Document:

drsv_ex49.htm

EXHIBIT 4.9

THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

DEBT RESOLVE, INC., A DELAWARE CORPORATION

14% SECURED CONVERTIBLE NOTE

 

	 	 	Note No.___________
	 	 	 
	$_________	 	Dated _________, 2010

 

1.           Principal.  For value received, Debt Resolve, Inc., a Delaware corporation (“Maker”), promises to pay to the order of ___________________________ (“Holder”), at the address of Holder known to Maker or at such other place as Holder may from time to time designate in writing, the principal sum of $_________ (the “Obligation”), which represents the principal amount advanced by Holder to Maker.  Maker and Holder may sometimes herein be referred to individually as the “Party” and collectively as the “Parties.”

2.           Interest.  The Outstanding Balance (as defined below) shall bear interest at the rate of 14% per annum, compounded daily, calculated on the basis of a 365 day year (the “Interest”).

3.           Payments.  The principal hereof and any unpaid accrued interest thereon shall be due and payable on the Maturity Date (as defined below).

4.           “Maturity Date” shall mean the date which is 36 months from the date of this Note.

5.           Prepayment.  Maker shall be entitled to prepay this Note prior to the Maturity Date without premium or penalty.

6.           Applications of Payments.  Payments received by Holder pursuant to the terms hereof shall be applied in the following manner:  first, to the payment of all expenses, charges, late payment fees, costs and fees incurred by or payable to Holder and for which Maker is obligated pursuant to the terms of this Note, second, to the payment of all interest accrued to the date of such payment; and third, to the payment of principal.

 

  

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7.           Conversion.  Subject to the limitations described herein:

(a)           Automatic Conversion.  Unless the Outstanding Balance (as defined below) of the Note is paid in full, the Outstanding Balance shall automatically and immediately convert into units of Maker’s securities (the “Units”) at a conversion price of $1.50 per Unit on the date that Maker closes on gross proceeds of at least $4,000,000 in any financing other than the offering in which this Note was issued.  Each Unit consists of ten shares of Maker’s common stock (the “Note Shares”) and six callable two-year warrants each to purchase one additional share of Maker’s common stock at an exercise price of $0.40 per share (the “Note Warrants”).  Only whole shares of common stock, and Warrants to purchase whole shares of common stock, will be issued upon conversion of the Notes.  The term “Outstanding Balance” shall mean the unpaid principal amount of the Obligation, together will all unpaid accrued interest thereon.  Subject to certain restrictions, at any time beginning on the first day after the ten trading day average closing price of Maker’s common stock exceeds $0.75 per share, but not sooner than 30 days after a registration statement covering the public sale of the shares underlying the Note Warrants is declared effective, Maker shall have the right to deliver written notices to the holder of the Note Warrants calling the Note Warrants.  Holders of the Note Warrants will have ten business days in which to exercise the Note Warrants upon receiving the call notice.  If Maker exercises this call option at a time when this Note has not yet been converted and is still outstanding, holders of the Notes will have ten business days in which to deliver both the written Election to Convert along with the executed warrant exercise form.  If the Note Holder does not return both forms within 10 business days of receipt, then in lieu of receiving the Note Warrants upon conversion, the Holder shall be entitled to receive upon conversion only the Note Shares that Holder would have received had the Holder converted the Note before the call option was exercised.

(b)           Voluntary Conversion.  This Note is convertible at the option of the Holder, in his, her or its sole discretion, in whole or in part, at any time prior to the Maturity Date into Units at a conversion price of $1.50 per Unit.  Holder shall deliver to Maker a written Election to Convert, a form of which is attached hereto.  As soon as reasonably practicable after receipt of the written Election to Convert, Maker shall issue and cause to be delivered with all reasonable dispatch to or upon the written order of the Holder, and in such name or names as the Holder may designate, a certificate or certificates for the full number of Note Shares and Note Warrants so purchased upon conversion of the Note.  Such certificate or certificates shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of record of such securities as of the date of delivery of the Election to Convert, notwithstanding that the certificate or certificates representing such securities shall not actually have been delivered or that the stock transfer books of Maker shall then be closed.  The Note shall be convertible, at the election of the Holders, either in full or from time to time in part and, in the event that the Note is converted in respect of less than all of the Note Shares and Note Warrants specified therein at any time prior to the Maturity Date, a new Note evidencing the remaining portion of the indebtedness shall be issued by Maker to the Holder.

8.           Events of Default.  The occurrence of any of the following events shall constitute an Event of Default hereunder:

(a)           Failure of Maker to pay the principal and interest upon the Maturity Date;

(b)           Failure of Maker to pay any amount or perform any other obligation under the Security Agreement or Investor Rights Agreement (provided, however, that the Maker’s failure to register the securities required to be registered under the Investor Rights Agreement shall not be deemed an event of default under this Section 8) that were entered into concurrently with this Note;

 

  

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(c)           Maker shall admit in writing its inability to, or be generally unable to, pay its undisputed debts as such undisputed debts become due;

(d)           Maker shall: (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator of all or a substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts; (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against him in an involuntary case under the United States Bankruptcy Code; or (vi) take any action for the purpose of effecting any of the foregoing;

(e)           A proceeding or case shall be commenced, without the application or consent of Maker, in any court of competent jurisdiction, seeking: (i) its financial reorganization, liquidation or arrangement, or the composition or readjustment of its debts; (ii) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of Maker or of all or any substantial part of its property; or (iii) similar relief in respect of Maker under any law relating to bankruptcy, insolvency, reorganization or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 30 or more days; or an order for relief against Maker shall be entered in an involuntary case under the United States Bankruptcy Code; or

(f)           A final judgment or judgments issued by a court of competent jurisdiction for the payment of money in excess of $100,000 in the aggregate shall be rendered by one or more governmental persons having jurisdiction against Maker and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution of the relevant judgment shall not be procured, within 30 calendar days from the date of entry of such judgment and Maker shall not, within that 30-day period, or such longer period during which execution of the same shall have been stayed, appeal from and cause the execution of such judgment to be stayed during such appeal.

9.           Remedies; Late Payment Penalty.  Upon the occurrence of an Event of Default and without demand or notice, Holder may declare the principal amount then outstanding of, and the accrued interest on, the Obligation of Maker to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by Maker and Maker may exercise all rights and remedies available to it under this Note or any succeeding agreement.

10.          Security.  Holder’s rights under this Note shall be secured by a lien against all of Maker’s assets, as more specifically provided under the Security Agreement which was entered into concurrently herewith.

11.          Waiver.  Maker hereby waives diligence, presentment, protest and demand, notice of protest, dishonor and nonpayment of this Note and expressly agrees that, without in any way affecting the liability of Maker hereunder, Holder may extend any maturity date or the time for payment of any installment due hereunder, accept security, release any party liable hereunder and release any security now or hereafter securing this Note.  Maker further waives, to the full extent permitted by law, the right to plead any and all statutes of limitations as a defense to any demand on this Note, or on any deed of trust, security agreement, lease assignment, guaranty or other agreement now or hereafter securing this Note.

 

  

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12.           Attorneys’ Fees; Costs.  Maker agrees to pay to Holder all costs and expenses including attorneys’ fees and costs, incurred by Holder in connection with the negotiation, preparation or execution of the loan and this Note.  If this Note is not paid when due or if any Event of Default occurs, Maker promises to pay all costs of enforcement and collection, including but not limited to, Holder’s  attorneys’ fees, whether or not any action or proceeding is brought to enforce the provisions hereof.

13.           Severability.  Every provision of this Note is intended to be severable.  In the event any term or provision hereof is declared by a court of competent jurisdiction, to be illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the balance of the terms and provisions hereof, which terms and provisions shall remain binding and enforceable.

14.           Interest Rate Limitation.  Holder and Maker stipulate and agree that none of the terms and provisions contained herein shall ever be construed to create a contract for use, forbearance or detention of money requiring payment of interest at a rate in excess of the maximum interest rate permitted to be charged by the laws of the State of California.  In such event, if any Holder of this Note shall collect monies which are deemed to constitute interest which would otherwise increase the effective interest rate on this Note to a rate in excess of the maximum rate permitted to be charged by the laws of the State of California, all such sums deemed to constitute interest in excess of such maximum rate shall, at the option of Holder, be credited to the payment of the sums due hereunder or returned to Maker.

15.           Number and Gender.  In this Note the singular shall include the plural and the masculine shall include the feminine and neuter gender, and vice versa, if the context so requires.

16.           Headings.  Headings at the beginning of each numbered paragraph of this Note are intended solely for convenience and are not to be deemed or construed to be a part of this Note.

17.           Choice of Law; Jurisdiction.  This Note shall be governed by and construed in accordance with the laws of the State of California.  The parties agree that the Courts of the County of Orange, State of California shall have sole and exclusive jurisdiction and venue for the resolution of all disputes arising under the terms of this Agreement and the transactions contemplated herein.

 

  

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18.           Miscellaneous.

(a)           Any notice pursuant to this Agreement by the Maker or by the Holder shall be in writing and shall be deemed to have been duly given if delivered personally, or if mailed by certified mail, postage prepaid, or transmitted by facsimile, to the parties at the addresses or facsimile numbers set forth below.

(i)           Holder Address.  If to the Holder, addressed to the Holder at the address set forth below Holder’s signature on the signature page of the Subscription Agreement, as it may be amended by the Holder from time to time by written notice to the Maker.

(ii)           Maker Address.  If to the Maker addressed to it at 150 White Plains Road, Suite 108, Tarrytown, New York, 10591, Attention: David M. Rainey, President, Facsimile No.:  (914) 428-3044.

(iii)           Notices to Holders.  All notices to Holders to be copied to jstanley@finance500.com

All such notices and other communications will (1) if delivered personally to the address as provided in this Section 18, be deemed given upon delivery, (2) if delivered by facsimile transmission to the facsimile number as provided in this Section 18, be deemed given upon receipt, and (iii) if delivered by mail in the manner described above to the address as provided in this Section 18, be deemed given upon receipt (in each case regardless of whether such notice is received by any other person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section 18).  Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto.

(b)           No failure or delay on the part of Holder or any other holder of this Note to exercise any right, power or privilege under this Note and no course of dealing between Maker and Holder shall impair such right, power or privilege or operate as a waiver of any default or an acquiescence therein, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein expressly provided are cumulative to, and not exclusive of, any rights or remedies, which Holder would otherwise have.  No notice to or demand on Maker in any case shall entitle Maker to any other or further notice or demand in similar or other circumstances or constitute a waiver of the right of Holder to any other or further action in any circumstances without notice or demand.

(c)           Maker may not assign its rights or obligations hereunder without prior written consent of Holder.  Subject to compliance with applicable federal and state securities laws, Holder may (i) assign all or any portion of this Note without the prior consent of Maker or (ii) sell or agree to sell to one or more other persons a participation in all or any part of the Note without the prior consent of Maker.  Upon surrender of the Note, Maker shall execute and deliver one or more substitute notes in such denominations and of a like aggregate unpaid principal amount or other amount issued to Holder and/or to Holder’s designated transferee or transferees.  Holder may furnish any information in the possession of Holder concerning Maker, or any of its respective subsidiaries, from time to time to assignees and participants (including prospective assignees and participants).

 

 

(SIGNATURE PAGE IMMEDIATELY FOLLOWS)

 

  

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IN WITNESS WHEREOF, Maker has caused this Note to be duly executed and delivered as of the day and year and at the place first above written.

 

 

	 	MAKER:	 
	 	 	 
	 	DEBT RESOLVE, INC.	 
	 	a Delaware corporation	 
	 	 	 
	 	 	 	 
	
 

	 	 
	 	BY:	
David M. Rainey

	 
	 	ITS:	President	 
	 	 	 	 
	 	HOLDER:	 
	 	 	 	 
	 	[	       ]	 
	 	 	 	 
	 	Acknowledgment contained in the Omnibus Signature Page in the Subscription Agreement	 

 

  

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FORM OF ELECTION TO CONVERT

The undersigned, the holders of the attached Note, hereby irrevocably elect to exercise their right to convert $_____________ of the Note into shares of common stock, and warrants to purchase shares of common stock, of Debt Resolve, Inc., a Delaware corporation, and request that the certificates for such securities be issued in the name of, and delivered to, _______________________________, whose address is ______________________________________________________________.

 

 

	Dated:	 	 	SIGNATURE:	 
	 	 	 
	 	
 

	 
	 	
(Signature must conform in all respects to the name of Holder as specified in the Note)

	 
	 	 	 
	 	 	 
	 	(Insert Social Security or Federal Tax I.D. Number of Holder)	 
	 	 	 
	 	IF NOTE IS HELD JOINTLY, BOTH PARTIES MUST SIGN:	 
	 	 	 
	 	 	 
	 	(Signature must conform in all respects to the name of Noteholder as specified in the Note)	 
	 	 	 
	 	 	 
	 	(Insert Social Security or Federal Tax I.D. Number of Joint Noteholder)	 

 

 

7drsv_ex410.htm

EXHIBIT 4.10

FORM OF INVESTOR WARRANT

 

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

 DEBT RESOLVE, INC.

STOCK PURCHASE WARRANT AGREEMENT

To Purchase Shares of Common Stock

 

	
No. 2009-__

	
Issue Date: ____________, 2010

 

THIS CERTIFIES that, for value received, ____________________________ (the “Holder”), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof, to subscribe for and purchase from, DEBT RESOLVE, INC., a Delaware corporation (the “Company”), ________ of the fully paid non-assessable shares of the Company’s common stock, $0.001 par value per share (“Common Stock”) at a purchase price of $0.40 per share, provided that such right will terminate, if not terminated earlier in accordance with the provisions hereof, at 5:00 p.m. (Eastern time) on the two-year anniversary (the “Expiration Date”) of the date hereof.  The purchase price and the number of shares for which this warrant (the “Warrant”) is exercisable are subject to adjustment, as provided herein.  The Warrants being sold and issued pursuant to this agreement shall be evidenced by warrant certificates substantially in the form of Annex A hereto (the “Warrant Certificate”).  This Warrant was issued in connection with the conversion of certain 14% Secured Convertible Notes which were sold by the Company in a private offering (the “Offering”) pursuant to a Private Placement Memorandum dated October 14, 2009 (the “Memorandum”) and is subject to the terms of a Subscription Agreement (the “Subscription Agreement”) attached as an Exhibit to the Memorandum.  Capitalized terms used and not otherwise defined herein will have the respective meanings ascribed to such terms in the Memorandum.

 

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

 

 (a)         The term “Company” shall include Debt Resolve, Inc., f/k/a Lombardia Acquisition Corp., and any corporation which shall succeed or assume the obligations of Debt Resolve, Inc. hereunder.

 

  

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 (b)         The term “Warrant Shares” includes (i) the Company’s common stock and (ii) any other securities into which or for which any of the Common Stock may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

 

 (c)         The term “Other Securities” refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities.

 

 (d)         The term “Exercise Price” shall be $0.40 per share, subject to adjustment pursuant to the terms hereof.

 

	
1.  

	
Number of Shares Issuable upon Exercise.

 

Unless sooner terminated in accordance herewith, from and after the date hereof through and including the Expiration Date, the Holder shall be entitled to receive, upon exercise of this Warrant in whole or in part, the number of Warrant Shares set forth on the first page of this Warrant, subject to adjustment pursuant hereto, by delivery of an original or fax copy of the exercise notice on the reverse side of the warrant certificate attached hereto as Annex A  (the “Notice of Exercise”) along with payment to the Company of the Exercise Price.

	
2.  

	
Exercise of Warrant.

 

 (a)         The purchase rights represented by this Warrant are exercisable by the registered Holder hereof, in whole at any time or in part from time to time by delivery of the Notice of Exercise duly completed and executed at the office of the Company in New York (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder hereof at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the shares thereby purchased (cash or by certified or official bank check payable to the order of the Company in an amount equal to the Exercise Price of the Warrant Shares thereby purchased); whereupon the Holder of this Warrant shall be entitled to receive a certificate for the number of Warrant Shares so purchased; provided that the Company will place on each certificate a legend substantially the same as that appearing on this Warrant, in addition to any legend required by any applicable state or federal law. If this Warrant is exercised in part, the Company will issue to the Holder hereof a new Warrant upon the same terms as this Warrant but for the balance of Warrant Shares for which this Warrant remains exercisable. The Company agrees that upon exercise of this Warrant the Holder shall be deemed to be the record owner of the Warrant Shares issued upon exercise as of the close of business on the date on which this Warrant shall have been exercised as aforesaid. This Warrant will be surrendered at the time of exercise or if lost, stolen, misplaced or destroyed, the Holder will comply with Section 7 below.

 

  

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 (b)         Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder hereof within a reasonable time after the date on which this Warrant shall have been exercised as aforesaid.

 

 (c)         The Company covenants that all Warrant Shares which may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant, be fully paid and nonassessable and free from all preemptive rights, taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue which shall be paid by the Company in accordance with Section 4 below).

	
3.  

	
No Fractional Shares.

The Company shall not be required to issue fractional Warrant Shares upon the exercise of this Warrant or to deliver Warrant Certificates which evidence fractional Warrant Shares. In the event that a fraction of a Warrant Share would, except for the provisions of this Section 3, be issuable upon the exercise of this Warrant, the Company shall pay to the Holder exercising the Warrant an amount in cash equal to such fraction multiplied by the Per Share Market Value of the Warrant Share.

 

For purposes of this Warrant, the Per Share Market Value shall be determined as follows: As used herein, “Per Share Market Value” means on any particular date the average closing price of the Common Stock for the ten trading days prior to the date of exercise of this Warrant (the “Average Closing Price”), as reported by the OTC Bulletin or in any over-the-counter market, provided, however, that if the Common Stock is listed on a stock exchange, the Market Price shall be the Average Closing Price on such exchange for the ten trading days prior to the date of exercise of the Warrants.  If the Common Stock is/was not traded during the ten trading days prior to the date of exercise, then the closing price for the last publicly traded day shall be deemed to be the closing price for any and all (if applicable) days during such ten trading day period.

	
4.  

	
Charges, Taxes and Expenses.

 

Issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge to the Holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder of this Warrant, or in such name or names as may be directed by the Holder of this Warrant; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder of this Warrant, the Company may require, as a condition thereto, that the transferee execute an appropriate investment representation as may be reasonably required by the Company.

 

  

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5.  

	
No Rights as Shareholders.

 

This Warrant does not entitle the Holder hereof to any voting rights or other rights as a Shareholder of the Company prior to the exercise hereof.

	
6.  

	
Exchange and Registry of Warrant.

 

 This Warrant is exchangeable, upon the surrender hereof by the registered Holder at the above-mentioned office or agency of the Company, for a new Warrant or Warrants aggregating the total Warrant Shares of the surrendered Warrant of like tenor and dated as of such exchange. The Company shall maintain at the above-mentioned office or agency a registry showing the name and address of the registered Holder of this Warrant. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at such office or agency of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

 

	
7.  

	
Loss, Theft, Destruction or Mutilation of Warrant.

 

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor (but with no additional rights or obligations) and dated as of such cancellation, in lieu of this Warrant.

	
8.  

	
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 be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

	
9.  

	
Cash Distributions.

 

No adjustment on account of cash dividends or interest on the Company’s Common Stock or Other Securities that may become purchasable hereunder will be made to the Exercise Price under this Warrant.

	
10.  

	
Consolidation, Merger or Sale of the Company.

If the Company is a party to a consolidation, merger or transfer of assets which reclassifies or changes its outstanding Common Stock, the successor corporation (or corporation controlling the successor corporation or the Company, as the case may be) shall by operation of law assume the Company’s obligations under this Warrant. Upon consummation of such transaction, the Warrants shall automatically become exercisable for the kind and amount of securities, cash or other assets which the holder of a Warrant would have owned immediately after the consolidation, merger or transfer if the holder had exercised the Warrant immediately before the effective date of such transaction. As a condition to the consummation of such transaction, the Company shall arrange for the person or entity obligated to issue securities or deliver cash or other assets upon exercise of the Warrant to, concurrently with the consummation of such transaction, assume the Company’s obligations hereunder by executing an instrument so providing and further providing for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Section 10.

 

  

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11.  

	
Adjustments for Stock Splits, Combinations, etc.

 

The number of shares and class of capital stock purchasable under this Warrant are subject to adjustment from time to time as set forth in this Section 11.

(a)          Adjustment for change in capital stock. If the Company:

(i)           pays a dividend or makes a distribution on its Common Stock, in each case, in shares of its Common Stock;

(ii)         subdivides its outstanding shares of Common Stock into a greater number of shares;

(iii)        combines its outstanding shares of Common Stock into a smaller number of shares;

(iv)        makes a distribution on its Common Stock in shares of its capital stock other than Common Stock; or

(v)         issues by reclassification of its shares of Common Stock any shares of its capital stock;

then the number and classes of shares purchasable upon exercise of each Warrant in effect immediately prior to such action shall be adjusted so that the holder of any Warrant thereafter exercised may receive the number and classes of shares of capital stock of the Company which such holder would have owned immediately following such action if such holder had exercised the Warrant immediately prior to such action.

For a dividend or distribution the adjustment shall become effective immediately after the record date for the dividend or distribution. For a subdivision, combination or reclassification, the adjustment shall become effective immediately after the effective date of the subdivision, combination or reclassification.

If after an adjustment the Holder, upon exercise of a Warrant, may receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company shall in good faith determine the allocation of the adjusted Exercise Price between or among the classes of capital stock. After such allocation, that portion of the Exercise Price applicable to each share of each such class of capital stock shall thereafter be subject to adjustment on terms comparable to those applicable to Common Stock in this Warrant. Notwithstanding the allocation of the Exercise Price between or among shares of capital stock as provided by this Section 11(a), a Warrant may only be exercised in full by payment of the entire Exercise Price currently in effect.

 

  

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 (b)        The Company will not, by amendment of 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 to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 11 and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holders of this Warrant against impairment.

	
12.  

	
Certificate as to Adjustments.

 

In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Exercise Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder of the Warrant and any Warrant agent of the Company (appointed pursuant to Section 16 hereof).

 

	
13.  

	
Reservation of Stock Issuable on Exercise of Warrant.

 

The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrant, shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant.

	
14.  

	
Assignment; Exchange of Warrant.

 

Subject to compliance with applicable securities laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered Holder hereof (a “Transferor”) with respect to any or all of the shares underlying this Warrant. On the surrender for exchange of this Warrant, together with evidence reasonably satisfactory to the Company demonstrating compliance with applicable securities laws, which shall include, without limitation, a legal opinion from the Transferor’s counsel that such transfer is exempt from the registration requirements of applicable securities laws, the Company at its expense (but with payment by the Transferor of any applicable transfer taxes) will issue and deliver to or on the order of the Transferor thereof a new Warrant of like tenor, in the name of the Transferor and/or the transferee(s) specified (each a “Transferee”), calling in the aggregate on the face or faces thereof for the number of Warrant Shares called for on the face or faces of the Warrant so surrendered by the Transferor; and provided further, that upon any such transfer, the Company may require, as a condition thereto, that the Transferee execute an appropriate investment representation as may be reasonably required by the Company.

 

  

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15.  

	
Registration Rights.

Not later than 90 calendar days following the final closing of the Offering, the Company shall file a registration statement (the “Registration Statement”) covering the public resale of the Warrant Shares, and the Company will cause such shares to be registered under the Act and continue to keep the Registration Statement effective for a period of two years.  For every day that the Company is late in filing the Registration Statement beyond 90 calendar days, it will issue to the holders of the Warrant Shares on a pro rata basis additional shares in whole share increments equal to 1% of the Warrant Shares held by such person or entity for up to a total of 90 calendar days.  Warrants will not be registered under the Registration Statement.  All fees, disbursements and out-of-pocket expenses and costs incurred by the Company in connection with the preparation and filing of the Registration Statement and in complying with applicable securities and “blue sky” laws (including, without limitation, all attorneys’ fees of the Company, registration, qualification, notification and filing fees, printing expenses, escrow fees, blue sky fees, expenses and the expense of any special audits incident to or required by any such registration and the reasonable expenses and fees of one counsel for the holders of the Warrant Shares not to exceed $25,000) shall be borne by the Company.  The holders of the Warrant Shares shall bear the cost of underwriting and/or brokerage discounts, fees and commissions, if any, applicable to the Warrant Shares being registered.  The Company shall not be required to qualify Warrant Shares in any state which will require an escrow or other restriction relating to the Company and/or the sellers, or which will require the Company to qualify to do business in such state or require the Company to file therein any general consent to service of process.  The Company at its expense will supply each holder of Warrant Shares with copies of the Registration Statement and the prospectus included therein and other related documents in such quantities as may be reasonably requested by such holder of Warrant Shares.

	
16.  

	
Warrant Agent.

 

The Company may, by written notice to each Holder of a Warrant, appoint an agent for the purpose of issuing Warrant Shares (or Other Securities) on the exercise of this Warrant pursuant to Section 2, exchanging this Warrant pursuant to Section 14, and replacing this Warrant pursuant to Section 7, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

 

  

7

  

	
17.  

	
Notices, etc.

 

Any notice pursuant to this Warrant by the Company or by a Holder or a holder of Warrant Shares shall be in writing and shall be deemed to have been duly given if delivered personally, or if mailed by certified mail, postage prepaid, or transmitted by facsimile, to the parties at the addresses or facsimile numbers set forth below.

17.1           Holder Address.  If to the Holder or the holder of Warrant Shares, addressed to him, her or it at the address set forth below such party’s signature on the Subscription Agreement, as it may be amended by the Holder or the holder of Warrant Shares from time to time by written notice to the Company.

17.2           Company Address.  If to the Company addressed to it at 150 White Plains Road, Suite 108, Tarrytown, New York, 10591, Attention: David M. Rainey, President, Facsimile No.:  (914) 428-3044.

 

All such notices and other communications will (i) if delivered personally to the address as provided in this Section 17, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section 17, be deemed given upon receipt, and (iii) if delivered by mail in the manner described above to the address as provided in this Section 17, be deemed given upon receipt (in each case regardless of whether such notice is received by any other person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section 17).  Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto.

	
18.  

	
Notices of Record Date.

 

In case,

(a)         The Company takes a record of the holders of its Common Stock for the purpose of entitling them to subscribe for or purchase any shares of stock of any class or to receive a dividend, distribution or any other rights;

 

 (b)        There is any capital reorganization of the Company, reclassification of the capital stock of the Company (other than a subdivision or combination of its outstanding shares of Common Stock), or consolidation or merger of the Company with or into another corporation which does not constitute a sale of the Company; or

 

 (c)        There is a voluntary or involuntary dissolution, liquidation or winding up of the Company;

 

then, and in any such case, the Company shall cause to be mailed to the Holder, at least 20 business days prior to the date hereinafter specified, a notice stating the date on which (i) a record is to be taken for the purpose of such dividend, distribution or rights, or (ii) such reclassification, reorganization, consolidation, merger, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, dissolution, liquidation or winding up.

 

  

8

  

	
19.  

	
Amendments and Supplements.

 

 (a)         The Company may from time to time supplement or amend this Warrant without the approval of any Holders in order to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provision, or to make any other provisions in regard to matters or questions herein arising hereunder which the Company may deem necessary or desirable and which shall not materially adversely affect the interest of the Holder. All other supplements or amendments to this Warrant must be signed by the party against whom such supplement or amendment is to be enforced.

 

 (b)         Notwithstanding Section 19(a), the Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

	
20.  

	
Call of Warrants by the Company.

 

Subject to the terms and conditions set forth herein, on any date during the period beginning on the first day after the ten Trading Day (as defined below) average closing price of the Company’s common stock exceeds $0.75 per share (the “Call Date”), but not sooner than 30 days after the Registration Statement is declared effective, and ending on the Expiration Date, the Company shall have the right to deliver written notices to the Holder (each, a “Call Notice” and the day a Call Notice is delivered, a “Delivery Date”), calling on the tenth Trading Day following the receipt of the Call Notice (“the Exercise Date”), any or all Warrants. The Company may not deliver a Call Notice unless and until all of the conditions set forth in this Section 20 have been satisfied by the Company or waived by the Holder.

 

As used herein, “Trading Day” means a day on which the shares of Common Stock are traded on the national securities exchange on which the shares of Common Stock are then listed or quoted, or (b) if the shares of Common Stock are not listed on a national securities exchange, a day on which the shares of Common Stock are quoted in the over-the-counter market, as reported by the National Quotation Bureau, Inc., or an equivalent generally accepted reporting service; provided, however , that in the event that the shares of Common Stock are not listed or quoted as set forth in (a) and (b) hereof, then Trading Day shall mean any calendar day that is not a Saturday, Sunday or federal holiday.

 (a)        Conditions Precedent to the Right of the Company to Deliver a Call Notice. The right of the Company to deliver a Call Notice is subject to the satisfaction by the Company or waiver by the Holder, at or before the applicable Delivery Date and the applicable Exercise Date, of each of the following conditions:

 

  

9

  

 

 (i)          Accuracy of the Company’s Representations and Warranties. Any material representations and warranties of the Company contained in this Warrant and in the Memorandum shall be true and correct as of the date when made, as of the applicable Delivery Date as though made on and as of the applicable Delivery Date and as of the applicable Exercise Date as though made on and as of the applicable Exercise Date;

 

 (ii)         Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all material covenants, agreements and conditions required by this Warrant and the Memorandum to be performed, satisfied or complied with by the Company at or prior to the applicable Delivery Date and the applicable Exercise Date;

 

 (iii)        No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Warrant and the Memorandum;

 

 (iv)        Trading Threshold. For the ten Trading Days immediately preceding the applicable Call Date, the average of the Per Share Market Value (as defined above) for such ten Trading Days shall be at least $0.75;

 

 (v)         Registration of Warrant Shares. On the applicable Call Date, the Warrant Shares must have been registered for the preceding 30 days and shall be registered on a registration statement covering the public sale of securities as further described in the Memorandum and such registration shall be effective through the Exercise Date; and

 

 (vi)        Notice. Notice of the Call Date shall be given to registered holders of Warrants in the manner provided in Section 17.

	
21.  

	
Investment Intent.

 

Holder represents and warrants to the Company that Holder is acquiring the Warrants for investment and with no present intention of distributing or reselling any of the Warrants.

	
22.  

	
Certificates to Bear Language.

The Warrants and the Warrant Shares issuable upon exercise thereof shall bear the following legend by which Holder shall be bound:

 “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.”

 

  

10

  

 

Certificates for Warrants or Warrant Shares without such legend shall be issued if such Warrants or Warrant Shares are sold pursuant to an effective registration statement under the Act, or if the Company has received an opinion from counsel reasonably satisfactory to counsel for the Company, that such legend is no longer required under the Act.

	
23.  

	
Miscellaneous.

 

 (a)        This Warrant shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. The Company and the Holder hereby submit to the exclusive jurisdiction of the Courts of the County of Orange, State of California for the resolution of all legal disputes arising under the terms of this Warrant. The Company and the Holder agree to waive trial by jury.

 

 (b)        If any action or proceeding is brought by the Company on the one hand or by the Holder on the other hand to enforce or continue any provision of this Warrant, the prevailing party’s costs and expenses, including its reasonable attorney’s fees, in connection with such action or proceeding shall be paid by the other party.

 

 (c)        In the event that any provision of this Warrant is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Warrant.

 

 (d)        The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof.

 

 

[SIGNATURE PAGE FOLLOWS.]

 

  

11

  

 

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

 

 

	 	DEBT RESOLVE, INC.,	 
	 	a Delaware corporation	 
	 	 	 
	 	 	 
	 	 	 
	
 

	 	 
	 	By:	David M. Rainey	 
	 	ITS:	President	 
	 	 	 	 
	 	 	 	 
	 	HOLDER	 
	 	 	 	 
	 	[	       ]	 
	 	 	 	 
	 	Acknowledgment contained in the Omnibus Signature Page in the Subscription Agreement	 

  

12

  

 

ANNEX A

 

	NUMBER	WARRANT
	 	Warrant to Purchase
	 	[INSERT NUMBER]
	 	Shares
	 	of Common Stock

 

	 	DEBT RESOLVE, INC.	see reverse for
	 	COMMON STOCK PURCHASE WARRANT	certain definitions
	Will be void if not exercised prior to 5:00 P.M. (Delaware time) on [INSERT TWO YEAR ANNIVERSARY DATE]

 

This Certifies that

for Value Received,________________________________________, the registered holder or assigns (“Holder”),

	

is entitled to purchase from Debt Resolve, a Delaware corporation (the “Company”) at any time after 9:00 A.M. (Eastern time) on [INSERT CURRENT DATE] at the purchase price per share of $0.40 (the “Warrant Price”), the number of shares of Common Stock of the Company set forth above (the “Shares”).  The number of shares purchasable upon exercise of each warrant evidenced hereby and the Warrant Price per Share shall be subject to adjustment from time to time as set forth in the Warrant Agreement executed by the Company and the holder hereof (the “Warrant Agreement”).  The Warrants expire at 5:00 P.M. (Eastern time) on the two-year anniversary of the date hereof (the “Expiration Date”).  Holders will not have any rights or privileges of shareholders of the Company prior to exercise of the Warrants except as set forth in the Warrant Agreement.  Holders of the Warrants evidenced hereby and the shares of Common Stock issuable upon exercise hereof have certain rights with respect to registration with the Securities and Exchange Commission of the Common Stock issuable upon exercise hereof.  These registration rights are set forth in that the Warrant Agreement.  Subject to the provisions of the Warrant Agreement, any or all of the Warrants evidenced hereby may be called at the option of the Company, on the tenth Trading Day (as defined in the Warrant Agreement) after the Company has delivered a written call notice to the Holder.  The Company may deliver such a call notice only during the period beginning on the first day after the ten Trading owner hereof for all purposes and as the person entitled to exercise the rights represented hereby, any notice to the contrary notwithstanding,

	 	
Day average closing price of the Company’s common stock exceeds $0.75 per share, but not sooner than 30 days after a registration statement covering the public sale of the Shares is declared effective, and ending on the Expiration Date.  The Warrants evidenced hereby may be exercised in whole or in part by presentation of this Warrant certificate with the Purchase Form on the revise side hereof fully executed and simultaneous payment of the Warrant Price (subject to adjustment) at the principal office of the Company.  Payment of such price shall be made at the option of the Holder in cash or by certified check or bank draft.  Upon any partial exercise of the Warrant evidenced hereby, there shall be countersigned and issued to the Holder a new Warrant Certificate in respect of the Shares as to which the Warrants evidenced hereby shall not have been exercised.  This Warrant Certificate may be exchanged at the office of the Company by surrender of this Warrant Certificate properly endorsed with a signature guarantee either separately or in combination with one or more other Warrants for one or more new Warrants to purchase the same aggregate number of Shares as evidenced by the Warrant or Warrants exchanged.  No fractional Shares will be issued upon the exercise of rights to purchase hereunder, but the Company shall pay the cash value of any fraction upon the exercise of one or more Warrants.  The Holder hereof may be treated by the Company and all other persons dealing with this Warrant Certificate as the absolute and until such transfer is on such books, the Company may treat the Holder as the owner for all purposes

	 	 	 
	Dated: _________, 2009	 	DEBT RESOLVE, INC.
	 	 	 
	Secretary	 	President
	SEE LEGEND ON REVERSE

 

  

13

  

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECAED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSE, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.

 

ELECTION TO PURCHASE

The undersigned hereby elects irrevocably to exercise the within Warrant and to purchase_________shares of Common Stock of Debt Resolve, Inc. and hereby makes payment of $_______(at the rate of $____________ per share) in payment of the Exercise Price pursuant hereto.  Please issue the shares as to which this Warrant is exercised in accordance with the instructions given below.

The undersigned represents and warrants that the exercise of the within Warrant was solicited by the member firm of the Financial Industry Regulatory Authority (“FINRA”) listed below.  If not solicited by a FINRA member, please write “unsolicited” in the space below.

 

 

	
 

	
 

	 
	 	(Insert Name of FINRA Member of “Unsolicited”)	 
	 	 	 	 

Dated:_______, 20___

 

	
 

	
Signature: 

	 	 

 

 

INSTRUCTIONS FOR REGISTRATION OF SHARES

Name (print)____________________________________

 

Address (print)______________________________________

 

ASSIGNMENT

 

FOR VALUE RECEIVED,________________________does hereby sell, assign and transfer unto___________________________, the right to purchase_________________ shares of Common Stock of Debt Resolve, Inc., evidenced by the within Warrant, and does hereby irrevocably constitute and appoint_____________________attorney to transfer such right on the books of Debt Resolve, Inc., with full power of substitution on the premises.

Dated:________, 20___

 

	
 

	
Signature: 

	 	 

 

Notice: The signature of Election of Purchase or Assignment must correspond with the name as written upon the face of the within Warrant in every particular wit.

 

 

14

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