase Warrant (or the portion thereof being exercised), by surrender of this Purchase Warrant to the Company, together with the exercise form attached hereto, in which event the issue to Holder, Shares in accordance with the following formula:

 

X = Y(A-B)

A

 

	  	  	  	  	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	
X

	  	  	  	
=

	  	  	
The number of Shares to be issued to Holder;

	  	  	
Where,

	  	  	  	  	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	
Y

	  	  	  	
=

	  	  	
The number of Shares for which the Purchase Warrant is being exercised;

	  	  	  	  	  	  	  	
A

	  	  	  	
=

	  	  	
The fair market value of one Share; and

	  	  	  	  	  	  	  	
B

	  	  	  	
=

	  	  	
The Exercise Price.

 

For purposes of this Section 2.2, the fair market value of a Share is defined as follows:

 

	
(i)

	
if the Company’s common stock is traded on a securities exchange, the value shall be deemed to be the closing price on such exchange prior to the exercise form being submitted in connection with the exercise of the Purchase Warrant; or

 

	
(ii)

	
if the Company’s common stock is actively traded over-the-counter, the value shall be deemed to be the closing bid prior to the exercise form being submitted in connection with the exercise of the Purchase Warrant; if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Company’s Board of Directors.

 

  

  

  

 

2.3 Legend. Each certificate for the securities purchased under this Purchase Warrant shall bear a legend as follows unless such securities have been registered under the Securities Act of 1933, as amended (the “Act”):

 

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), or applicable state law. Neither the securities nor any interest therein may be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Securities Act, or pursuant to an exemption from registration under the Securities Act and applicable state law which, in the opinion of counsel to the Company, is available.”

 

	
3.

	
Transfer.

 

3.1 General Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder will not: (a) sell, transfer, assign, pledge or hypothecate this Purchase Warrant for a period of one hundred eighty (180) days following the Effective Date to anyone other than: (i) Aegis Capital Corp. (“Aegis”) or an underwriter or a selected dealer participating in the Offering, or (ii) a bona fide officer or partner of AEGIS or of any such underwriter or selected dealer, in each case in accordance with FINRA Conduct Rule 5110(g)(1), or (b) cause this Purchase Warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this Purchase Warrant or the securities hereunder, except as provided for in FINRA Rule 5110(g)(2). On and after 180 days after the Effective Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with the Purchase Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five (5) Business Days transfer this Purchase Warrant on the books of the Company and shall execute and deliver a new Purchase Warrant or Purchase Warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.

 

3.2 Restrictions Imposed by the Securities Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until: (i) the Company has received the opinion of counsel for the Holder that the securities may be transferred pursuant to an exemption from registration under the Securities Act and applicable state securities laws, the availability of which is established to the reasonable satisfaction of the Company (the Company hereby agreeing that the opinion of Reed Smith LLP shall be deemed satisfactory evidence of the availability of an exemption), or (ii) a registration statement or a post-effective amendment to the Registration Statement relating to the offer and sale of such securities has been filed by the Company and declared effective by the U.S. Securities and Exchange Commission (the “Commission”) and compliance with applicable state securities law has been established.

 

	
4.

	
Registration Rights.

 

 

4.1 “Piggy-Back” Registration.

 

4.1.1 Grant of Right. The Holder shall have the right, for a period of six (6) years commencing on the Commencement Date, to include all or any portion of the shares underlying the Purchase Warrants (collectively, “the Registrable Securities” as part of any other registration of securities filed by the Company (other than in connection with a transaction contemplated by Rule 145 (a) promulgated under the Securities Act or pursuant to Form S-8 or any equivalent form); provided, however, that if, solely in connection with any primary underwritten public offering for the account of the Company, the managing underwriter(s) thereof shall, in its reasonable discretion, impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which the Holder requested inclusion hereunder as the underwriter shall reasonably permit. Any exclusion of Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities in proportion to the number of Registrable Securities sought to be included by such Holders; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not entitled to inclusion of such securities in such Registration Statement or are not entitled to pro rata inclusion with the Registrable Securities.

 

4.1.2 Terms. The Company shall bear all fees and expenses attendant to registering the Registrable Securities pursuant to Section 4.2.1 hereof, but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities. In the event of such a proposed registration, the Company shall furnish the then Holders of outstanding Registrable Securities with not less than thirty (30) days written notice prior to the proposed date of filing of such registration statement. Such notice to the Holders shall continue to be given for each registration statement filed by the Company until such time as all of the Registrable Securities have been sold by the Holder. The holders of the Registrable Securities shall exercise the “piggy-back” rights provided for herein by giving written notice within ten (10) days of the receipt of the Company’s notice of its intention to file a registration statement. Except as otherwise provided in this Purchase Warrant, there shall be no limit on the number of times the Holder may request registration under this Section 4.2.2; provided, however, that such registration rights shall terminate on the sixth anniversary of the Commencement Date.

 

  

  

  

 

4.2 General Terms.

 

4.2.1 Indemnification. The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Securities Act or Section 20 (a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, arising from such registration statement. The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Securities Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration statement.

 

4.2.2 Exercise of Purchase Warrants. Nothing contained in this Purchase Warrant shall be construed as requiring the Holder(s) to exercise their Purchase Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.

 

 

4.2.3 Damages. Should the registration or the effectiveness thereof required by Sections 4.1 and 4.2 hereof be delayed by the Company or the Company otherwise fails to comply with such provisions, the Holder(s) shall, in addition to any other legal or other relief available to the Holder(s), be entitled to obtain specific performance or other equitable (including injunctive) relief against the threatened breach of such provisions or the continuation of any such breach, without the necessity of proving actual damages and without the necessity of posting bond or other security.

 

	
5.

	
New Purchase Warrants to be Issued.

 

5.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax if exercised pursuant to Section 2.1 hereto, the Company shall cause to be delivered to the Holder without charge a new Purchase Warrant of like tenor to this Purchase Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable hereunder as to which this Purchase Warrant has not been exercised or assigned.

 

5.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase Warrant and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver a new Purchase Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.

 

	
6.

	
Adjustments.

 

6.1 Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of Shares underlying the Purchase Warrant shall be subject to adjustment from time to time as hereinafter set forth:

 

6.1.1 Share Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective day thereof, the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding Shares, and the Exercise Price shall be proportionately decreased.

 

6.1.2 Aggregation of Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is decreased by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective date thereof, the number of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding Shares, and the Exercise Price shall be proportionately increased.

 

6.1.3 Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Shares other than a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in the case of any share reconstruction or amalgamation or consolidation of the Company with or into another corporation (other than a consolidation or share reconstruction or amalgamation in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Warrant shall have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the Company obtainable upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change in Shares covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers.

 

6.1.4 Changes in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section 6.1, and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Purchase Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Warrants reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the computation thereof.

 

  

  

  

 

6.2 Substitute Purchase Warrant. In case of any consolidation of the Company with, or share reconstruction or amalgamation of the Company with or into, another corporation (other than a consolidation or share reconstruction or amalgamation which does not result in any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant) to receive, upon exercise of such Purchase Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Shares of the Company for which such Purchase Warrant might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation, sale or transfer. Such supplemental Purchase Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this Section 6. The above provision of this Section shall similarly apply to successive consolidations or share reconstructions or amalgamations.

 

6.3 Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares upon the exercise of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may be, to the nearest whole number of Shares or other securities, properties or rights.

 

7. Reservation and Listing. The Company shall at all times reserve and keep available out of its authorized Shares, solely for the purpose of issuance upon exercise of the Purchase Warrants, such number of Shares or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of the Exercise Price therefor, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder. The Company further covenants and agrees that upon exercise of the Purchase Warrants and payment of the exercise price therefor, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder. As long as the Purchase Warrants shall be outstanding, the Company shall use its commercially reasonable efforts to cause all Shares issuable upon exercise of the Purchase Warrants to be listed (subject to official notice of issuance) on all national securities exchanges (or, if applicable, on the OTC Bulletin Board or any successor trading market) on which the Shares issued to the public in the Offering may then be listed and/or quoted.

 

	
8.

	
Certain Notice Requirements.

 

8.1 Holder’s Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events described in Section 8.2 shall occur, then, in one or more of said events, the Company shall give written notice of such event at least fifteen days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be. Notwithstanding the foregoing, the Company shall deliver to each Holder a copy of each notice given to the other shareholders of the Company at the same time and in the same manner that such notice is given to the shareholders.

 

8.2 Events Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, (ii) the Company shall offer to all the holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor, or (iii) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or share reconstruction or amalgamation) or a sale of all or substantially all of its property, assets and business shall be proposed.

 

8.3 Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall describe the event causing the change and the method of calculating same and shall be certified as being true and accurate by the Company’s Chief Financial Officer.

 

8.4 Transmittal of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall be deemed to have been duly made when hand delivered, or mailed by express mail or private courier service: (i) if to the registered Holder of the Purchase Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to following address or to such other address as the Company may designate by notice to the Holders:

 

If to the Holder:

 

Aegis Capital Corp.

810 Seventh Avenue, 11th Floor

New York, New York 10019

Attn: Mr. David Bocchi, Managing Director of Investment Banking

Fax No.: (212)813-1047

 

  

  

  

 

McDermott Will & Emery LLP

340 Madison Avenue

New York, New York 10173

Attn: Stephen E. Older, Esq.

Fax No.: (212) 730-5444

 

If to the Company:

 

Professional Diversity Network, Inc.

150 North Wacker Drive

Suite 2360

Chicago, Illinois 60606

Attention: James Kirsch

 

with a copy (which shall not constitute notice) to:

SNR Denton US LLP

Attn: Linda Harris, Esq.

233 South Wacker Drive

Suite 7800

Chicago, Illinois, 90909-6404

(312) 876-7934

 

	
9.

	
Miscellaneous.

 

9.1 Amendments. The Company and Aegis may from time to time supplement or amend this Purchase Warrant without the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Aegis may deem necessary or desirable and that the Company and Aegis deem shall not adversely affect the interest of the Holders. All other modifications or amendments shall require the written consent of and be signed by the party against whom enforcement of the modification or amendment is sought.

 

9.2 Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Warrant.

 

9.3. Entire Agreement. This Purchase Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.

 

9.4 Binding Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions herein contained.

 

9.5 Governing Law; Submission to Jurisdiction; Trial by Jury. This Purchase Warrant shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefore. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and the Holder hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

9.6 Waiver, etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.

 

9.7 Execution in Counterparts. This Purchase Warrant may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Such counterparts may be delivered by facsimile transmission or other electronic transmission.

 

  

  

  

 

9.8 Exchange Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any time prior to the complete exercise of this Purchase Warrant by Holder, if the Company and Aegis enter into an agreement (“Exchange Agreement”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.

 

[Signature Page Follows]

 

 

 

 

 

 

  

  

  

IN WITNESS WHEREOF, the Company has caused this Purchase Warrant to be signed by its duly authorized officer as of September 24, 2014.

 

PROFESSIONAL DIVERSITY NETWORK, INC.

 

 

By: /s/ James Kirsch                       

Name: James Kirsch

Title: Chief Executive Officer

 

  

  

  

[Form to be used to exercise Purchase Warrant]

 

Date: ________________ , 20__

 

The undersigned hereby elects irrevocably to exercise the Purchase Warrant for shares of common stock, par value $.01 per share (the “Shares”), of Professional Diversity Network, Inc., a Delaware corporation (the “Company”), and hereby makes payment of $ (at the rate of $4.00 per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been exercised.

 

or

 

The undersigned hereby elects irrevocably to convert its right to purchase Shares of the Company under the Purchase Warrant for Shares, as determined in accordance with the following formula:

 

	  	  	  
	  	
X =

	
Y(A-B)

A

	  	  	  
	
Where,

	
X =

	
The number of Shares to be issued to Holder;

	  	
Y =

	
The number of Shares for which the Purchase Warrant is being exercised;

	  	
A =

	
The fair market value of one Share which is equal to $_____; and

	  	
B =

	
The Exercise Price which is equal to $______ per share

 

The undersigned agrees and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect to the calculation shall be resolved by the Company in its sole discretion.

 

Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been converted.

 

Signature

 

Signature Guaranteed 

 

  

  

  

 

INSTRUCTIONS FOR REGISTRATION OF SECURITIES

 

	  	  
	
Name:

	  
	  	
(Print in Block Letters)

	  	  
	
Address:

	  
	  	  
	  	  
	  	  
	  	  

 

NOTICE: The signature to this form must correspond with the name as written upon the face of the Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

 

  

  

  

[Form to be used to assign Purchase Warrant]

 

ASSIGNMENT

 

(To be executed by the registered Holder to effect a transfer of the within Purchase Warrant):

 

FOR VALUE RECEIVED, does hereby sell, assign and transfer unto the right to purchase shares of common stock, par value $.01 per share, of Professional Diversity Network, Inc., a Delaware corporation (the “Company”), evidenced by the Purchase Warrant and does hereby authorize the Company to transfer such right on the books of the Company.

 

Dated: ___________________ , 20___

 

Signature

 

Signature Guaranteed 

 

NOTICE: The signature to this form must correspond with the name as written upon the face of the within Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

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