Document:

December 23, 2010

 

Mr. Christopher Mulvihill

President

Boomerang Systems, Inc.

355 Madison Avenue

Morristown, NJ  07960

 

Dear Mr. Mulvihill:

 

Boomerang Systems, Inc., a Delaware corporation (“Borrower” or “Company”), has requested the individuals and entities listed on the signature page hereto, (each a “Lender” and collectively “Lenders”) to extend credit to it to enable it upon the terms, and subject to the conditions, of this letter agreement (the “Commitment Letter”), to borrow (a) at any time and from time to time, prior to the Expiration Date (as defined below) up to an aggregate principal amount at any time outstanding not in excess of $3,250,000, the proceeds of such borrowings to be used by Borrower to fund Borrower’s working capital requirements.  Lenders are willing to provide such credit facility to Borrower upon the terms and subject to the conditions set forth in this Commitment Letter.

 

Accordingly, in consideration of the foregoing statements and the execution and delivery to Lenders of this Commitment Letter and a Note (as defined below), each Lender agrees as to itself as follows:

 

1.           Upon the terms, and subject to the conditions of, this Commitment Letter, Lenders agree to make loans (“Loans”) to Borrower, at any time and from time to time on or after the date of this Commitment Letter (the “Commitment Date”) and until the Expiration Date (as defined below) in accordance with the terms hereof, in an aggregate principal amount not to exceed $3,250,000 (the “Commitment”).  Each Lender irrevocably commits to lend up to the amount set forth next to such Lender’s name on the signature page hereof in accordance with the terms hereof.  “Expiration Date,” as used herein, means the earliest of (a) January 1, 2012, and (b) the consummation of a private or public offering of the Company’s common stock yielding gross proceeds to the Company in an amount not less than $5,000,000.

 

2.           Borrower shall give Lenders written or telecopy notice, or telephone notice promptly confirmed in writing or by telecopy (each, a “Notice of Borrowing”), not later than 2:00 p.m., New York time, two Business Days before the date of each proposed borrowing. The date of any borrowing is referred to as a “Commitment Date”.  Each Notice of Borrowing shall be irrevocable and in each case refer to this Agreement and specify the date of such borrowing (which shall be a business day) and the amount thereof.  Each Loan shall be made by all lenders on a pro rata basis in proportion to the amount of each Lenders commitment.  For example, and for illustration purposes only, if there were four Lenders, each of whom committed $500,000, if Borrower sought to borrow $1,000,000, each Lender would be required to loan $250,000.  The minimum amount of each borrowing is $250,000 and the maximum number of borrowings is $3,250,000.

  

  

 

 

3.           The Loans shall be evidenced by note duly executed on behalf of Borrower, dated the Commitment Date, in substantially the form attached hereto as Exhibit A (the “Notes”), payable to each Lender’s order in a principal amount equal to the amount loaned by such Lender.  Each Note will be a senior unsecured obligation of the Company.  Each Note shall bear interest from the date of the borrowing thereunder on the outstanding principal balance thereof at a rate of 3% per annum.  Interest will be due and payable upon the earlier to occur of repayment or maturity.

 

4.           The obligation of Lenders to make Loans hereunder is subject to the satisfaction of the following conditions:

 

(a)  On the date of each borrowing:

 

(i)  Each Lender shall have received a Notice of Borrowing as to such borrowing.

 

(ii)  Borrower will be in compliance with the terms and provisions of this Commitment Letter and the Note; at the time of, and immediately after, such borrowing, no Event of Default or Default shall have occurred and be continuing; and

 

(iii)  Borrower’s representations and warranties herein shall be true and complete as if made on and as of the date of such borrowing.

 

Each borrowing shall be deemed to constitute a representation and warranty by Borrower on the date of such borrowing as to the matters specified in this Section 4(a).

 

5.           To induce Lenders to enter into this Commitment Letter and to make the Loans, Borrower hereby agrees that:

 

(a)           The Borrower will issue to each Lender warrants in substantially the form annexed hereto as Exhibit B to purchase one share of the Company’s common stock for every one dollar committed by such Lender under this Commitment Letter (the “Commitment Warrants”).  The Commitment Warrants will be issued on the date hereof, will have an exercise price of $0.30 per share, and will be exercisable in for a period of five years.

 

(b)           On each Commitment Date, the Borrower will issue to each Lender three warrants (the “Draw Down Warrants”) for every one dollar drawn down from such Lender’s pro rata portion of the Commitment.  The Draw Down Warrants will be issued on the Commitment Date, will have an exercise price of $0.30 per share, will expire five years from the date of this Agreement and will be insubstantially the form of the Commitment Warrants.

 

(c)           The parties agree, and the Warrant Agreements for the Commitment Warrants and the Draw Down Warrants shall state, that in the event that the Company shall at any time subdivide its outstanding shares of common stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of shares purchasable pursuant to the warrant immediately prior to such subdivision shall be proportionately increased, and conversely, in the event that the outstanding shares of common stock shall at any time be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of shares purchasable upon the exercise of the warrant immediately prior to such combination shall be proportionately reduced.

  

  

 

(d)          Borrower will have no obligation to deliver any Commitment Warrants or Draw Down Warrants to any Lender who does not provide the requested funds within two business days after receipt of a Notice of Borrowing.

 

6.           To induce Borrower to issue the Commitment Warrants or the Draw Down Warrants, as the case may be, each Lender hereby represents and warrants that such Lender (i)  has been advised that none of the Commitment Warrants, the Draw Down Warrants and the common stock issued upon the exercise thereof (collectively the “Securities”) have been registered under the Securities Act of 1933, as amended (the “Securities Act”); (ii) is acquiring the Securities for its account for investment purposes only; (ii) has no intention of selling or otherwise disposing of the Securities in violation of the securities laws of the United States; (iii)  is an “accredited investor” as defined by Rule 501 of Regulation D promulgated under the Securities Act; and (iv) is familiar with the proposed business, management, financial condition and affairs of the Corporation.

 

7.           To induce Lenders to enter into this Commitment Letter and to make the Loans, Borrower, by its signature appearing at the end of this Commitment Letter, represents and warrants to each Lender that:

 

(a)  Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  Borrower has all requisite corporate power and authority to: (A) own or lease its assets; and (B) to execute and deliver this Commitment Letter, the Notes, the Commitment Warrants and the Draw Down Warrants.

 

(b)  The execution, delivery and performance by Borrower of the Commitment Letter, the Notes, the Commitment Warrants and the Draw Down Warrants and the borrowings hereunder, (i) have been duly authorized by all requisite corporate action of Borrower, (b) will not violate any provision of any requirement of law or contractual obligation of Borrower, or (c) be in conflict with, result in a breach of, or constitute (alone or with notice or lapse of time or both) a default under any such contractual obligation.

 

(c)  The Commitment Letter and the Commitment Warrants have been duly executed and delivered by Borrower and the Commitment Letter and Commitment Warrants are, and, if executed and delivered, the Notes and Draw Down Warrants will be, the legal, valid and binding obligation of Borrower, enforceable against Borrower in accordance with their terms.

 

(d)  No license, consent or approval of, registration or filing with, or any other action by, any governmental authority, or any other person pursuant to any contractual obligation of Borrower, is or will be required in connection with the execution, delivery and performance of this Commitment Letter and the Note, except such as have been made or obtained and are in full force and effect.

 

(e)  The public filings that the Company files from time to time with the Securities and Exchange Commission are true and correct in all material respects.

  

  

 

 

(f)           The Company has reserved from its authorized but unissued shares a sufficient number of shares to be issued upon the exercise of the Commitment Warrants or the Draw Down Warrants, and such shares, when issued, will be duly authorized, fully paid and non-assessable.

 

                      [Signature Page Follows]

  

  

 

 

Please indicate your acceptance of this Commitment Letter by signing this letter and the enclosed counterpart hereof at the place indicated below.

 

Very truly yours,

	
Lender

	
Commitment Amount

	  	
  

 

	  	
 

  

	  	
 

  

	  	
 

  

	  	
 

  

	  	
 

  

Consented to, Acknowledged and

Agreed as of the above date

BOOMERANG SYSTEMS, INC.

	
By:

	
  

	 
	  	
Christopher Mulvihill

	 
	  	
PresidentTHE SECURITIES REPRESENTED BY THIS WARRANT AND THE COMMON STOCK ISSUABLE THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS WARRANT MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.

 

WARRANT

 

to Purchase Common Stock of

 

Boomerang Systems, Inc.

 

Expires___________

 

This Warrant to Purchase Common Stock (the “Warrant”) certifies that for value received,__________ (the “Holder”), or his assigns, is entitled to subscribe for and purchase from the Company (as hereinafter defined), in whole or in part,__________ shares of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock (as hereinafter defined) at the initial Exercise Price (as hereinafter defined), subject, however, to the provisions and upon the terms and conditions hereinafter set forth.  The number of Warrants (as hereinafter defined), the number of shares of Common Stock purchasable hereunder, and the Exercise Price therefore are subject to adjustment as hereinafter set forth.  This Warrant and all rights hereunder shall expire at 5:00 p.m. New York City time on __________ .

 

As used herein, the following terms shall have the meanings set forth below:

 

“Company” shall mean Boomerang Systems, Inc., a Delaware corporation, and shall also include any successor thereto with respect to the obligations hereunder, by merger, consolidation or otherwise.

 

“Common Stock” shall mean and include the Company’s Common Stock, par value $0.001 per share, authorized on the date of the original issue of this Warrant and shall also include (i) in case of any reorganization, reclassification, consolidation, merger, share exchange or sale, transfer or other disposition of assets of the character referred to in Section  hereof, the stock, securities provided for in such Section, and (ii) any other shares of common stock of the Company into which such shares of Common Stock may be converted.

  

 

  

 

“Exercise Price” shall mean the initial purchase price of $0.30 per share of Common Stock payable upon exercise of the Warrants.  The Exercise Price is subject to adjustment from time to time pursuant to the provisions hereof.

 

“Person” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Warrant” shall mean the right upon exercise to purchase one Warrant Share.

 

“Warrant Shares” shall mean the shares of Common Stock purchased or purchasable by the holder hereof upon the exercise of the Warrants.

 

ARTICLE I

 

EXERCISE OF WARRANTS

 

1.1           Method of Exercise.  The Warrants represented hereby may be exercised by the holder hereof, in whole or in part, at any time and from time to time from the date hereof until 5:00 p.m. New York City time on .  To exercise the Warrants, the holder hereof shall deliver to the Company, at the Warrant Office designated in Section 4.6 hereof, (i) a written notice in the form of the Subscription Notice attached as an exhibit hereto, stating therein the election of such holder to exercise the Warrants in the manner provided in the Subscription Notice; (ii) payment in full of the Exercise Price, at the Holder’s option, either (a) in cash or by bank check, or (b) on a cashless basis, as set forth in Section 1.1.1 hereof, for all Warrant Shares purchased hereunder.  The Warrants shall be deemed to be exercised on the date of receipt by the Company of the Subscription Notice, accompanied by payment for the Warrant Shares and surrender of this Warrant, as aforesaid, and such date is referred to herein as the “Exercise Date”.  Upon such exercise, the Company shall, as promptly as practicable and in any event within ten (10) business days, issue and deliver to such holder a certificate or certificates for the full number of the Warrant Shares purchased by such holder hereunder, and shall, unless the Warrants have expired, deliver to the holder hereof a new Warrant representing the number of Warrants, if any, that shall not have been exercised, in all other respects identical to this Warrant.  As permitted by applicable law, the Person in whose name the certificates for Common Stock are to be issued shall be deemed to have become a holder of record of such Common Stock on the Exercise Date and shall be entitled to all of the benefits of such holder on the Exercise Date, including without limitation, the right to receive dividends and other distributions for which the record date falls on or after the Exercise Date and the right to exercise voting rights.

  

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1.1.1           Cashless Exercise.  At the Holder’s option, in lieu of paying the Exercise Price in cash, the Warrants may be exercised on a cashless basis by converting the Warrants (or a portion thereof) into the number of Warrant Shares (rounded to the next highest integer) which equals (i) the number of Warrant Shares specified by the Holder in his notice of exchange (the “Total Share Number”) less (ii) the number of Warrant Shares equal to the quotient obtained by dividing (a) the product of the Total Share Number and the existing Exercise Price per Warrant Share by (b) the Market Price (as defined below) of the Company’s common stock on the exchange date.  “Market Price” at any date shall be deemed to be average of the last sale price of the Common Stock for the ten (10) consecutive trading days ending on the day prior to the date of determination as officially reported by the principal securities exchange on which the Common Stock is listed or admitted to trading or, if the Common Stock is not so listed, as reported in the NASDAQ National Market System, or, if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted on the NASDAQ National Market System, the last sale price as furnished by (i) NASDAQ, (ii) a similar organization if NASDAQ is no longer reporting such information, or, (iii) an inter-dealer quotation system or the “pink sheets” which provides such information if the Common Stock is not traded on NASDAQ or a similar organization or, (d) if the Common Stock is not traded on NASDAQ, a similar organization or an inter-dealer quotation system or the “pink sheets,” the fair market value of the Common Stock, as determined in good faith by resolution of the directors (other than the Holder) of the Company adopted within five business days after the Holder exercised the Warrant.

 

1.1.2           Vesting.  The Warrant shall vest and become exercisable immediately and shall remain exercisable until .

 

1.2           Expenses and Taxes.  The Company shall pay all expenses and taxes (including, without limitation, all documentary, stamp, transfer or other transactional taxes) other than income taxes attributable to the preparation, issuance or delivery of the Warrants and of the shares of Common Stock issuable upon exercise of the Warrants.

 

1.3           Reservation of Shares.  The Company shall reserve at all times so long as the Warrants remain outstanding, free from preemptive rights, out of its treasury Common Stock or its authorized but un-issued shares of Common Stock, or both, solely for the purpose of effecting the exercise of the Warrants, a sufficient number of shares of Common Stock to provide for the exercise of the Warrants.

 

1.4           Valid Issuance.  All shares of Common Stock that may be issued upon exercise of the Warrants will, upon issuance by the Company, be duly and validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof and, without limiting the generality of the foregoing, the Company shall take no action or fail to take any action which will cause a contrary result (including, without limitation, any action that would cause the Exercise Price to be less than the par value, if any, of the Common Stock).

 

1.5           Acknowledgment of Rights.  At the time of the exercise of the Warrants in accordance with the terms hereof and upon the written request of the holder hereof, the Company will acknowledge in writing its continuing obligation to afford to such holder any rights to which such holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant; provided, however, that if the holder hereof shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such holder any such rights.

  

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1.6           No Fractional Shares.  The Company shall not be required to issue fractional shares of Common Stock on the exercise of this Warrant.  If more than one Warrant shall be presented for exercise at the same time by the same holder, the number of full shares of Common Stock which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of whole shares of Common Stock purchasable on exercise of the Warrants so presented.  If any fraction of a share of Common Stock would, except for the provisions of this Section, be issuable on the exercise of this Warrant, the Company shall pay an amount in cash calculated by it to be equal to the fair market value of such fractional share as reasonably determined by the Company’s Board of Directors.

 

ARTICLE II

 

TRANSFER

 

2.1           Warrant Office.  The Company shall maintain an office for certain purposes specified herein (the “Warrant Office”), which office shall initially be the Company’s offices at 355 Madison Avenue, Morristown, NJ 07960 and may subsequently be such other office of the Company or of any transfer agent of the Common Stock in the continental United States as to which written notice has previously been given to the holder hereof.  The Company shall maintain, at the Warrant Office, a register for the Warrants in which the Company shall record the name and address of the Person in whose name this Warrant has been issued, as well as the name and address of each permitted assignee of the rights of the registered owner hereof.

 

2.2           Ownership of Warrants.  The Company may deem and treat the Person in whose name the Warrants are registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary until presentation of this Warrant for registration of transfer as provided in this Article II.  Notwithstanding the foregoing, the Warrants represented hereby, if properly assigned in compliance with this Article II, may be exercised by an assignee for the purchase of Warrant Shares without having a new Warrant issued.

 

2.3           Restrictions on Transfer of Warrants.  The Company agrees to maintain at the Warrant Office books for the registration and transfer of the Warrants.  Subject to the restrictions on transfer of the Warrants in this Section, the Company, from time to time, shall register the transfer of the Warrants in such books upon surrender of this Warrant at the Warrant Office properly endorsed or accompanied by appropriate instruments of transfer and written instructions for transfer satisfactory to the Company.  Upon any such transfer and upon payment by the holder or its transferee of any applicable transfer taxes, new Warrants shall be issued to the transferee and the transferor (as their respective interests may appear) and the surrendered Warrants shall be canceled by the Company.  The Company shall pay all taxes (other than securities transfer taxes or income taxes) and all other expenses and charges payable in connection with the transfer of the Warrants pursuant to this Section.

  

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2.3.1           Restrictions in General.  The holder of the Warrants agrees that it will not transfer the Warrants unless registration of such Warrant Shares under the Securities Act and any applicable state securities or blue sky laws has become effective or the holder has provided to the Company an opinion of counsel acceptable to the Company that such registration is not required.  Prior to any transfer (other than the grant of a security interest) as provided herein, the transferor shall provide written notice to the Company and an opinion of counsel to the effect that the proposed transfer is exempt from registration under all applicable securities laws, all in form and substance reasonably satisfactory to the Company.

 

2.4           Compliance with Securities Laws.  Notwithstanding any other provisions contained in this Warrant except Section 2.3.1, the holder hereof understands and agrees that the following restrictions, limitations and provisions shall be applicable to all Warrant Shares and to all re-sales or other transfers thereof pursuant to the Securities Act:

 

2.4.1           The holder hereof agrees that the Warrant Shares shall not be sold or otherwise transferred unless the Warrant Shares are registered under the Securities Act and applicable state securities or blue sky laws or are exempt therefrom.

 

2.4.2           A legend in substantially the following form will be placed on the certificate(s) evidencing the Warrant Shares:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.”

 

2.4.3           Holder agrees that stop transfer instructions shall be imposed with respect to the Warrant Shares so as to restrict resale or other transfer thereof, subject to this Section.

 

2.4.4           It is understood and agreed by the Holder that the Company has no obligation and has not agreed to register under the Securities Act for sale or transfer either this Warrant or the Warrant Shares.

 

2.4.5           Upon any exercise of this Warrant, the Holder agrees to confirm to the Company that he is an “accredited investor” as defined in Addendum B to the Agreement and provide such other documentation as the Company may reasonably request in order to obtain assurance that the issue and sale of the shares to the Holder on exercise of the Warrant is exempt from registration under the Securities Act.

  

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ARTICLE III

 

ANTI-DILUTION

 

3.1           Stock Splits and Reverse Splits.  In the event that the Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of Warrant Shares purchasable pursuant to this Warrant immediately prior to such subdivision shall be proportionately increased, and conversely, in the event that the outstanding shares of Common Stock shall at any time be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares purchasable upon the exercise of this Warrant immediately prior to such combination shall be proportionately reduced.   Except as provided in this Section, no adjustment in the Exercise Price and no change in the number of Warrant Shares purchasable shall be made under this Article III as a result of, or by reason of, any such subdivision or combination.

 

3.2           Reorganizations and Asset Sales.  If any capital reorganization or reclassification of the capital stock of the Company, or any consolidation, merger or share exchange of the Company with another Person, or the sale, transfer or other disposition of all or substantially all of its assets to another Person shall be effected in such a way that a holder of Common Stock of the Company shall be entitled to receive capital stock, securities or assets with respect to or in exchange for their shares, then the following provisions shall apply:

 

3.2.1           As a condition of such reorganization, reclassification, consolidation, merger, share exchange, sale, transfer or other disposition (except as otherwise provided below in this Section ), lawful and adequate provisions shall be made whereby the holder of Warrants shall thereafter have the right to purchase and receive upon the terms and conditions specified in this Warrant and in lieu of the Warrant Shares immediately theretofore receivable upon the exercise of the rights represented hereby, such shares of capital stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of Warrant Shares immediately theretofore so receivable had such reorganization, reclassification, consolidation, merger, share exchange or sale not taken place, and in any such case appropriate provision reasonably satisfactory to such holder shall be made with respect to the rights and interests of such holder to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of Warrant Shares receivable upon the exercise) shall thereafter be applicable, as nearly as possible, in relation to any shares of capital stock, securities or assets thereafter deliverable upon the exercise of Warrants.

 

3.2.2           In the event of a merger, share exchange or consolidation of the Company with or into another Person as a result of which a number of shares of Common Stock or its equivalent of the successor Person greater or lesser than the number of shares of Common Stock outstanding immediately prior to such merger, share exchange or consolidation are issuable to holders of Common Stock, then the Exercise Price in effect immediately prior to such merger, share exchange or consolidation shall be adjusted in the same manner as though there were a subdivision or combination of the outstanding shares of Common Stock.

  

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3.2.3           The Company shall not effect any such consolidation, merger, share exchange, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor Person (if other than the Company) resulting from such consolidation, share exchange or merger of the Person purchasing or otherwise acquiring such assets shall have assumed by written instrument executed and mailed or delivered to the holder hereof at the last address of such holder appearing on the books of the Company the obligation to deliver to such holder such shares of capital stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to receive, and all other liabilities and obligations of the Company hereunder.  Upon written request by the holder hereof, such successor Person will issue a new warrant revised to reflect the modifications in this Warrant effected pursuant to this Section.

 

3.2.4           If a purchase, tender or exchange offer is made to and accepted by the holders of 50% or more of the outstanding shares of Common Stock, the Company shall not effect any consolidation, merger, share exchange or sale, transfer or other disposition of all or substantially all of the Company’s assets with the Person having made such offer or with any affiliate of such Person, unless prior to the consummation of such consolidation, merger, share exchange, sale, transfer or other disposition the holder hereof shall have been given a reasonable opportunity to then elect to receive upon the exercise of the Warrants either the capital stock, securities or assets then issuable with respect to the Common Stock or the capital stock, securities or assets, or the equivalent, issued to previous holders of the Common Stock in accordance with such offer.

 

3.3           Adjustment for Asset Distribution.  If the Company declares a dividend or other distribution payable to all holders of shares of Common Stock in evidences of indebtedness of the Company or other assets of the Company (including, cash (other than regular cash dividends declared by the Board of Directors), capital stock (other than Common Stock, Convertible Securities or options or rights thereto) or other property), the Exercise Price in effect immediately prior to such declaration of such dividend or other distribution shall be reduced by an amount equal to the amount of such dividend or distribution payable per share of Common Stock, in the case of a cash dividend or distribution, or by the fair value of such dividend or distribution per share of Common Stock (as reasonably determined in good faith by the Board of Directors of the Company), in the case of any other dividend or distribution.  Such reduction shall be made whenever any such dividend or distribution is made and shall be effective as of the date as of which a record is taken for the purpose of such dividend or distribution or, if a record is not taken, the date as of which holders of record of Common Stock entitled to such dividend or distribution are determined.

  

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3.4           De Minimis Adjustments.  No adjustment in the number of shares of Common Stock purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least one share of Common Stock purchasable upon an exercise of each Warrant and no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least $0.01 in the Exercise Price; provided, however, that any adjustments which by reason of this Section  are not required to be made shall be carried forward and taken into account in any subsequent adjustment.  All calculations shall be made to the nearest full share or nearest one hundredth of a dollar, as applicable.

 

3.5           Notice of Adjustment.  Whenever the Exercise Price or the number of Warrant Shares issuable upon the exercise of the Warrants shall be adjusted as herein provided, or the rights of the holder hereof shall change by reason of other events specified herein, the Company shall compute the adjusted Exercise Price and the adjusted number of Warrant Shares in accordance with the provisions hereof and shall prepare an Officer’s Certificate setting forth the adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon the exercise of the Warrants or specifying the other shares of stock, securities or assets receivable as a result of such change in rights, and showing in reasonable detail the facts and calculations upon which such adjustments or other changes are based.  The Company shall cause to be mailed to the holder hereof copies of such Officer’s Certificate together with a notice stating that the Exercise Price and the number of Warrant Shares purchasable upon exercise of the Warrants have been adjusted and setting forth the adjusted Exercise Price and the adjusted number of Warrant Shares purchasable upon the exercise of the Warrants.

 

3.6           Notifications to Holders.  In case at any time the Company proposes:

 

(i)           to declare any dividend upon its Common Stock payable in capital stock or make any special dividend or other distribution (other than cash dividends) to the holders of its Common Stock;

 

(ii)           to offer for subscription pro rata to all of the holders of its Common Stock any additional shares of capital stock of any class or other rights;

 

(iii)           to effect any capital reorganization, or reclassification of the capital stock of the Company, or consolidation, merger or share exchange of the Company with another Person, or sale, transfer or other disposition of all or substantially all of its assets; or

 

(iv)           to effect a voluntary or involuntary dissolution, liquidation or winding up of the Company,

  

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then, in any one or more of such cases, the Company shall give the holder hereof (a) at least 10 days’ (but not more than 90 days’) prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of such issuance, reorganization, reclassification, consolidation, merger, share exchange, sale, transfer, disposition, dissolution, liquidation or winding up, and (b) in the case of any such issuance, reorganization, reclassification, consolidation, merger, share exchange, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ (but not more than 90 days’) prior written notice of the date when the same shall take place.  Such notice in accordance with the foregoing clause (a) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Common Stock shall be entitled thereto, and such notice in accordance with the foregoing clause (b) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock, as the case may be, for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, share exchange, sale, transfer, disposition, dissolution, liquidation or winding up, as the case may be.  Notwithstanding the foregoing, the failure of the Company to give such notice shall not affect the validity or enforceability of any such action as to which notice may be required to be given or otherwise and as may have been taken without the giving of such notice as may be required by this Section.

 

ARTICLE IV

 

MISCELLANEOUS

 

4.1           Entire Agreement.  This Warrant, together with the Agreement, contains the entire agreement between the holder hereof and the Company with respect to the Warrant Shares purchasable upon exercise hereof and the related transactions and supersedes all prior arrangements or understandings with respect thereto.

 

4.2           Governing Law.  This warrant shall be governed by and construed in accordance with the laws of the State of Delaware.

 

4.3           Waiver and Amendment.  Any term or provision of this Warrant may be waived at any time by the party which is entitled to the benefits thereof and any term or provision of this Warrant may be amended or supplemented at any time by agreement of the holder hereof and the Company, except that any waiver of any term or condition, or any amendment or supplementation, of this Warrant shall be in writing.  A waiver of any breach or failure to enforce any of the terms or conditions of this Warrant shall not in any way effect, limit or waive a party’s rights hereunder at any time to enforce strict compliance thereafter with every term or condition of this Warrant.

 

4.4           Illegality.  In the event that any one or more of the provisions contained in this Warrant shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in any other respect and the remaining provisions of this Warrant shall not, at the election of the party for whom the benefit of the provision exists, be in any way impaired.

 

4.5           Copy of Warrant.  A copy of this Warrant shall be filed among the records of the Company.

 

4.6           Notice.  Any notice or other document required or permitted to be given or delivered to the holder hereof shall be in writing and delivered at, or sent by certified or registered mail to such holder at, the last address shown on the books of the Company maintained at the Warrant Office for the registration of this Warrant or at any more recent address of which the holder hereof shall have notified the Company in writing.  Any notice or other document required or permitted to be given or delivered to the Company, other than such notice or documents required to be delivered to the Warrant Office, shall be delivered at, or sent by certified or registered mail to, the offices of the Company at 355 Madison Avenue, Morristown, NJ 07960 or such other address within the continental United States of America as shall have been furnished by the Company to the holder of this Warrant.

  

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4.7           Limitation of Liability; Not Stockholders.  No provision of this Warrant shall be construed as conferring upon the holder hereof the right to vote, consent, receive dividends or receive notices (other than as herein expressly provided) in respect of meetings of stockholders for the election of directors of the Company or any other matter whatsoever as a stockholder of the Company.  No provision hereof, in the absence of affirmative action by the holder hereof to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the holder hereof, shall give rise to any liability of such holder for the purchase price of any shares of Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

4.8           Exchange, Loss, Destruction, etc. of Warrant.  Upon receipt of evidence satisfactory to the Company of the loss, theft, mutilation or destruction of this Warrant, and in the case of any such loss, theft or destruction upon delivery of a bond of indemnity or such other security in such form and amount as shall be reasonably satisfactory to the Company, or in the event of such mutilation upon surrender and cancellation of this Warrant, the Company will make and deliver a new warrant of like tenor, in lieu of such lost, stolen, destroyed or mutilated Warrant.  Any warrant issued under the provisions of this Section in lieu of any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated Warrant, shall constitute an original contractual obligation on the part of the Company.  This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement.  The Company shall pay all taxes (other than securities transfer taxes or income taxes) and all other expenses and charges payable in connection with the preparation, execution and delivery of warrants pursuant to this Section.

 

4.9           Headings.  The Article and Section and other headings herein are for convenience only and are not a part of this Warrant and shall not affect the interpretation thereof.

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name.

Dated as of________.

	  	
BOOMERANG SYSTEMS, INC.

	  	  	  
	  	
By:

	
 

	  	
Name:

	
 Joseph Bellantoni

	  	
Title:

	
 Chief Financial Officer

  

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SUBSCRIPTION NOTICE

The undersigned, the holder of the foregoing Warrant, hereby elects to exercise purchase rights represented thereby for, and to purchase thereunder, _______ shares of the Common Stock covered by such Warrant, and herewith makes payment in full for such shares in a manner provided for in the Warrant, and requests (a) that certificates for such shares (and any other securities or other property issuable upon such exercise) be issued in the name of, and delivered to ________________, and (b) if such shares shall not include all of the shares issuable as provided in such Warrant, that a new Warrant of like tenor and date for the balance of the shares issuable thereunder be delivered to the undersigned.

	
Signature: 

	  
	  	  
	
Date:

	
 

	  	  
	
Address: 

	  
	  	  
	
 

	  

 

  

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ASSIGNMENT

For value received, _______________________, hereby sells, assigns, and transfers unto _________________________ the within Warrant, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ________________________ attorney, to transfer such Warrant on the books of the Company, with full power of substitution.

	
Signed:

	  
	 	 
	
Date:

	  

 

  

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