Document:

exv10w4

 

EXHIBIT 10.4

FORM OF BRIDGE WARRANT

THESE WARRANTS HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND ARE ‘RESTRICTED SECURITIES’ AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THESE WARRANTS MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933
ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, THE AVAILABILITY OF WHICH IS
TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY THROUGH REASONABLE MEANS AS DETERMINED BY THE
COMPANY, INCLUDING AN OPINION OF SELLER’S COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY.

SILICON MOUNTAIN HOLDINGS, INC.

BRIDGE WARRANT

			
	Warrant to Purchase Shares of
	 	March ___, 2008
	Common Stock	 	 
	Warrant No.                     
	 	Number of Shares:                    
	 
	 	(Subject to adjustment)

     This certifies that pursuant to the terms of this Common Stock Warrant (this “Bridge
Warrant”), for value received, Silicon Mountain Holdings, Inc., a Colorado corporation (the
“Company”), hereby grants to                                          (the “Holder”), or its registered assigns, the right to
purchase from the Company a number of shares of the Company’s common stock, $.001 par value per
share, (“Common Stock”) at a purchase price of $.01 per share (the “Exercise Price”) in
consideration of the Holder’s investing $                     with the Company pursuant to that certain
Subscription Agreement, dated March ___, 2008 (the “Subscription Agreement”). All capitalized
terms not defined herein shall have the meanings given to them in the Subscription Agreement.

     1. Exercise of Warrant.

          1.1 Exercise Period.

               (a) Except as restricted as set forth in Section 1.3 below, Holder may exercise this Bridge
Warrant, in whole or in part, at any time and from time to time commencing on the date hereof and
prior to 5:00 p.m. (central standard time) on March ___, 2012 (the “Expiration Date”);

 

 

          1.2 Procedure for Exercising Bridge Warrant.

               (a) This Bridge Warrant will be deemed to have been exercised at such time as
the Company has received all of the following items (the “Exercise Date”):

                    (i) A completed Exercise Agreement, in substantially the form set forth
in Exhibit A hereto and as described in Section 1.4 below, executed
by the person exercising all or part of the purchase rights represented by
this Bridge Warrant (the “Purchaser”);

                    (ii) This Bridge Warrant;

                    (iii) If this Bridge Warrant is not registered in the name of the
Purchaser, an Assignment in the form set forth in Exhibit B,
evidencing the assignment of this Bridge Warrant to the Purchaser and the
consent of the Company thereto; and

                    (iv) A check payable to the Company in an amount equal to the product
of the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise.

     (b) Certificates representing shares of Common Stock purchased upon exercise of
this Bridge Warrant will be delivered by the Company to the Purchaser within 10 days
after the Exercise Date. Unless this Bridge Warrant has expired or all of the
purchase rights represented hereby have been exercised, Company will prepare a new
Bridge Warrant, substantially identical hereto, representing the rights formerly
represented by this Bridge Warrant which have not expired or been exercised. The
Company will deliver such new Bridge Warrant to the person designated to receive it
in the Exercise Agreement.

     (c) The Common Stock issuable upon the exercise of this Bridge Warrant will be
deemed to have been issued to the Purchaser on the Exercise Date, and the Purchaser
will be deemed for all purposes to have become the record holder of such Common
Stock on the Exercise Date.

     (d) The issuance of certificates for shares of Common Stock upon exercise of
this Bridge Warrant will be made without charge to the Holder or the Purchaser for
any issuance tax in respect thereof or any other cost incurred by the Company in
connection with such exercise and the related issuance of shares.

     1.3 Net Exercise. Notwithstanding any provisions herein to the contrary, if
the fair market value of one share of the Company’s Common Stock is greater than the
Exercise Price (at the date of calculation as set forth below), in lieu of exercising this
Warrant by payment of cash, the Holder may elect (the “Conversion Right”) to receive shares
equal to the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company together with
the properly endorsed Notice of Exercise in which event the Company shall

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issue to the Holder a number of shares of Common Stock computed using the following
formula:

     

	 	 	 	 	 
	 

	 	Where X =
	 	the number of shares of Common Stock to be issued to the Holder
	 
	 	 	 	 
	 

	 	Y =
	 	the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being exercised, the portion of
the Warrant being canceled (at the date of such calculation)
	 
	 	 	 	 
	 

	 	A =
	 	the fair market value of one share of the Company’s Common
Stock (at the date of such calculation)
	 
	 	 	 	 
	 

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

For purposes of the above calculation, the fair market value of one share of Common Stock shall be
determined based on the following:

     (a) if this Warrant is exercised in connection with an initial public offering
of Common Stock, then the fair market value of one share of Common Stock shall be
the price that one share of Common Stock is offered to the public in such initial
public offering; and

     (b) if the Common Stock is traded on a national securities exchange or admitted
to unlisted trading privileges on such an exchange, or is listed on the National
Market System (the “National Market System”) of the Nasdaq, the fair market value of
one share of Common Stock as of a specified day shall be the last reported sale
price of Common Stock on such exchange or on the National Market System on such date
or if no such sale is made on such day, the mean of the closing bid and asked prices
for such day on such exchange or on the National Market System. If the Common Stock
is not so listed or admitted to unlisted trading privileges, the fair market value
of one share of Common Stock as of a specified day shall be the mean of the last bid
and asked prices reported on such date by the Nasdaq or, if reports are unavailable
from Nasdaq, then by the National Quotation Bureau Incorporated. If the Common
Stock is not so listed or admitted to unlisted trading privileges and bid and ask
prices are not reported, the fair market value of one share of Common Stock as of a
specified day shall be determined in good faith by the Board of Directors of the
Company, taking into account the most recently or concurrently completed arm’s
length transaction between the Company and an unaffiliated third party the closing
of which occurs within the six months preceding or on the date of such calculation,
if any.

     1.4 Exercise Agreement. The Exercise Agreement will be substantially in the
form set forth in Exhibit A hereto, except that if the shares of Common Stock are
not to be issued in the name of the Holder, the Exercise Agreement will also state the name
of the person to whom the certificates representing the shares of Common Stock are to be
issued, and if the number of shares of Common Stock to be issued does not include all the

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shares of Common Stock purchasable hereunder, it will also state the name of the person
to whom a new Bridge Warrant for the unexercised portion of the rights hereunder is to be
delivered.

     1.5 Fractional Shares. The Company is not required to issue any fraction of a
share of Common Stock upon exercise of this Bridge Warrant. If the Company elects not to
issue fractional shares hereunder, the Company shall pay cash consideration in lieu of any
fractional shares that would otherwise have been issued hereunder but for the preceding
sentence.

     1.6 Securities Acts Compliance. As a condition to its delivery of the
certificates representing the Common Stock, the Company may require the Purchaser to deliver
to the Company, in writing, representations regarding the Purchaser’s sophistication,
accredited investor status (as defined in Rule 501 of Regulation D promulgated by the U.S.
Securities and Exchange Commission), investment intent, acquisition for his, her or its own
account and such other matters as are reasonable and customary for purchasers of securities
in an unregistered private offering, and Company may place conspicuously upon each
certificate representing the Common Stock a legend restricting the assignment, transfer or
other disposition of the shares of Common Stock, unless such shares have been registered or
qualified under the Act and applicable blue sky laws or there has been delivered to the
Company an opinion of counsel, satisfactory to the Company, to the effect that such
registration and qualification is not required.

     2. Adjustment in Shares of Common Stock and Exercise Price. The number of shares of
Common Stock purchasable upon the exercise of this Bridge Warrant and the Exercise Price per share
are subject to adjustment from time to time as provided in this Section 2; provided,
however, that the Exercise Price per share will not be less than $.001 per share.

     2.1 Subdivision or Combination of Shares. If the Company at any time
subdivides its outstanding shares of Common Stock into a greater number of shares (including
a stock split effected as a stock dividend) or combines its outstanding shares of Common
Stock into a lesser number of shares, the number of shares issuable upon exercise of this
Bridge Warrant will be adjusted to such number as is obtained by multiplying the number of
shares issuable upon exercise of this Bridge Warrant immediately prior to such subdivision
or combination by a fraction, the numerator of which is the aggregate number of shares of
Common Stock outstanding immediately after giving effect to such subdivision or combination
and the denominator of which is the aggregate number of shares of Common Stock outstanding
immediately prior to such subdivision or combination, and the Exercise Price will be
correspondingly adjusted to such amount as will, when multiplied by the number of shares
issuable upon full exercise of this Bridge Warrant (as increased or decreased to reflect
each subdivision or combination of outstanding shares of Common Stock, as the case may be),
equal the product of the Exercise Price in effect immediately prior to such subdivision or
combination multiplied by the number of shares issuable upon exercise of this Bridge Warrant
immediately prior to such subdivision or combination.

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     2.2 Effect of Sale, Merger or Consolidation. If any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or merger of the
Company with another corporation, or sale of all or substantially all of the Company’s
assets to another corporation, is effected after the date hereof in such a way that holders
of Common Stock will be entitled to receive stock, securities or assets with respect to or
in exchange for Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision will be made whereby the Holder
will thereafter have the right to purchase and receive, upon the basis and the terms and
conditions specified in this Bridge Warrant and in lieu of the shares immediately
theretofore purchasable and receivable upon the exercise of this Bridge Warrant, such shares
of stock, securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of Common Stock equal to the number of shares of Common
Stock immediately theretofore purchasable and receivable upon the exercise of this Bridge
Warrant, and in any such case appropriate provision will be made with respect to the rights
and interests of the Holder to the end that the provisions of this Bridge Warrant
(including, without limitation, provisions for adjustments of the Exercise Price and of the
number of shares issuable upon the exercise of this Bridge Warrant) will thereafter be
applicable, as nearly as may be possible, in relation to any shares of stock, securities or
assets thereafter deliverable upon the exercise of this Bridge Warrant. Except for the
transactions contemplated by the Stock Exchange Agreement (as described below), the Company
will not effect any such consolidation, merger or sale unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such assets
assumes, by written instrument executed and delivered to the Holder at its last address
appearing on the books of the Company, the obligation to deliver to the Holder such shares
of stock, securities or assets as, in accordance with the foregoing sentence, the Holder may
be entitled to purchase.

     2.3 [Intentionally Omitted.]

     2.4 Issuance of Dilutive Shares. If at any time prior to the exercise of all
or any portion of this Warrant, the Company issues or, pursuant to this subsection is deemed
to have issued, additional shares of Common Stock (other than “Exempted Securities,” as
defined below) at a price per share less than the then-effective Exercise Price, then (i)
the Exercise Price shall be reduced to the price per share at which such additional shares
of Common Stock were sold, or deemed sold and (ii) the number of shares of Common Stock
purchasable upon the exercise of this Warrant (the “Exercise Shares”) shall be increased to
the number determined by dividing (A) an amount equal to the number of shares issuable upon
the exercise of this Warrant immediately prior to such adjustment, multiplied by the
Exercise Price in effect immediately prior to such adjustment, by (B) the Exercise Price in
effect immediately after such adjustment. For purposes of this subsection, if the Company
issues or sells (x) stock or other securities convertible into additional shares of Common
Stock (such convertible stock or securities being herein referred to as “Convertible
Securities”) or (y) rights or options for the purchase of additional shares of Common Stock
or Convertible Securities and if the applicable exercise or conversion price plus the amount
originally paid, if any, for such convertible or exercisable securities is less than any
Exercise Price, in each case the Company shall

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be deemed to have issued at the time of the issuance of such rights or options or
Convertible Securities the maximum number of additional shares of Common Stock issuable upon
exercise or conversion thereof and to have received as consideration for the issuance of
such shares an amount equal to the total amount of the consideration, if any, received by
the Company for the issuance of such rights or options or Convertible Securities plus the
minimum amounts of consideration, if any, payable to the Company upon the exercise of such
rights or options. For the purposes of this Agreement, “Exempted Securities” shall mean:

     (a) shares of Common Stock or options or other Common Stock purchase rights and
the Common Stock issued pursuant to such options or other rights (as adjusted for
any stock dividends, combinations, splits, recapitalizations and the like after the
date of the Bridge Financing Agreement) to employees, officers or directors of, or
consultants or advisors to, the Company or any subsidiary pursuant to the Company’s
2003 Stock Option Plan or pursuant to any stock option, stock incentive or similar
plan approved by the Board of Directors of the Company in the future;

     (b) Common Stock issued or issuable pursuant to any rights or agreements,
options, warrants or convertible securities outstanding as of the date of this
Warrant;

     (c) Common Stock issued for consideration other than cash pursuant to a merger,
consolidation, strategic alliance, acquisition or similar business combination
approved by the Board of Directors including the Exchange;

     (d) shares of Common Stock issued in connection with any stock split, stock
dividend or recapitalization by the Company;

     (e) any shares of Common Stock issued pursuant to any equipment loan or leasing
arrangement, real property leasing arrangement, or debt financing from a bank or
similar financial or lending institution;

     (f) any shares of Common Stock issued in connection with strategic transactions
involving the Company and other entities approved by the Board of Directors,
including (i) joint ventures, manufacturing, marketing or distribution arrangements
or (ii) technology transfer or development arrangements;

     (g) any shares of Common Stock, Convertible Securities or rights or options for
the purchse of shares of Common Stock or Convertible Securities issued in connection
with the Exchange or the private placement that is contemplated by the engagement
letter between the Stanford Group Company and the Company dated June 20, 2005; and

     (h) any shares of Common Stock, Convertible Securities or rights or options for
the purchse of shares of Common Stock or Convertible Securities issued as part of
the same offering (the “Offering”) where the Effective Price (as defined below) of
all such securities sold or issued by the Company in the

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Offering is greater than the Exercise Price regardless of whether any
individual securities sold or issued by the Company in the Offering may have a price
per share, exercise or conversion price less than the then-effective Exercise Price.
For purposes of this Section 2.4(h), (i) the “Effective Price” shall be calculated
by dividing (x) the Total Offering Consideration (as defined below) by (y) the
Aggregate Number of Shares (as defined below). For purposes of this Section 2.4(h),
(i) the “Total Offering Consideration” shall be an amount equal to the total amount
of consideration received by the Company for the issuance of such securities in the
Offering plus the minimum amount of consideration, if any, payable to the Company
upon the exercise of such rights or options to purchase shares of Common Stock or
Convertible Securites and (ii) the “Aggregate Number of Shares” shall mean the total
number of shares of Common Stock or Convertible Securities issued in the Offering
plus the maximum number of additional shares of Common Stock issuable upon exercise
or conversion thereof and issuable upon the exercise of such rights or option to
purchase shares of Common Stock.

     2.5 Termination of Anti-Dilution Protection. Notwithstanding anything in this
Bridge Warrant to the contrary, the anti-dilution protections contemplated by Section 2.4.
above, shall terminate upon the payment of all of the outstanding principal and interest due
under the Note.

     2.6 Bridge Warrants Not Callable. The Bridge Warrants are not callable.

     2.7 Notice to Holder of Adjustment. Whenever the number of shares purchasable
upon exercise of this Bridge Warrant or the Exercise Price is adjusted as herein provided,
the Company will cause to be mailed to the Holder notice setting forth the adjusted number
of shares purchasable upon the exercise of the Bridge Warrant and the adjusted Exercise
Price and showing in reasonable detail the computation of the adjustment and the facts upon
which such adjustment is based.

     3. Prior Notice as to Certain Events. In the event the Company pays any dividend
payable in cash or stock upon its Common Stock or makes any distribution to the holders of its
Common Stock, then the Company will give prior written notice, by first class mail, postage
prepaid, addressed to the Holder at the address of such holder as shown on the books of the
Company, of the date on which the books of the Company will close or a record taken for such
dividend or distribution. Such notice will also specify the date as of which the holders of the
Common Stock of record will participate in said dividend or distribution. Such written notice will
be given not less than 20 days prior to the record date in respect thereto. Notwithstanding the
rights established in Section 3, the Bridge Warrants are subject to restrictions on exercise as set
forth in Section 1.3.

     4. Reservation of Common Stock. Not later than the date hereof, the Company will have
authorized Common Stock in an amount sufficient to permit the exercise in full of this Bridge
Warrant. At all times from and after such date, the Company will reserve and keep available for
issuance upon the exercise of Bridge Warrants such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit such exercise. Upon issuance,

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in accordance with the terms of this Bridge Warrant, such shares of Common Stock will be
validly issued, fully paid and nonassessable.

     5. No Voting Rights; Limitations of Liability. This Bridge Warrant does not confer
upon the holder hereof any voting rights or other rights as a stockholder of the Company, either at
law or equity. The rights of the Holder are limited to those expressed herein and the Holder by
acceptance hereof, consents to and agrees to be bound by and to comply with all the provisions of
this Bridge Warrant. No provision of this Bridge Warrant, in the absence of affirmative action by
the Holder to purchase Common Stock, and no enumeration in this Bridge Warrant of the rights or
privileges of the Holder, will give rise to any liability of such Holder for the Exercise Price of
Common Stock purchasable by exercise hereof or as a stockholder of Company.

     6. Restrictions on Transfer of Bridge Warrant.

     (a) This Bridge Warrant and the Holder’s rights hereunder may be transferred,
assigned or subjected to a pledge or security interest without the prior written
consent of the Company; provided that any transfer or assignment hererof shall be
effected by the surrender of this Bridge Warrant with a properly executed Assignment
(in the form of Exhibit B hereto) at the principal office of the Company.
If the Company determines that the proposed assignment is permitted pursuant to the
requirements of applicable securities law, the Company will register the assignment
of this Bridge Warrant in accordance with the information contained in the
Assignment and will, without charge, execute and deliver a new Bridge Warrant or
Bridge Warrants in the name of the assignee or assignees named in such assignment
instrument and this Bridge Warrant will promptly be cancelled. In connection with
such an assignment the Company may require as conditions to the transfer of this
Bridge Warrant or any portion thereof that (i) the Holder deliver to the Company an
opinion of counsel, reasonably satisfactory in form and substance to the Company’s
counsel, to the effect that the proposed transfer will not be in violation of the
Act or of any applicable state law and that (ii) the proposed transferee deliver to
the Company his, her or its written agreement to accept and be bound by all of the
terms and conditions of this Bridge Warrant, including compliance with Section 1.6
of this Bridge Warrant; provided that the Company hereby consents to the assignment
of all or any portion of this warrant to the Company’s employees, advisors and
consultants without such an opinion of counsel. The date the Company initially
issues this Bridge Warrant will be deemed to be the “Date of Issuance” of this
Bridge Warrant regardless of the number of times new certificates representing the
unexpired and unexercised rights formerly represented by this Bridge Warrant are
issued.

     (b) The Holder acknowledges that this Bridge Warrant has not been registered
under the Act, and, except in the limited instance described in Section 6(a) above,
agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise
dispose of this Bridge Warrant or any Common Stock issued upon its exercise in the
absence of (i) an effective registration statement as to this Bridge Warrant or such
Common Stock under the Act, or (ii) an opinion of counsel for

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Company to the effect that such registration is not, under the circumstances,
required.

     7. Miscellaneous.

     7.1 Waiver. No delay or failure of the Holder in exercising any right, power,
privilege or remedy under this Bridge Warrant will affect such right, power, privilege or
remedy or be deemed to be a waiver of the same or any part thereof, nor will any single or
partial exercise thereof or any failure to exercise the same in any instance preclude any
further or future exercise thereof, or the exercise of any other right, power, privilege or
remedy.

     7.2 Notices. All notices, requests and consents hereunder must be in writing.
Notices, requests and consents to the Company will be effectively given and delivered (i)
upon personal delivery, or delivery via overnight courier or (ii) upon the third business
day after deposit in the United States mail, by certified or registered mail, postage
prepaid and addressed as follows to the Company at its offices at 4755 Walnut Street,
Boulder, CO 80301. Notices, requests, and consents to the Holder will be effectively given
and delivered when sent by facsimile or mailed by first class mail, postage prepaid, or sent
by overnight courier, to the Holder at the facsimile number or address of the Holder
appearing on the books and records of the Company. Either party by notice to the other may
from time to time change the facsimile number or address for any such notice, request, or
consent.

     7.3 Governing Law; Venue. This Bridge Warrant and all rights and obligations
hereunder, including matters of construction, validity, and performance, will be governed by
and construed and interpreted in accordance with the laws of the State of Colorado, without
regard to the choice or conflicts of laws rules of such state. The parties agree that venue
for any suit, action, proceeding or litigation arising out of or in relation to this
Agreement will be in any federal or state court in the State of Colorado having subject
matter jurisdiction.

     7.4 Successors. This Bridge Warrant will inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.

     7.5 Headings and Exhibits. The headings used in this Bridge Warrant are for
convenience only and will not constitute a part of this Bridge Warrant. All of the exhibits
attached hereto are incorporated herein and made a part of this Bridge Warrant by reference
thereto.

[Signature Page Follows]

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     IN WITNESS WHEREOF, this Bridge Warrant has been executed and delivered by a duly authorized
representative of the Company on the day and year first above written.

	 	 	 	 	 
	 	SILICON MOUNTAIN HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Rudolph (Tré) Cates, III 	 
	 	 	President and Chief Executive Officer 	 
	 

 

 

EXHIBIT A

Exercise Agreement

			
	 	 	 
	To: Silicon Mountain Holdings, Inc.
	 	Dated:                                         

     The undersigned, pursuant to the provisions set forth in the within Bridge Warrant, hereby
agrees to subscribe for and purchase                                                             shares of the Common
Stock covered by such Bridge Warrant and makes payment herewith in full for such Common Stock at
the price per share provided by such Bridge Warrant.

     The undersigned requests that a certificate for the shares of Common Stock be issued as
follows:

	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

     and, if said number of shares is not all the shares of Common Stock purchasable hereunder, that a
new Bridge Warrant for the balance of the remaining shares of Common Stock purchasable under the
within Bridge Warrant be registered in the name of, and delivered to, the undersigned at the
address stated below:

	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

Dated:                                         

	 	 	 	 	 	 	 
	 

	 	HOLDER:
	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 	 	 

 

 

EXHIBIT B

Assignment

     To be executed by the registered Holder to request a permitted transfer of the attached Bridge
Warrant.

FOR VALUE RECEIVED

	 	 	 
	 

	 	(“Assignor”)
	 	 	 
	 
	 	 
	hereby sells, assigns and transfers unto
	 	 
	 
	 	 
	 

	 	(“Assignee”)
	 	 	 
	(Name)
	 	 
	 
	 	 
	 	 	 
	(Address)
	 	 
	 
	 	 
	 	 	 

the right to purchase shares of Common Stock of Silicon Mountain Holdings, Inc. evidenced by the
attached Bridge Warrant, together with all right, title and interest therein, and does irrevocably
constitute and appoint                                          attorney to transfer the said right on the books
of said corporation with full power of substitution in the premises.

	 	 	 	 	 	 	 
	Date:                                        

	 	Assignor:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Its	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	APPROVED:	 	SILICON MOUNTAIN HOLDINGS, INC.
	 
	 	 	 	 	 	 
	Date:                                        
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Its	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Signatureexv10w5

 

EXHIBIT 10.5

SUBSCRIPTION AGREEMENT

Silicon Mountain Holdings, Inc.

4755 Walnut Street

Boulder, CO 80301

Gentlemen and Ladies:

     The undersigned is investing in Silicon Mountain Holdings, Inc. (the “Company”) on the terms
and conditions described in this Subscription Agreement (this “Subscription Agreement”). Pursuant
to the terms described in this Subscription Agreement, at the offering price of $1.00 per share of
the Company’s common stock, par value $.001 per share (the “Common Stock”), each investor is to
receive one share of Common Stock (a “Share”) and a warrant to purchase one share of the Common
Stock (a “Warrant”). The exercise price of the Warrant is $.01 per share of Common Stock, and the
Warrant expires four years from the date hereof.

	1.	 	Subscription
	 
	 	 	Subject to and in accordance with the terms and conditions of this Subscription Agreement,
the undersigned has agreed to purchase ___Shares together with the same number of
Warrants. On March 14, 2008, the undersigned delivered to the Company the full purchase
price of $___(the “Purchase Price”) for the subscription of the Shares and Warrants in
the form of a check or wire transfer to the Company. It is understood by the undersigned
that the Company reserves the right in its sole discretion to reject all or any part of any
subscription.

	2.	 	Representations and Warranties of the Undersigned
	 
	 	 	The undersigned hereby represents and warrants to, and agrees with, the Company as follows:

	 	(i)	 	the undersigned can bear the economic risk of losing the undersigned’s entire
	 
	 	 	 	Investment in the Shares and Warrants;
	 
	 	(ii)	 	the undersigned is acquiring the Shares and Warrants for its
own account and not with a view to, or for resale in connection with, a
distribution of the Shares, Warrants or Common Stock underlying the Warrants in
violation of the Securities Act of 1933, as amended (the “1933 Act”);
	 
	 	(iii)	 	the undersigned’s overall commitments to investments that are
not readily marketable is not disproportionate to the undersigned’s net worth
and the undersigned’s investment in the Shares and Warrants will not cause such
overall commitments to become excessive;
	 
	 	(iv)	 	the undersigned’s financial condition is such that the
undersigned is under no present or contemplated future need to dispose of any
portion of the Shares or Warrants to satisfy any existing or contemplated
undertaking, need or indebtedness;
	 
	 	(v)	 	the undersigned has adequate means of providing for the
undersigned’s current needs and personal contingencies and has no need for
liquidity in the undersigned’s investment in the Shares; and

 

 

	 	(vi)	 	the undersigned has sufficient knowledge and experience in
business and financial matters to evaluate, and has evaluated, the merits and
risks of this investment.

     (b) The address set forth below on the signature page of this Subscription Agreement is the
undersigned’s true and correct principal office, and the undersigned has no present intention of
relocating its principal office to any other state or jurisdiction.

     (c) The undersigned is an “accredited investor” as that term is defined in Rule 501 of
Regulation D, as promulgated under the 1933 Act because the undersigned meets one of the following
criteria (if the undersigned is not an “accredited investor”, place an “X” in the following
blank: ___):

	 	(i)	 	An individual with a net worth, individually or jointly with
the undersigned’s spouse, of $1,000,000; or
	 
	 	(ii)	 	An individual with income in excess of $200,000 in each of the
two most recent years, or joint income with the undersigned’s spouse in excess
of $300,000 in each of those years, and the undersigned has a reasonable
expectation of reaching the same income level in the current year; or
	 
	 	(iii)	 	An individual who is an officer or director of the Company; or
	 
	 	(iv)	 	A corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000; or
	 
	 	(v)	 	A trust with total assets in excess of $5,000,000 not formed
for the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii) of
Regulation D, as promulgated under the 1933 Act; or
	 
	 	(vi)	 	An entity in which all of the equity owners are accredited
investors; or
	 
	 	(vii)	 	A bank as defined in section 3(a)(2) of the Act, or a savings
and loan association or other institution as defined in section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; a broker or
dealer registered pursuant to section 15 of the Securities Exchange Act of
1934; an insurance company as defined in section 2(a)(13) of the Act; an
investment company registered under the Investment Company Act of 1940 or a
business development company as defined in section 2(a)(48) of that Act; a
Small Business Investment Company licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment Act
of 1958; a plan established and maintained by a state, its political
subdivisions, or an agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets
in excess of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made
solely by persons that are accredited investors; or

- 2 -

 

	 	(viii)	 	A private business development company as defined in section 202(a)(22) of
the Investment Advisers Act of 1940.

     (d) The undersigned confirms that all documents, records and books pertaining to an investment
in the Shares and Warrants that have been requested by the undersigned have been made available or
delivered to the undersigned. Without limiting the foregoing, the undersigned has had the
opportunity to discuss the acquisition of the Shares and Warrants with the Company. The
undersigned has obtained or been given access to all information concerning the Company that the
undersigned has requested. As a result of its review of the Company, including the review of the
materials provided to the undersigned, the undersigned understands, among other things, the
following: (a) the Company has limited financial resources; (b) the Company has not concurrently,
and may not in the future, receive additional investment funds; and (c) the Company is involved in
an extremely competitive industry and has no assurance of success. The undersigned further
represents that the undersigned is cognizant of the operations, financial condition and
capitalization of the Company, is cognizant of the intended use of proceeds from this financing,
and has available full information concerning the Company’s affairs to evaluate the merits and
risks of an investment in the Shares and Warrants.

     (e) The undersigned has had the opportunity to ask questions of, and receive answers from, the
Company concerning the terms of an investment in the Shares and Warrants and to receive additional
information necessary to verify the accuracy of the information delivered to the undersigned.

     (f) The undersigned understands that the issuance of the Shares, the Warrants and the Common
Stock underlying the Warrants have not been registered under the 1933 Act or any state securities
laws in reliance on an exemption for private offerings and no U.S. federal or state agency has made
any finding or determination as to the fairness of this investment or any recommendation or
endorsement of the offering of the Shares, the Warrants or the Common Stock underlying the
Warrants.

     (g) The undersigned acknowledges that, in making the decision to purchase the Shares and
Warrants, it has relied solely upon independent investigations made by it.

     (h) The undersigned has the full right, power and authority to enter into this Subscription
Agreement and to carry out and consummate the transactions herein. This Subscription Agreement
constitutes the legal, valid and binding obligation of the undersigned.

     (i) The undersigned represents that an investment in the Shares and Warrants is a suitable
investment for the undersigned.

     (j) The undersigned acknowledges and is aware that the following legend will be imprinted on
the certificate(s) representing the Shares, the Warrants and the Common Stock underlying the
Warrants:

- 3 -

 

“THE SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND ARE ‘RESTRICTED SECURITIES’ AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, THE AVAILABILITY OF WHICH IS
TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY THROUGH REASONABLE
MEANS AS DETERMINED BY THE COMPANY, INCLUDING AN OPINION OF SELLER’S COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY.”

     (k) The undersigned acknowledges and is aware of the following, in addition to other
information included in the information provided to the undersigned:

	 	(i)	 	The Shares and Warrants constitute a speculative investment and
involve a high degree of risk of loss by the undersigned of the undersigned’s
total investment.
	 
	 	(ii)	 	There are substantial restrictions on the transferability of
the Shares, the Warrants and the Common Stock underlying the Warrants..

     (l) The undersigned understands and agrees that the Company is relying upon the accuracy,
completeness, and truth of the undersigned’s representations, warranties, agreements, and
certifications contained in this Subscription Agreement, in determining the undersigned’s
suitability as an investor in the Company and in establishing compliance with federal and state
securities laws. The undersigned understands that any incomplete, inaccurate, or untruthful
response, or the breach of the undersigned’s representations, warranties, agreements, or
certifications may result in the undersigned or the Company, or both, being in violation of federal
or state securities laws, and any person, including the Company, who suffers damage as a result may
have a claim against the undersigned for damages. The undersigned also acknowledges that the
undersigned is indemnifying the Company and others for any such losses in accordance with Section 3
of this Subscription Agreement.

     The foregoing representations and warranties are true and accurate in all material respects as
of the date hereof and shall survive the delivery of the subscription amount and the completed
Subscription Agreement.

	3.	 	Indemnification

     Both the Company and the undersigned acknowledge and understand the meaning and legal
consequences of the representations, warranties, agreements, and certifications contained above,
and the Company and the undersigned hereby agree to indemnify and hold harmless the other party
(including, without limitation, its respective managers, officers, directors, representatives and
agents) from and against any and all loss, damage, or liability due to or arising out of a breach
of any representation, warranty, agreement, or certification, or the inaccuracy of any statement,
of the Company or the undersigned, as the case may be, contained in this Subscription Agreement or
any other document submitted by the Company or the undersigned in connection with the undersigned’s
subscription for the Shares and Warrants. The foregoing notwithstanding, nothing in this
Subscription Agreement, including the representations, warranties, agreements and certifications
contained above, shall be deemed to constitute a waiver of any rights that the undersigned may have
under the 1933 Act and other federal and state securities laws.

- 4 -

 

	4.	 	Miscellaneous

     (a) This Subscription Agreement may be executed in one or more counterparts all of which taken
together shall constitute a single instrument.

     (b) This Subscription Agreement shall be governed and construed as binding upon the parties
hereto, and their respective successors, and no other person shall have any right or obligation
hereunder. This subscription shall be irrevocable, and may not be assigned by the undersigned.
Subject to the foregoing, this Subscription Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives, successors and assigns of
the undersigned.

     (c) This Subscription Agreement constitutes the entire agreement between the undersigned and
the Company with respect to the subject matter of the Subscription Agreement and supersedes all
prior and contemporaneous agreements between the undersigned and the Company with respect to the
subject matter of the Subscription Agreement.

     (d) This Subscription Agreement will be construed and enforced in accordance with and governed
by the laws of the State of Colorado, except for matters arising under the 1933 Act, without
reference to principles of conflicts of law.

     With such full understandings and acknowledgements, the undersigned does hereby affirm the
undersigned’s subscription to the purchase of the Shares and Warrants being offered by the Company
as described herein and in the Memorandum. The undersigned does further acknowledge the
undersigned’s understandings of all the terms and provisions of this Subscription Agreement and,
upon acceptance of this Subscription Agreement by the Company, agrees to be bound by all the terms
and conditions of this Subscription Agreement.

[Signature page follows]

- 5 -

 

SIGNATURE PAGE FOR INDIVIDUALS

Please complete the following:

	 	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Exact Name in Which Title is to be Held	 	 
	 
	 	 	 	 
	 	 	 
	Signature	 	Signature of Co-Owner
	 
	 	 	 	 
	 	 	 
	Print Name	 	Print Name of Co-Owner
	 
	 	 	 	 
	 	 	 
	Social Security Number or Tax Identification No.	 	Social Security Number or Tax Identification No.
	 
	 	 	 	 
	 
	Address	 	 
	 
	 	 	 	 
	 
	City, State, Postal or Zip Code, Country	 	 

	 	 	 	 	 	 	 	 	 
	STATE OF

	 	 	 	 	)	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 

	 	 	 	 	)	 	 	ss.
	COUNTY OF

	 	 	 	 	)	 	 	 
	 

	 	 

	 	 	 	 	 	 

     On this                      day of                                         , 2008, before me pe
rsonally appeared                                                             , who
being duly sworn by me, acknowledged that (s)he executed the foregoing instrument for the uses and
purposes therein stated.

     My commission expires:                                                             

	 	 	 	 	 
	 

Notary Public

	 	 

Address
	 	 

     * If the Securities are to be held in joint tenancy or as tenants in common, both persons
must sign above and please indicate the manner in which the Securities are to be held:

	 	 	 
	                     Tenants in Common
	 	                     Joint Tenants

     This subscription is accepted by Silicon Mountain Holdings, Inc. on this                      day of
                                        , 2008.

	 	 	 	 	 	 	 
	 	 	SILICON MOUNTAIN HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

- 6 -

 

SIGNATURE PAGE FOR ENTITIES

	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Printed Name of Entity	 	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 

Signature
	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Printed Name and Title	 	 
	 
	 	 	 	 	 	 
	 	 	 
	Address	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	City, State, Postal or Zip Code, Country	 	 

	 
	                                                                      
          

	Tax Identification Number

	 	 	 	 	 	 	 	 	 
	STATE OF

	 	 	 	 	)	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 

	 	 	 	 	)	 	 	ss.
	COUNTY OF

	 	 	 	 	)	 	 	 
	 

	 	 

	 	 	 	 	 	 

     On this                      day of                                         , 2008, before me personal
ly appeared                                                             , who
being duly sworn by me, acknowledged that (s)he executed the foregoing instrument in the name of
said entity, that (s)he had the authority to execute the same, and that (s)he executed the same as
the act and deed of said entity for the uses and purposes therein stated.

     My commission expires:                                        

	 	 	 	 	 
	 

Notary Public

	 	 

Address
	 	 

     This subscription is accepted by Silicon Mountain Holdings, Inc. on this                      day of
                                        , 2008.

	 	 	 	 	 	 	 	 	 
	 	 	SILICON MOUNTAIN HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 

- 7 -

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