Document:

ex10-30.htm

Exhibit 10.30

 

 

Equipment Lease Agreement

“Mini Melts” Vending Machines

This Equipment Lease Agreement (“Agreement”) is made and entered into effective as of October 21, 2014 (the “Effective Date”) by and between:

PERKIN INDUSTRIES, LLC, a Louisiana limited liability company having its principal place of business at 342 Walnut Street, New Orleans, Louisiana, 70118 (“Lessor”); and

U-VEND, INC. (OTC: UVND), a Delaware corporation, with its principal place of business located at: 1507 7th Street, Unit 425, Santa Monica, CA 90401 (“Lessee”).

WHEREAS, the Lessor is the sole owner of the Equipment described in Exhibit A hereto; and

WHEREAS, the Lessee wishes to lease the Equipment from Lessor in accordance with the terms and conditions of this Agreement; and

WHEREAS, the Lessor wants to lease the Equipment to the Lessee in accordance with the terms and conditions of this Agreement; and

WHEREAS, each Lessor and Lessee each acknowledges and agrees that it is duly authorized to enter into this Agreement;

NOW, THEREFORE, in consideration of the above premises and the mutual covenants set forth in this Agreement, the sufficiency of which the Parties acknowledge, the Parties agree as follows:

1.           Definitions:

Lessor – the Party who grants a lease.

Lessee – the Party to whom a lease is made.

Equipment – equipment to be leased as defined in Exhibit A.

Party – Lessor or Lessee.

Parties – Lessor and lessee.

2.           Lease and Lease Term:

2.1           Lessor agrees to lease the Equipment to the Lessee and the Lessee agrees to lease the Equipment from the Lessor in accordance with the terms and conditions of this Agreement.

  

1 of 9

  

2.2           The term of this Lease shall be twenty-four (24) months commencing on October 17, 2014 and ending at midnight on October 17, 2016 (the “Lease Term”).

3.           Equipment Use:

3.1           Lessee shall be solely responsible for all use, operation, service, maintenance and repair of the Equipment during the Lease Term.  Lessee shall cause the Equipment to be operated, serviced, maintained and repaired by only competent and qualified personnel in a safe and proper manner.

3.2           During the Lease Term Lessee shall transport, handle, store, operate and use the Equipment in a safe manner as required by any instructions provided by Lessor, as well as in accordance with any applicable governmental laws, standards, rules and regulatory requirements relating to the use of the Equipment.

3.3           Lessee shall be responsible for obtaining any required governmental or regulatory licenses and/or permits required to use, operate and maintain the Equipment, at any location.

3.4           Lessee shall be solely responsible for transporting all Equipment to any location for use, operation, service, maintenance and/or repair.  Lessee shall transport Equipment using qualified, insured and properly-licensed transportation services and shall demonstrate same to Lessor upon request.

3.5           Lessee shall not grant, create, incur, assume consent to or permit the continued existence any contractual or judicially imposed lien(s) or encumbrance(s) on, part with possession of, or sublease the Equipment without Lessor’s prior written consent.

3.6           Lessor may, at any time, enter Lessee’s premises where any Equipment may be used or stored for purposes of inspecting and/or examining the Equipment

3.8           The Equipment shall remain the property of the Lessor at all times during the period of the lease.

3.9           Lessee shall keep Lessor advised of any changes in the location of any Equipment during the Lease Term.

3.10           Lessee shall maintain insurance on loss of or damage to the Equipment and provide proof of this insurance as specified in Article 10, below.  The loss, destruction, theft, or damage of or to any Equipment shall not relieve Lessee from its obligation to pay the full purchase price or total monthly lease charges hereunder.

4.           Lease Charges:

4.1           As a material inducement and incentive for Lessor to acquire the Equipment and enter into this Lease with Lessee, Lessee shall transfer and assign to Lessor warrants to purchase two hundred thousand (200,000) shares in U-Vend, Inc. (OTC:  UVND), which warrants shall have a term of three (3) years, and an exercise price of $0.35 (the “Warrants”).  Notwithstanding any other provision of this Lease, this Lease shall not become effective until the Warrants have been transferred, in full, to Lessor.  Notwithstanding any termination or default of this Lease by Lessee, Lessor shall be entitled to keep and retain the Warrants and/or exercise any rights incumbent in the Warrants.

  

2 of 9

  

4.2           In addition to assignment and transfer of the Warrants as stated in Section 4.1 above, Lessee shall pay a monthly rental to Lessor for the Equipment (“Rent”).  Rent shall be THREE THOUSAND ONE HUNDRED TWENTY-FIVE DOLLARS and NO/100 ($3,125.00), Rent shall be payable monthly in advance, with the first payment due on the Effective Date, and thereafter on or before the 17th  day of each month thereafter.  All payments of Rent and any applicable late charges shall be made to:

Perkin Industries, LLC

342 Walnut Street

New Orleans, LA 70118

4.3           If Lessee fails to make any payment of Rent within five (5) days of the date then due, Lessee shall pay to Lessor a late charge in the sum of THREE HUNDRED DOLLARS and NO/100 ($300.00).  Acceptance of any such late charge or penalty by Lessor shall not be construed as a waiver of Lessor’s rights to enforce any other remedies with respect to any other provisions of this Lease.

4.4           Lessee further agrees to pay fifty percent (50%) of Lessor’s attorney fees incurred in connection with the negotiation, drafting and execution of this Lease.

5.           Delivery of Equipment:

 

5.1           Lessee acknowledges that all Equipment has been delivered to Lessee, and is within the control, custody and care of Lessee as of the Effective Date.

6.           Acceptance of Equipment, and Maintenance and Repair:

6.1           Lessee accepts all Equipment in its condition as of the Effective Date.

6.2           Lessee is responsible for all required periodic maintenance, reconditioning and refurbishment of the Equipment during the Lease Term.

6.3           Lessee shall be responsible for the repair of any Equipment damaged during the Lease Term, whether resulting from use, misuse, storage or transit and shall also be responsible to notify Lessor, in writing, within five working days of said Equipment damage.

6.4           If during the Lease Period the Equipment is lost, destroyed or damaged beyond repair, the Lessee shall be liable for the cost of replacing the Equipment.  Lessee shall not be entitled to any remission of Rent as a result of any loss, destruction or damages to any Equipment, unless said loss, destruction or damages is attributable solely to a negligent or intentional act of Lessor.

  

3 of 9

  

7.           Put/Call Option:

7.1           Commencing on September 21, 2015 and ending on October 21, 2015 (the “Year One Option Period”), Lessor shall have thirty (30) days to exercise its option to “put” fifty percent (50%) of the Equipment back to Lessee for purchase (the “Year One Put”).  Likewise, Lessee shall have the option to call fifty percent (50%) of the Equipment from Lessor for purchase during the Year One Option Period (the “Year One Call”).  In the event that the Year One Put and/or the Year One Call is timely exercised, in writing, Lessee shall pay to Lessor the sum of ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS and NO/100 ($125,000.00) on or before November 21, 2015.  Further, if the Year One Put and/or the Year One Call is timely exercised, monthly Rent due under this Agreement shall be reduced by fifty percent (50%).

7.2           Commencing on September 21, 2016 and ending on October 21, 2016 (the “Year Two Option Period”), Lessor shall have thirty (30) days to exercise its option to put the remaining fifty percent (50%), or, if the Year One Put or Year One Call has not been exercised, Lessor shall be permitted to put one hundred percent (100%), of the Equipment back to Lessee for purchase (the “Year Two Put”).  Likewise, Lessee shall have the option to call fifty percent (50%), or, if the Year One Put or Year One Call has not been exercised, Lessee shall be permitted to call one hundred percent (100%), of the Equipment from Lessor for purchase during the Year One Option Period (the “Year Two Call”).  In the event that the Year Two Put and/or the Year Two Call is timely exercised, in writing, Lessee shall pay to Lessor the sum of ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS and NO/100 ($125,000.00) on or before November 17, 2016, provided that 50% of the Equipment is put or called in Year 2.  In the event that 100% of the Equipment is put or called in Year 2, the purchase price to be paid by Lessee to Lessor is TWO HUNDRED FIFTY THOUSAND DOLLARS and NO/100 ($250,000.00).

7.3.           In the event of Lessee’s purchase of Equipment as described in Sections 7.1, 7.2, or 8.2, Lessor shall provide Lessee clean title to the Equipment, free and clear of all liens.

7.4           Lessee shall not be entitled to any reduction of the purchase price of any Put/Call Option (whether contained in Section 7.1 or 7.2, above, or Section 8.2, below) as a result of any loss, damage or destruction to any Equipment.

8.           Limited Option to Renew:

8.1           Provided that all Equipment has not been put or called for purchase by Lessee at the conclusion of Lease Year 2, and subject to Lessor’s prior written consent, Lessee shall have the option to renew the Credit Facility for an additional one (1) year period pursuant to the same terms stated in this Lease (the “Renewal Year”). This renewal will be granted solely at the discretion of Lessor, based upon the Lessee’s performance under the Lease as well as other factors.  Monthly Rent paid during the renewal term shall be proportionate to the amount of Equipment owned by Lessor (i.e., full monthly Rent will be owed if Lessor retains ownership of 100% of the Equipment at the conclusion of Year 2; 50% of the monthly Rent will be owed if Lessor retains ownership of 50% of the Equipment at the conclusion of Year 2.).

  

4 of 9

  

8.2           Within thirty (30) days of the conclusion of the Renewal Year, Lessor shall have the option to put all remaining Equipment back to Lessee (the “Year Three Put”).  Likewise,  Lessee shall have the option to call all remaining Equipment from Lessor within thirty (30) days of the conclusion of the Renewal Year (the “Year Three Call”).  If Lessor or Lessee has timely put or called, in writing, 50% of the Equipment during Year 1 or 2, and 50% of the Equipment remains under lease during the Renewal Year, the purchase price paid by Lessee for the Equipment put or called during the Renewal Year shall be ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS and NO/100 ($125,000.00).  If none of the Equipment has been put or called prior to the Renewal Year (i.e., in Year 1 or Year 2), the purchase price paid by Lessee for the Equipment put or called during the Renewal Year shall be TWO HUNDRED FIFTY THOUSAND DOLLARS and NO/100 ($250,000.00).

9.           Early Termination by Lessor:

9.1           In the event of:

	
  

	
(a.)

	
Lessee going into bankruptcy;

	
  

	
(b.)

	
A Receiver or Manager of the property of the Lessee shall be appointed;

	
  

	
(c.)

	
Distress or execution being levied or threatened upon any of the Lessees property;

	
  

	
(d.)

	
The Lessee shall abandon the Equipment; or

	
  

	
(e.)

	
The Lessee shall fail to remedy any breach of this Agreement within fifteen (15) days of written notice provided by Lessor to Lessee specifying such default.

Lessor shall be entitled to immediately terminate this Agreement, including the rental of the Equipment and the associated Rent, by notice to Lessee. Upon such termination Lessor shall direct Lessee to  either: (1) immediately assign to Lessor all of Lessee’s operating agreements with any third party(ies) related to the operation, placement and use of the Equipment, which are identified on Exhibit B; or (2) deliver the Equipment to Lessor at the address to be advised by Lessor.  If the Lessee fails to comply with the foregoing within fourteen (14) days of notice being received, Lessor or its agents may without further notice retake possession of the Equipment.  All costs, including attorney’s fees, incurred by Lessor in connection with the enforcement of this Lease, including but not limited to any action taken by Lessor in connection with the repossession and/or return of Equipment to Lessor, shall be at the cost of the Lessee.

  

5 of 9

  

9.2           During any term of this Lease and upon five (5) days written notice from Lessor, Lessee shall provide to Lessor an updated Exhibit B, which shall identify all then current operator and/or operating agreements with any third parties related to the operation, placement and use of the Equipment.

10.           Indemnity and Insurance:

10.1           Lessee shall indemnify and hold harmless Lessor from and against any and all claims arising from this Agreement, the Equipment and/or the conduct of Lessee’s business, and shall further indemnify and hold harmless Lessor from and against any and all claims arising from arising from this Agreement, the Equipment and/or the conduct of Lessee’s business.  Such indemnity shall indemnify Lessor against costs, attorney’s fees, expenses, and liabilities incurred in the defense of any such claim, action or proceeding brought thereon and in any case, action or proceeding brought thereon and in any case, action or proceeding brought thereon and in any case, action, or proceeding to be brought against Lessor by reason of such claim.  Lessee, upon notice of Lessor, shall defend the same at Lessee’s expense by counsel satisfactory to Lessor.  Lessee, as a material part of the consideration to Lessor, hereby assumes all risk of damage to property or injury to persons in or about the premises arising from any cause and Lessee hereby waives all claims and respect thereto against Lessor.  This indemnity agreement shall arise and be effective even if the cause of any such loss or damage, death, bodily injury, or personal injury, shall be caused or contributed to by Lessor or those for whom Lessor may be responsible, or by the condition of the premises.  In connection with this clause, Lessee shall maintain liability insurance to limits of at least $1,000,000.00 and obtain an endorsement naming Lessor as an additional insured.  Notwithstanding the provision of this Section, Lessee shall not be required to indemnify Lessor if it be proved that any loss or damage has been caused solely by Lessor’s negligence, gross negligence or intentional act.

10.2           The Lessee shall also take out and maintain insurance coverage on the Equipment to protect against loss, destruction or damage to the Equipment by burglary, theft, misuse, mischief, malicious damages, flood, fire, storm, earthquake, other water damage, sprinkler leakage, act of god, tempest, explosion, aircraft or other aerial devices (including any articles dropped there from), strikes, riots, civil commotion and such other risk as Lessor may consider necessary from time to time.  Lessee shall ensure that the interests of Lessor in the Equipment is noted in all insurance coverages required by this Agreement.

10.3           The Lessee covenants and agrees that it shall notify its insurer or all the provisions of this Agreement, and in particular draw its insurer’s attention to this Article 10, and shall produce copies of any current certificates of insurance required by this Agreement to Lessor upon request.

11.           Failure and Delay by Lessor’s Suppliers and Force Majeure:

11.1           Lessor shall not be liable for any failure to fulfill any terms of this Agreement if fulfillment is prevented, hindered or delayed in whole or in part directly or indirectly by:

 

  

6 of 9

  

	
  

	
(a.)

	
Any failure to supply, delay in supply, by the supplier and/or seller of the Equipment or any part thereof to Lessor; and

	
  

	
(b.)

	
Government intervention, war, rebellion, insurrection, political or labor disturbances, riot, civil commotion, strikes, lock outs, fire, floods, breakdown of machinery, Act of God, or any cause comprehended in the term force majeure.

12.           Assignment:

12.1           The Lessor may assign any rights under this Agreement without the consent of Lessee.  In the event of Lessor’s assignment of this Agreement, Lessor must provide Lessee 30 days written notice of Lessor’s intent to assign.

12.2           Lessee may only assign its rights under this Agreement with written approval of Lessor.  Any party to whom the Lessee proposes to assign its rights under this Agreement must be of a reputable standing and proof of credit worthiness must be provided to Lessor on request.  Lessor shall not unreasonably withhold consent.

13.           Warranties and Representations by Lessee:

13.1           Lessee expressly warrants and represents to Lessor that:

	
  

	
(a.)

	
Within ninety (90) days of the Effective Date, U-Vend, Inc., Lessee, will procure “key man” insurance coverage on the life of Raymond Meyers and/or any successor chief executive officer of U-Vend, Inc., which shall remain in place throughout the duration of this Agreement and any renewal thereof.

	
  

	
(b.)

	
All financial records provided by or on behalf of Lessee to Lessor pertaining to Mini Melts, Inc. and Mini Melts USA, Inc. and/or any of their respective subsidiary or affiliated entities, attached hereto as Exhibit C, accurately represent the then current financial condition of said companies.

	
  

	
(c.)

	
Raymond Meyers has entered into a legally enforceable non-competition agreement with U-Vend, Inc., which shall remain in place throughout the duration of this Agreement and any renewal thereof.

14.           Governing Law and Jurisdiction:

14.1           This Agreement shall be exclusively governed by and interpreted in accordance with the laws of Louisiana and will not change unless mutually agreed to between the Parties in writing.  The Parties submit to the non-exclusive jurisdiction of the federal and state courts of Louisiana.

  

7 of 9

  

15.           Severability:

15.1           If any law or court of competent jurisdiction invalidates, voids or amends any provision of this Agreement, said provision will be deemed as deleted or modified to comply with such law or court but this Agreement including any such modified provision and all its other provisions shall continue with full force and effect for the term hereof.

16.           Agreement Organization:

16.1           The titles of articles, sections and other headings or formatting of this Agreement are for organizational and administrative convenience only and their use or arrangement shall not under any circumstance govern or affect the intent, interpretation, or construction hereof.

17.           Entirety of Agreement:

17.1           This Agreement constitutes the entire and complete Agreement between the Parties, supersedes and replaces any and all prior understandings, promises, representations, and agreements, oral or written, which may have been made by or on behalf of the Parties in connection herewith.  No modification, change, or waiver of this Agreement shall be valid unless agreed to as provided herein or otherwise agreed to in writing by duly authorized representatives of the Parties.

[Signature page follows]

 

 

 

 

 

 

 

 

  

8 of 9

  

IN WITNESS WHEREOF, the parties hereto have executed this Equipment Lease Agreement effective as of the date first set forth above.

	  	
FOR LESSOR:

 

PERKIN INDUSTRIES, LLC.

 

 

By:   /s/ Nicolas R. Perkin

Name:  Nicolas R. Perkin

Title:    Manager

Telephone:  (504) 388-3169

Fax:               [Insert]

Email:           nicolas@perkinindustries.com

 

 

 

	  	
FOR LESSEE:

 

U-VEND, INC.

 

 

By:   /s/ Raymond Meyers

Name:  Raymond Meyers

Title:    Chief Executive Officer

Telephone:    323-855-1107

 

Email:            rmeyers@u-vend.com

 

 

 

 

 

  

9 of 9ex10-31.htm

Exhibit 10.31

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

PURSUANT TO THE TERMS OF SECTION 1 OF THIS WARRANT, ALL OR A PORTION OF THIS WARRANT MAY HAVE BEEN EXERCISED, AND THEREFORE THE ACTUAL NUMBER OF WARRANT SHARES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF.

U-VEND, INC.

Warrant To Purchase Common Stock

Warrant No.: PI-001                                             

Number of Shares of Common Stock: 200,000

Date of Issuance: October 21, 2014 (“Issuance Date”)

U-VEND, Inc, a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Perkin Industries, the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time after the Issuance Date (as defined below) (the “Exercisability Date”), but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), Two Hundred Thousand (200,000) fully paid non-assessable shares of Common Stock (as defined below) (the “Warrant Shares”).  Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 15.  This Warrant is the Warrant to purchase Common Stock (this “Warrant”) issued pursuant to Equipment Lease Agreement (the “Lease Agreement”), dated as of October 21, 2014 (the “Subscription Date”), by and among the Company and the investors party thereto.

 

 

  

  

  

 

1.      EXERCISE OF WARRANT.

(a)      Mechanics of Exercise.  Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day on or after the Exercisability Date, in whole or in part (but not as to fractional shares), by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant and (ii) if both (A) the Holder is not electing a Cashless Exercise (as defined below) pursuant to Section 1(d) of this Warrant and (B) a registration statement registering the issuance of the Warrant Shares under the Securities Act of 1933, as amended (the “Securities Act”), is effective and available for the issuance of the Warrant Shares, or an exemption from registration under the Securities Act is available for the issuance of the Warrant Shares, payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or wire transfer of immediately available funds no later than one Business Day after delivery of the Exercise Notice (a “Cash Exercise”).  The Holder shall not be required to surrender this Warrant in order to effect an exercise hereunder; provided, however, that in the event that this Warrant is exercised in full or for the remaining unexercised portion hereof, the Holder shall deliver this Warrant to the Company for cancellation within a reasonable time after such exercise.  On or before the first Trading Day following the date on which the Company has received the Exercise Notice (the date upon which the Company has received the Exercise Notice, the “Exercise Date”), the Company shall transmit by facsimile or e-mail transmission an acknowledgment of confirmation of receipt of the Exercise Notice to the Holder and the Company’s transfer agent for the Common Stock (the “Transfer Agent”). The Company shall deliver any objection to the Exercise Notice on or before the second Trading Day following the date on which the Company has received the Exercise Notice.  On or before the second Trading Day following the date on which the Company has received the Exercise Notice (the “Share Delivery Date”) and provided that the Company has received payment of the Exercise Price, the Company shall, (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program (the “FAST Program”) and so long as the certificates therefor are not required to bear a legend regarding restriction on transferability, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y), if the Transfer Agent is not participating in the FAST Program or if the certificates are required to bear a legend regarding restriction on transferability, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon delivery of the Exercise Notice and payment of the Exercise Price, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been properly exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be.  If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Trading Days after any such submission and at its own expense, issue a new Warrant (in accordance with Section 7(e)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant has been and/or is exercised.  The Company shall pay any and all taxes and other expenses of the Company (including overnight delivery charges) that may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or an affiliate thereof.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

  

2

  

(b)      Exercise Price.  For purposes of this Warrant, “Exercise Price” means $0.35, subject to adjustment as provided herein.

(c)      Company’s Failure to Timely Deliver Securities.  If the Company shall fail for any reason or for no reason to issue to the Holder within three (3) Business Days of the Exercise Date a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise of this Warrant, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the Holder’s written request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Warrant Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Warrant Shares and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.

(d)      Cashless Exercise.  Notwithstanding anything contained herein to the contrary, if a registration statement covering the Warrant Shares that are the subject of the Exercise Notice (the “Unavailable Warrant Shares”), or an exemption from registration, is not available for the resale of such Unavailable Warrant Shares, the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

 

	
Net Number = (A x B) - (A x C)

	                         B

 

For purposes of the foregoing formula:

	  	
A= the total number of shares with respect to which this Warrant is then being exercised.

	  	
B= the arithmetic average of the Closing Sale Prices of the shares of Common Stock for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the Exercise Notice.

	  	
C= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

  

3

  

(e)      Rule 144.  For purposes of Rule 144(d) promulgated under the Securities Act, as in effect on the date hereof, assuming the Holder is not an affiliate of the Company, it is intended that the Warrant Shares issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Lease Agreement.

(f)      Disputes.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed.

2.      ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

(a)      Adjustment upon Issuance of shares of Common Stock. If and whenever on or after the Subscription Date, the Company issues or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued by the Company in connection with any Excluded Securities (as defined below) (the “Additional Shares”) for a consideration per share (the “New Issuance Price”) less than a price (the “Applicable Price”) equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to a price determined as follows:

 

Adjusted Exercise Price =    (A x B) + D

                                                                       A+C

Where:

“A” equals the number of shares of Common Stock outstanding, including the Additional Shares deemed to be issued hereunder, immediately preceding the Dilutive Issuance;

“B” equals the Exercise Price in effect immediately preceding such Dilutive Issuance;

“C” equals the number of Additional Shares issued or deemed issued hereunder as a result of the Dilutive Issuance; and

“D” equals the aggregate consideration, if any, received or deemed to be received by the Company upon such Dilutive Issuance.

  

4

  

For purposes of determining the adjusted Exercise Price under this Section 2(a), the following shall be applicable:

 

(i) Issuance of Options. If the Company in any manner grants any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 2(a)(i), the “lowest price per share for which one share of Common Stock is issuable upon exercise of such Options or upon conversion, exercise or exchange of such Convertible Securities issuable upon exercise of any such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the granting or sale of such Option, upon exercise of such Option and upon conversion exercise or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

(ii) Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 2(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security less any consideration paid or payable by the Company with respect to such one share of Common Stock upon the issuance or sale of such Convertible Security and upon conversion, exercise or exchange of such Convertible Security. No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(a), no further adjustment of the Exercise Price or number of Warrant Shares shall be made by reason of such issue or sale.

 

(iii) Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Exercise Price and the number of Warrant Shares in effect at the time of such increase or decrease shall be adjusted to the Exercise Price and the number of Warrant Shares which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 2(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(a) shall be made if such adjustment would result in an increase of the Exercise Price then in effect or a decrease in the number of Warrant Shares.

  

5

  

(iv) Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction, (x) the Options will be deemed to have been issued for the Option Value of such Options and (y) the other securities issued or sold in such integrated transaction shall be deemed to have been issued for the difference of (I) the aggregate consideration received by the Company less any consideration paid or payable by the Company pursuant to the terms of such other securities of the Company, less (II) the Option Value. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Sale Price of such security on the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Required Holders. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Trading Days after the tenth (10th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

(v) Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or

(B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

  

6

  

(b)      Voluntary Adjustment by Company. Subject to the provisions of Section 2(a)(vi), the Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

(c)      Adjustment upon Subdivision or Combination of Common Stock.  If the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased.  If the Company at any time on or after the Subscription Date combines (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased.  Any adjustment under this Section 2(c) shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

(d)      Other Events.  If any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights or phantom stock rights), then the Company’s Board of Directors will make an appropriate adjustment in the Exercise Price and the number of Warrant Shares so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 2(d) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.

3.      RIGHTS UPON DISTRIBUTION OF ASSETS.

(a)      If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Weighted Average Price determined as of the record date mentioned above, and of which the numerator shall be such Weighted Average Price on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith.  In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

  

7

  

4.      PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

(a)      Purchase Rights.  In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

(b)      Fundamental Transactions.  The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing (unless the Company is the Successor Entity) all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section (4)(b) pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of the Warrants in exchange for such Warrants a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, an adjusted exercise price equal to the value for the shares of Common Stock reflected by the terms of such Fundamental Transaction, and exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and reasonably satisfactory to the Required Holders. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of the publicly traded common stock or common shares (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Warrant been converted immediately prior to such Fundamental Transaction, as adjusted in accordance with the provisions of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the Corporate Event but prior to the Expiration Date, in lieu of shares of Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Corporate Event, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Corporate Event had this Warrant been exercised immediately prior to such Corporate Event. Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Required Holders. The provisions of this Section 4(b) shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any limitations on the exercise of this Warrant.

 

  

8

  

(c)      Black Scholes Value. Notwithstanding the foregoing and the provisions of Section 4(b) above, in the event of the consummation of a Fundamental Transaction that is (1) an all-cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act or (3) a Fundamental Transaction involving a person or entity not traded on an Eligible Market, at the request of the Holder delivered at any time commencing on the earliest to occur of (x) the public disclosure of the Fundamental Transaction or (y) the consummation of the Fundamental Transaction, through the date that is ninety (90) days after the public disclosure of the consummation of such Fundamental Transaction by the Company pursuant to a Current Report on Form 8-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder on the later of (i) the date of consummation of the Fundamental Transaction and (ii) the fifth Trading Day following the date of such request, in each case by paying to the Holder cash in an amount equal to the Black Scholes Value.

(d)      Applicability to Successive Transactions.   The provisions of this Section shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any limitations on the exercise of this Warrant.

5.      NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith comply with all the provisions of this Warrant and take all actions consistent with effectuating the purposes of this Warrant.  Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as this Warrant is outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant, 100% of the number of shares of Common Stock issuable upon exercise of this Warrant then outstanding (without regard to any limitations on exercise).

6.      WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

  

9

  

7.      REISSUANCE OF WARRANTS.

(a)      Transfer of Warrant.  If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company and deliver the completed and executed Assignment Form, in the form attached hereto as Exhibit B, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less then the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

(b)      Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.

(c)      Exchangeable for Multiple Warrants.  This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Common Stock shall be given.

(d)      Issuance of New Warrants.  Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

  

10

  

8.      NOTICES.  Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with Section 9.4 of the Lease Agreement.

9.      AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Holders.  Any such amendment shall apply to all Warrants and be binding upon all registered holders of such Warrants.

10.      GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.  This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of California, without reference to the choice of law provisions thereof.  The Company and, by accepting this Warrant, the Holder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of  California for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant.  The Company and, by accepting this Warrant, the Holder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  The Company and, by accepting this Warrant, the Holder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

11.      CONSTRUCTION; HEADINGS.  This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof.  The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

12.           DISPUTE RESOLUTION.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder.  If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder, which approval shall not be unreasonably withheld, or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant.  The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations or calculations.  The prevailing party in any dispute resolved pursuant to this Section 12 shall be entitled to the full amount of all reasonable expenses, including all costs and fees paid or incurred in good faith, in relation to the resolution of such dispute.  Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

  

11

  

13.           REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.

14.      TRANSFER.  Subject to applicable laws, this Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.

15.      CERTAIN DEFINITIONS.  For purposes of this Warrant, the following terms shall have the following meanings:

(a)      “Approved Stock Plan” means any employee benefit plan or other issuance, employment agreement or option grant or similar agreement which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to any employee, consultant, officer or director for services provided to the Company.

(b)      “Black Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s request pursuant to Section 4(c), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common Stock during the period beginning on the Trading Day immediately preceding the earlier to occur of (x) the public disclosure of the applicable Fundamental Transaction or (y) the consummation of the applicable Fundamental Transaction and ending on the Trading Day of the consummation of the Fundamental Transaction and (2) the sum of the price per share being offered in cash in the applicable Fundamental Transaction (if any) plus the value of the non-cash consideration being offered in the applicable Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section 4(c), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c) and (2) the remaining term of this Warrant as of the date of consummation of the applicable Fundamental Transaction or as of the date of the Holder’s request pursuant to Section 4(c) if such request is prior to the date of the consummation of the applicable Fundamental Transaction and (iv) an expected volatility equal to the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the public disclosure of the applicable Fundamental Transaction.

(c)      “Bloomberg” means Bloomberg Financial Markets.

  

12

  

(d)      “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

(e)      “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

(f)      “Common Stock” means (i) the Company’s shares of Common Stock, par value $0.001 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

(g)       “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

(h)      “Eligible Market” means the Principal Market, The New York Stock Exchange, Inc., The NYSE Amex, The NASDAQ Global Market, The NASDAQ Global Select Market or The OTC Markets.

(i)      “Expiration Date” means the third anniversary of the Exercisability Date or, if such date falls on a day other than a Trading Day or on which trading does not take place on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded (a “Holiday”), the next date that is not a Holiday.

(j)      “Excluded Securities” means: (i) capital stock, Options or Convertible Securities issued to directors, officers, employees or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company pursuant to an Approved Stock Plan, including but not limited to, the issuance of capital stock upon the exercise or conversion thereof, (ii) shares of Common Stock issued upon the conversion or exercise of Options or Convertible Securities that were issued and outstanding on the date immediately preceding the Subscription Date, provided such securities are not amended after the Subscription Date to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof, (iii) securities issued pursuant to the Lease Agreement and securities issued upon the exercise or conversion of those securities, (iv) the Acquisition Shares, (v) the issuance of Common Stock or Common Stock Equivalents to the Agent in payment of the fees owed to the Agent as disclosed in Schedule 4.21 of the Lease Agreement, and (vi) capital, Options or Convertible Securities issued as consideration for an acquisition or strategic transaction approved by a majority of the disinterested directors of the Company, excluding any acquisition or transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities. 

 

  

13

  

(k)      “Fundamental Transaction” means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person (but excluding a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company), or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person; provided that, the granting of a lien on all or substantially all of the Company’s assets as collateral shall not be deemed a Fundamental Transaction, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify its Common Stock, or (vi) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock.

(l)       “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

(m)     “Option Value” means the value of an Option based on the Black and Scholes Option Pricing model obtained from the “OV” function on Bloomberg determined as of the day prior to the public announcement of the applicable Option for pricing purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of the applicable Option as of the applicable date of determination, (ii) an expected volatility equal to the 100 day volatility obtained from the HVT function on Bloomberg as of the day immediately following the public announcement of the issuance of the applicable Option, (iii) the underlying price per share used in such calculation shall be the highest Weighted Average Price of the Common Stock during the period beginning on the day prior to the execution of definitive documentation relating to the issuance of the applicable Option and the public announcement of such issuance and (iv) a 360 day annualization factor.

  

14

  

(n)      “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

(o)      “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

(p)      “Principal Market” means The OTC Markets.

(q)      “Required Holders” means, as of any date, the holders of at least a majority of the Warrants outstanding as of such date.

(r)      “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

(s)      “Trading Day” means any day on which the Common Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock are then traded; provided that “Trading Day” shall not include any day on which the Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

(t)      “Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets” by OTC Markets LLC. If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12 with the term “Weighted Average Price” being substituted for the term “Exercise Price.” All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

  

15

  

16.      [Limitation on Exercise.  Notwithstanding anything to the contrary contained herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% (the “Maximum Percentage”) of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise).  For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  The Company’s obligation to issue shares of Common Stock in excess of the limitation referred to in this Section shall be suspended (and shall not terminate or expire notwithstanding any contrary provisions hereof) until such time, if any, as such shares of Common Stock may be issued in compliance with such limitation, but in no event later than the Expiration Date.  By written notice to the Company, the Holder may waive the provisions of this Section or increase or decrease the Maximum Percentage to any other percentage specified in such notice, but (i) any such waiver or increase will not be effective until the 61st day after such notice is delivered to the Company, and (ii) any such waiver or increase or decrease will apply only to the Holder and not to any other holder of Warrants.]

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

 

	  	
U-VEND, INC.

	  
	  	  	  	  
	  	
By:

	/s/ Raymond Meyers	  
	  	  	
Name: Raymond Meyers

	  
	  	  	
Title: Chief Executive Officer

	  
	  	  	  	  

	  	  

 

  

16

  

 EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

U-VEND, INC.

 

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of U-Vend, Inc., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

1.  Form of Exercise Price.  The Holder intends that payment of the Exercise Price shall be made as:

	  	
____________

	
a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

	  	
____________

	
a “Cashless Exercise” with respect to _______________ Warrant Shares.

2.  Payment of Exercise Price.  In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

3.  Delivery of Warrant Shares.  The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant and, after delivery of such Warrant Shares, _____________ Warrant Shares remain subject to the Warrant.

Date: _______________ __, ______

 

 

____________________________________

Name of Registered Holder

By:          _______________________________________ 

Name:

Title:

  

  

  

EXHIBIT B

ASSIGNMENT FORM

U-VEND, INC.

(To assign the foregoing Warrant, execute this form and supply required information.  Do not use this form to purchase shares.)

 

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

 

Name:  ___________________________________________________________________  

           (Please Print)

Address: __________________________________________________________________

              (Please Print)

Dated: ________________, ______                                                                           

 

 

Holder’s Signature:   __________________________________

 

 

Holder’s Address:   ___________________________________

 

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00236-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00236-of-00352.parquet"}]]