Document:

Exhibit 10.6 Sublease

SUB-LEASE AGREEMENT

(468 N. Camden Drive, 3rd Floor, Suite 350, Beverly Hills, CA 90210)

THIS SUB-LEASE AGREEMENT (“Agreement”) is entered into on May 1, 2015 by and between MOSTOFI & COMPANY, LLP, a Limited Liability Partnership ("Sub-Lessor”), with an address of 468 N. Camden Drive, Suite 350, Beverly Hills, California 90210, and B4MC Gold Mines, Inc, ("Sub-Tenant"), currently located at P.O. Box 5778, Beverly Hills, CA 90209 (the “Parties”).

FOR VALUABLE CONSIDERATION, the Parties agree to the following terms and conditions.

Premises:  Sub-Lessor hereby Leases to Sub-Tenant and Sub-Tenant hereby Leases from Sub-Lessor for the term specified below, and upon all of the conditions set forth herein, that certain office units (5 and 6 per attached Exhibit A) comprising approximately a total of (130 + 130) 260 square feet, situated within Suite 350, located at 468 N. Camden Drive, Beverly Hills, California (the “Premises”).  The Premises, and the Suite in which the Premises is located, are generally depicted on the floor plan attached hereto designated as Offices 5, and 6 on Exhibit A, which is incorporated herein by this reference.

Terms:  The term of the Sub-Lease shall be on a month to month basis, and may be cancelled at any time by either party upon delivery of thirty (30) days prior written notice.   The Term of the Sub-Lease shall commence on the later or (i) the date that is ten (10) days after Sub-Lessor notifies Sub-Tenant in writing that the Premises are ready for occupancy, or (ii) June 1, 2014.  If, after using commercially reasonable and good faith efforts, Sub-Lessor is unable to deliver possession of the Premises to Sub-Tenant by June 1, 2014 Sub-Tenant may terminate this Agreement.

Base Rent:  Sub-Tenant shall pay to Sub-Lessor as monthly Base Rent for the Premises equal payments of Four Thousand Two Hundred Dollars ($4,200.00) per month, payable in advance on the 1st  day of each month of the term hereof.  Base Rent which is less than one month for any period during the term hereof shall be calculated at a pro rata portion of the monthly installment.  The Base Rent amount covers all costs for utilities, HVAC, and cable/Wi-Fi (except as expressly stated under “Other Services” below) for the Premises.

Security Deposit:  Equivalent of one month’s rent is required upon signing of this Sub-Lease Agreement.  Sub-Tenant will deposit with Sub-Lessor the sum equal to one month rent and such to be held by Sub-Lessor as security for the faithful performance by Sub-Tenant of all terms, covenants, and condition of this Sub-Lease.  Sub-Lessor shall not be required to keep this security deposit separate from its general funds and Sub-Tenant shall not be entitled to interest on such deposit.  If Sub-Tenant shall fully and faithfully perform every provision of this Sub-Lease, the security deposit shall be returned to Sub-Tenant at the expiration of this Sub-Lease term or applied to the last month’s rent.

Rent Defined:  All monetary obligations of Sub-Tenant to Sub-Lessor under the terms of this Sub-Lease are deemed to be rent (“Rent”).  Rent shall be payable in lawful money of the United States to Sub-Lessor at the address stated herein or to such other persons or at such other places as Sub-Lessor may designate in writing.

Agreed Use:  The Premises shall be used and occupied only for general office use, and for no other purpose. Sub-Tenant and Sub-Lessor shall not permit any activity or hazard to annoy or injure other tenants or affect fire or other insurance on the Premises nor violate any law or ordinance.

Subject to the terms hereof, Sub-Tenant accepts the Premises as being in good, sanitary order, condition and repair.  Sub-Tenant shall at Sub-Tenant's sole cost and expense keep the Premises as they were received, reasonable wear and tear, damage by fire, earthquake, act of God, the elements, or conditions beyond Sub-Tenant's control excepted.

Compliance:  Sub-Lessor warrants that the improvements on the Premises comply with all applicable covenants or restrictions of record and applicable building codes, regulations and ordinances in effect on the commencement date.  Said warranty does not apply to the use to which Sub-Tenant will put the Premises or to any alterations or utility installations made or to be made by Sub-Tenant.

Acceptance of Premises:  Sub-Lessor covenants and agrees that upon delivery of the Premises to Sub-Tenant, and as a condition to Sub-Tenant’s obligation to commence payment of Rent, the electrical, plumbing, HVAC, internet access, cable and fire sprinkler systems shall be in good working order and condition.   Sub-Tenant acknowledges that the Premise is unfurnished.

Sub-Tenant shall not make or suffer to be made any alterations, additions or improvements to or of the Premises or any part thereof without written consent of the Sub-Lessor. Upon the expiration or sooner termination of the term, Sub-Tenant shall, upon demand by Sub-Lessor at Sub-Tenant's sole cost and expense, forthwith and with all due diligence remove any alterations, additions or improvements made by Sub-Tenant designated by Sub-Lessor to be removed, and Sub-Tenant shall forthwith and with all due diligence and its sole cost and expense, repair any damage to the Premises caused by such removal.

Insurance and Personal Property Taxes: Sub-Tenant recognizes that Sub-Lessor does not carry any insurance on Sub-Tenant's contents and the Sub-Tenant must rely upon its own content insurance at Sub-Tenant's sole expense and pay all taxes levied or assessed on Sub-Tenant's furniture and equipment.

Entry By Sub-Lessor:  Sub-Lessor reserves and shall at any and all times have the right to enter the Premises (in an emergency) and inspect the same, to supply janitor service and any other service to be provided by Sub-Lessor to Sub-Tenant hereunder, to show said Premises to prospective tenants, to post notices of non-responsibility, and to alter, improve or repair the Premises and any portion of the Premises are a part or in emergencies without abatement of rent. Sub-Lessor shall at all times have and retain a key with which to unlock all of the doors in, upon an about the Premises, excluding Sub-Tenant's locked cabinets, desks, vaults and safes.

Other Services:  Sub-Tenant shall, at its election and at Global Business Center standard rates (which are currently between $95 to $245 per month), be entitled to use of the packaged services associated with the virtual professional office environment, including phone answering service, mail room (for receipt and dispatch of mail), high speed copiers, scanners, fax and printing machines located on the 2nd floor, conference rooms, lobby and reception area, and other common areas associated with the Global Business Center.  

Parking:  Sub-Tenant shall have the right to rent ONE unreserved parking space in the parking garage located in the Building of which the Premises are a part, at building standard rates (which currently is at $140 per month).  Sub-Lessor does not guarantee or is responsible for any increase in the Parking Rate as managed by the Landlord or its agent.

Keys and Card: Sub-Tenant shall receive, for each office Sub-Leased, two keys for entry into office suite (one for main entrance, and one for balcony entrance), and one elevator card.  Sub-Lessor shall not be responsible for any loss suffered as a result of Sub-Tenant's failure to lock Sub-Tenant's office(s). Sub-Tenant shall pay to Sub-Lessor the sum of $100 as a deposit on such key/ cards for each office Sub-Leased.  Lost key /card, duplication thereof, will also be charged at actual cost.  Sub-Tenant shall have access to the Premises and the Suite of which the Premises is a part 24 hrs per day, 7 days per week, subject to any temporary closures under the Master Lease.

Master Lease: Sub-Lessor is the lessee of the Premises by virtue of a lease, (the “Master Lease”), a copy of which is made available for “review” by Sub-Tenant before execution of this Sub-Lease.

This Sub-Lease is and shall at all times be subject and subordinate to the Master Lease.  Sub-Lessor represents to Sub-Tenant that the Master Lease is in full force and effect and that no default exists on the part of any party to the Master Lease.

Sub-Tenant shall faithfully observe and comply with the Rules and Regulation as set forth in the Master Lease.  These Rules and Regulations are subject to change by Master Lessor. Sub-Tenant acknowledges that Sub-Lessor is intended to maintain, along with other Sub-Tenants of the Premise, a prestigious place of business and that the cooperation of all the Sub-Tenants is necessary to maintain the high standards of the Premise.  Sub-Lessor shall operate the Suite of which the Premises is a part in a professional and prestigious manner consistent with the Building. Sub-Lessor shall be entitled to injunctive and other appropriate relief if Sub-Tenant fails to comply with any one or more of the Rules and Regulations or takes any actions which detract from the reputation and character of the Premise, as may be allowed by law, or if Sub-Tenant actions or inactions cause any material interference with the business of the other Sub-Tenants of the Premise.

Sub-Lessor, as tenant under the Master Lease, shall faithfully perform all obligations and covenants of Sub-Lessor thereunder, including the timely payment of rent.  Any obligations of the landlord under the Master Lease shall, for purposes of this Sub-Lease, be considered the obligation of Sub-Lessor herein.   Sub-Lessor shall be in default of this if it fails to cure any such failure or default within ten (10) days following written notice to Sub-Lessor (or thirty (30) days if the failure or default cannot reasonably be cured within such ten (10) day period, provided that Sub-Lessor commences to cure within such ten (10) day period and thereafter diligently pursues such cure to completion.   In the event that any amounts or deposits are owed by Sub-Lessor to Sub-Tenant hereunder, Sub-Tenant may recover from Sub-Lessor any unpaid amounts plus interest on said unpaid amounts at the rate of ten percent (10%) per annum.

Assignment: Sub-Tenant shall not assign, transfer, pledge or encumber this Sub-Lease or any interest therein, and shall not sublet the said Premises or any part thereof without the written consent of Sub-Lessor.   This Sub-Lease shall not be affected by any assignment by Sub-Lessor of Sub-Lessor's interest herein.  Sub-Tenant shall keep the Premises in which the Premises are situated free from any liens arising out of any work performed, materials furnished or obligations incurred by Sub-Tenant.

Attorney’s Fees: If any party brings an action to enforce the terms hereof or to declare rights hereunder, the prevailing party in any such action, on trial and appeal, shall be entitled to his reasonable attorney’s fees and out of pocket litigation expenses to be paid by the losing party as fixed by the Court.

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Default: The occurrence of any of the following shall constitute a material default and breach of this Sub-Lease by Sub-Tenant: 1) Any failure by Sub-Tenant to pay rental or to make any other payments required to be made by Sub-Tenant hereunder, after 10 days’ written notice; 2) The permanent abandonment or vacation of the Premises by Sub-Tenant, bankruptcy of Sub-Tenant, or assignment for benefit of creditors; 3) A failure by Sub-Tenant to observe and perform any other provision of this Sub-Lease to be observed or performed by Sub-Tenant, where such failure continues for thirty (30) days after written notice thereof by Sub-Lessor to Sub-Tenant.

In the event of any such default by Sub-Tenant, then in addition to any other remedies available to Sub-Lessor at law or in equity, Sub-Lessor shall have the immediate option to terminate this Sub-Lease and all rights of Sub-Tenant hereunder by giving 30 days advance written notice of such intention to terminate. In the event that Sub-Lessor shall elect to so terminate this Sub-Lease after providing Sub-Tenant with the required written notice, then Sub-Lessor may recover from Sub-Tenant any unpaid rent plus interest on said unpaid rental at the rate of ten percent (10%) per annum.

In the event of any such default by Sub-Tenant (following the expiration of any notice and cure period), Sub-Lessor shall also have the right, with or without terminating this Sub-Lease but upon at least 48 hrs prior written notice to Sub-Tenant, to re-enter the Premises and remove all persons and property from the Premises, in accordance with law; such property may be removed and stored in a public warehouse or elsewhere at the cost of an the account of Sub-Tenant.

Abandonment: Sub-Tenant shall not permanently vacate or abandon the Premises at any time during the term and if Sub-Tenant shall abandon, vacate or surrender said Premises for a period of thirty consecutive (30) days without the intent of re-occupying the same, or be dispossessed by process of law, or otherwise, any personal property belonging to Sub-Tenant and left on the Premises shall be deemed to be abandoned after thirty (30) days prior written notice to Sub-Tenant, which notice shall specifically state Sub-Lessor’s intent to declare such property abandoned.

Surrender:  Sub-Tenant shall vacate the Premises and return the keys and the elevator key card to Sub-Lessor no later than the expiration date of the Sub-Lease, or upon any sooner termination, and any deposits shall be promptly returned to Sub-Tenant. If Sub-Tenant remains in possession of the Premises with the consent of Sub-Lessor after the expiration, this Sub-Lease shall continue on a month-to-month basis on the same terms and conditions of the Sub-Lease, except as to any rental increase. Sub-Tenant shall indemnify and hold Sub-Lessor harmless from any and all direct losses, claims, damages or liabilities arising from Sub-Tenant’s failure to timely vacate the Premises at the expiration or termination of the Sub-Lease term; provided, however, in no event shall Sub-Tenant be liable for any consequential damages.

Governing Law:  This Sub-Lease shall be governed by the laws of the State of California.  Any disputes hereunder will be heard in the appropriate venue located in the County of Los Angeles, California.

		
	Executed at:  City of Beverly Hills, California

On:  May 1, 2015

Address: 468 N. Camden Drive, Suite 350, Beverly Hills, CA 90210

	Sub-Lessor:  Mostofi & Company, LLP

By: ___________________

Printed Name: Cyrus K.  Mostofi, CPA

Title: Principal

	

Executed at:  City of Beverly Hills, California

On:  May 1, 2015

Address: P.O. Box 5778, Beverly Hills, CA 90209

	

Sub-Tenant:  B4MC Gold Mines, Inc.

By:___________________

Printed Name: Bennett J. Yankowitz

Title: Chief Executive Officer

3 Sets of Keys containing: Elevator Card, Suite Entrance, and Patio Entrance were provided to the tenant in return for $300 deposit.

3

Exhibit A

Floor Plan - Suite 350

4dynatronicsexh41.htm

Exhibit 4.1

DYNATRONICS CORPORATION

 

A-WARRANT

 

June 30, 2015

  

  

  

 

TABLE OF CONTENTS

 

	
Section 1.

	
Definitions

	
1

	 	 	 
	
Section 2.

	
Exercise

	
1

	 	 	 
	
(a)

	
Exercise of Warrant

	
1

	 	 	 
	
(b)

	
Exercise Price

	
2

	 	 	 
	
(c)

	
Immediate Exercise Upon Certain Events

	
2

	 	 	 
	
(d)

	
Mechanics of Exercise

	
2

	 	 	 
	
(e)

	
Holder’s Exercise Limitations

	
4

	 	 	 
	
Section 3.

	
Certain Adjustments

	
5

	 	 	 
	
(a)

	
Stock Dividends and Splits

	
5

	 	 	 
	
(b)

	
[RESERVED]

	
6

	 	 	 
	
(c)

	
Subsequent Rights Offerings

	
6

	 	 	 
	
(d)

	
Pro Rata Distributions

	
6

	 	 	 
	
(e)

	
Fundamental Transaction

	
7

	 	 	 
	
(f)

	
Calculations

	
9

	 	 	 
	
(g)

	
Notice to Holder

	
10

	 	 	 
	
Section 4.

	
Transfer of Warrant

	
11

	 	 	 
	
(a)

	
Transferability

	
11

	 	 	 
	
(b)

	
New Warrants

	
11

	 	 	 
	
(c)

	
Warrant Register

	
11

	 	 	 
	
(d)

	
Transfer Restrictions

	
11

	 	 	 
	
(e)

	
Representation by the Holder

	
12

 

  

  

  

 

	
Section 5.

	
Miscellaneous

	
12

	 	 	 
	
(a)

	
No Rights as Stockholder Until Exercise

	
12

	 	 	 
	
(b)

	
Loss, Theft, Destruction or Mutilation of Warrant

	
12

	 	 	 
	
(c)

	
Saturdays, Sundays, Holidays, etc.

	
12

	 	 	 
	
(d)

	
Authorized Shares

	
13

	 	 	 
	
(e)

	
Jurisdiction

	
14

	 	 	 
	
(f)

	
Restrictions

	
14

	 	 	 
	
(g)

	
Nonwaiver and Expenses

	
14

	 	 	 
	
(h)

	
Notices

	
14

	 	 	 
	
(i)

	
Limitation of Liability

	
14

	 	 	 
	
(j)

	
Remedies

	
14

	 	 	 
	
(k)

	
Successors and Assigns

	
14

	 	 	 
	
(l)

	
Amendment

	
14

	 	 	 
	
(m)

	
Severability

	
14

	 	 	 
	
(n)

	
Headings

	
15

 

  

  

  

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

DYNATRONICS CORPORATION

 

No. A- ____

 

Warrant Shares: _______                                                                           Issuance Date: June 30, 2015

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _____________ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date Shareholder Approval is received (the “Initial Exercise Date”) and on or prior to the close of business on the six year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Dynatronics Corporation, a Utah corporation (the “Company”), up to ______ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock.  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.                       Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated May 1, 2015, among the Company and the purchasers signatory thereto.

 

Section 2.                       Exercise.

 

(a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed e-mail or facsimile copy of the Notice of Exercise in the form annexed hereto and within three (3) Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

  

 

  

 

(b) Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $2.75, subject to adjustment hereunder (the “Exercise Price”).

 

(c) Immediate Exercise Upon Certain Events.  Notwithstanding anything herein to the contrary, the Warrants shall be immediately exercisable in the event that, subject to the receipt of Shareholder Approval, holders of 4.99% or more of the outstanding voting securities of the Company accept any direct or indirect purchase offer, tender offer or exchange offer (whether by the Company or another Person) pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property (a “Tender Offer”).  In such case, the Termination Date shall be the six year anniversary of the Tender Offer.

 

(d) Mechanics of Exercise.

 

(i) Delivery of Warrant Shares Upon Exercise.  Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is one (1) Trading Day after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”).   The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid.  If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise within two Trading Days after the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.

 

  

2

  

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

 

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

 

(iv) Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

  

3

  

 

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

 

(vi) Charges, Taxes and Expenses.  Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.  The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

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

 

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

 

  

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Section 3.                       Certain Adjustments.

 

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

 

  

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(b) [RESERVED]

 

(c) Subsequent Rights Offerings.  In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares 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 exercise hereof, including without limitation, the Beneficial Ownership Limitation) 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 (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

(d) Pro Rata Distributions.  During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (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) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein 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 exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, 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 participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).   

 

  

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(e) Fundamental Transaction.

 

(i) If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group 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 or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).

 

(ii) For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.

 

  

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(iii) If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.

 

(iv) Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder a “Warrant Settlement Payment” (defined in subsection (v) below), equal in value to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction (referred to herein as the “Warrant Settlement Right”).  “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date.

 

(v) The Warrant Settlement Payment shall be paid using the same type or form of consideration that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock, or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction.  By way of example only, if the holders of Common Stock are to receive cash only in connection with the Fundamental Transaction, the holders of this Warrant shall also receive cash only in payment of the Warrant Settlement Payment.  If the holders of Common Stock are to receive shares of stock only in connection the Fundamental Transaction, the holders of this Warrant shall be paid the Warrant Settlement Payment with shares of the same stock.  Likewise, if the holders of Common Stock are given the right and option to choose from among alternative forms of consideration as payment for their shares in connection with the Fundamental Transaction, the holders of this Warrant shall be given the same right to choose from among the same alternative forms of consideration as payment for their Warrant Settlement Payment.  In no case shall the holders of this warrant receive cash only for their Warrant Settlement Payment, if the holders of the Common Stock of the Company are not also receiving cash only for their shares of Common Stock in connection with the Fundamental Transaction.

 

  

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(vi) The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) 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 with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such 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 and the other Transaction Documents 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 and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

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

 

  

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(g) Notice to Holder.

 

(i) Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

(ii) Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice  except as may otherwise be expressly set forth herein.

 

  

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Section 4.                       Transfer of Warrant.

 

(a) Transferability.  Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

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

 

(c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

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

 

  

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(e) Representation by the Holder.  The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.                       Miscellaneous.

 

(a) No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

 

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

 

(c) Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

  

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(d) Authorized Shares.

 

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

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

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

 

  

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

  

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

 

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

 

 

(Signature Page Follows)

 

  

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

 

 

 

 

	
DYNATRONICS CORPORATION

 

 

	
By:__________________________________________

     Name: Kelvyn Cullimore, Jr.

     Title: Chief Executive Officer

 

 

  

 

  

 

NOTICE OF EXERCISE

 

TO:           DYNATRONICS CORPORATION

 

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

 

Payment shall take the form of  lawful money of the United States.

 

(2) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

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

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ______________________________________________________________

 

Signature of Authorized Signatory of Investing Entity: _______________________________________

 

Name of Authorized Signatory: _________________________________________________________

 

Title of Authorized Signatory: ___________________________________________________________

 

Date: _______________________________________________________________________________

 

  

 

  

 

EXHIBIT B

 

ASSIGNMENT FORM

 

(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:                                                                

	  

  

 

  

 

EXHIBIT C

 

NOTICE OF BENEFICIAL OWNERSHIP LIMITATION

 

In accordance with Section 2(e) of that certain A-Warrant (the “Warrant”) of Dynatronics Corporation, a Utah corporation (the “Corporation”) issued to the undersigned, the undersigned hereby elects that, effective immediately,  the Corporation shall not effect any exercise of the Warrant, and that the undersigned shall not have the right to exercise any portion of the Warrant, to the extent that, after giving effect to the exercise set forth on the applicable Notice of Exercise, the undersigned (together with its Affiliates, and any Persons acting as a group together with the undersigned or any of the undersigned’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation.   All terms not defined herein shall have the meanings assigned to them in the Warrant.

 

 

	
 

[HOLDER]

 

By:___________________________________

     Name:

     Title:

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