WARP 9, INC.
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") made as of April
6, 2011 between WARP 9, INC., a Nevada corporation (the "Company"), and WINGS
FUND, INC. (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company desires to issue and sell to the Purchaser, and
the Purchaser desires to purchase from the Company, units (the "Units") of the
Company's securities (the number and purchase date of which is set forth on the
signature page hereof), each Unit consisting of one (1) share of common stock
(the "Shares"), par value $0.001 per share, of the Company (the "Common Stock")
and a five-year warrant to purchase ONE (1) share of Common Stock, substantially
in the form attached hereto as Exhibit A, upon the terms and conditions
hereinafter set forth. Each warrant included in the Units shall be issuable
after the Company implements its planned one-for-five reverse stock split which
split will not change the number of authorized shares of the Company's common
and preferred stock (i.e. the number of authorized shares of the Company's
common and preferred stock will remain 500,000,000 shares, comprised of
495,000,000 shares of common stock and 5,000,000 shares of preferred stock)
(referred to as the "Split Effective Date," as defined in Section 4.1(a) of this
Agreement) and shall be exercisable to purchase ONE (1) share of Common Stock at
$0.0006 per share on a pre reverse stock-split basis (i.e. $0.003 per share on a
post reverse stock-split basis) (the "Warrants" and together with the Shares,
the "Securities").
WHEREAS, the Company and the Purchaser are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Section 4(2) of the Securities Act of 1933, as
amended (the "Securities Act"), as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act.
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants hereinafter set forth, the parties hereto do
hereby agree as follows:
I. PURCHASE OF UNITS AND REPRESENTATIONS BY PURCHASER
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The Purchaser hereby irrevocably agrees to purchase from the Company
such number of Units, and the Company agrees to sell to the Purchaser such
number of Units, as is set forth on the signature page hereof, at a price equal
to $0.0006 per Unit calculated prior to the Split Effective Date. The purchase
price is payable by wire transfer of immediately available funds to:
WIRE INSTRUCTIONS:
Routing Transit Number: _____________
Bank Name: Bank of America.
[Street Address]
[City, State Zip]
Account Number: ______________
Account Name: Warp 9, Inc.
1.1 The Purchaser recognizes that the purchase of the Securities
involves a high degree of risk including, but not limited to, the following: (a)
the Company remains a development stage business with limited operating history
and requires substantial funds in addition to the proceeds from this purchase;
(b) an investment in the Company is highly speculative, and only investors who
can afford the loss of their entire investment should consider investing in the
Company and the Securities; (c) the Purchaser may not be able to liquidate its
investment; (d) transferability of the Securities is extremely limited; (e) in
the event of a disposition, the Purchaser could sustain the loss of its entire
investment; (f) the Company has not paid any dividends on its Common Stock since
its inception and does not anticipate paying any dividends in the foreseeable
future; and (g) the Company may issue additional securities in the future which
have rights and preferences that are senior to those of the Shares being
subscribed to hereunder.
1.2 The Purchaser represents that the Purchaser is an "accredited
investor" as such term is defined in Rule 501 of Regulation D ("Regulation D")
promulgated under the Securities Act, as indicated by the Purchaser's responses
to the questions contained in Article VII hereof, and that the Purchaser is able
to bear the economic risk of an investment in the Units.
1.3 The Purchaser hereby acknowledges and represents that (a) the
Purchaser has knowledge and experience in business and financial matters, prior
investment experience, including investment in securities that are non-listed,
unregistered and/or not traded on a national securities exchange nor on NASDAQ,
or the Purchaser has employed the services of a "purchaser representative" (as
defined in Rule 501 of Regulation D), attorney and/or accountant to read all of
the documents furnished or made available by the Company both to the Purchaser
and to all other prospective investors in the Securities to evaluate the merits
and risks of such an investment on the Purchaser's behalf; (b) the Purchaser
recognizes the highly speculative nature of this investment; and (c) the
Purchaser is able to bear the economic risk that the Purchaser hereby assumes.
1.4 The Purchaser hereby acknowledges receipt and careful review of
this Agreement, the Company's filings with the SEC (the "Company Filings"), and
any documents which may have been made available upon request as reflected
therein (collectively referred to as the "Offering Materials") and hereby
represents that the Purchaser has been furnished by the Company during the
course of the purchase with all information regarding the Company, the terms and
conditions of the purchase and any additional information that the Purchaser has
requested or desired to know, and has been afforded the opportunity to ask
questions of and receive answers from duly authorized officers or other
representatives of the Company concerning the Company and the terms and
conditions of the purchase.
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1.5 (a) In making the decision to invest in the Securities, the
Purchaser has relied solely upon the information provided by the Company in the
Offering Materials. To the extent necessary, the Purchaser has retained, at its
own expense, and relied upon appropriate professional advice regarding the
investment, tax and legal merits and consequences of this Agreement and the
purchase of the Units hereunder. The Purchaser disclaims reliance on any
statements made or information provided by any person or entity in the course of
Purchaser's consideration of an investment in the Units other than the Offering
Materials.
(b) The Purchaser represents that (i) the Purchaser was
contacted regarding the sale of the Securities by the Company (or an authorized
agent or representative thereof) with whom the Purchaser had a prior substantial
pre-existing relationship and (ii) no Securities were offered or sold to it by
means of any form of general solicitation or general advertising, and in
connection therewith, the Purchaser did not (A) receive or review any
advertisement, article, notice or other communication published in a newspaper
or magazine or similar media or broadcast over television or radio, whether
closed circuit, or generally available; or (B) attend any seminar meeting or
industry investor conference whose attendees were invited by any general
solicitation or general advertising.
1.6 The Purchaser hereby represents that the Purchaser, either by
reason of the Purchaser's business or financial experience or the business or
financial experience of the Purchaser's professional advisors (who are
unaffiliated with and not compensated by the Company or any affiliate or selling
agent of the Company, directly or indirectly), has the capacity to protect the
Purchaser's own interests in connection with the transaction contemplated
hereby.
1.7 The Purchaser hereby acknowledges that this Agreement has not been
reviewed by the SEC nor any state regulatory authority since the purchase is
intended to be exempt from the registration requirements of Section 5 of the
Securities Act, pursuant to Regulation D. The Purchaser understands that the
Units have not been registered under the Securities Act or under any state
securities or "blue sky" laws and agrees not to sell, pledge, assign or
otherwise transfer or dispose of the Securities unless they are registered under
the Securities Act and under any applicable state securities or "blue sky" laws
or unless an exemption from such registration is available.
1.8 The Purchaser understands that the Securities have not been
registered under the Securities Act by reason of a claimed exemption under the
provisions of the Securities Act that depends, in part, upon the Purchaser's
investment intention. In this connection, the Purchaser hereby represents that
the Purchaser is purchasing the Units for the Purchaser's own account for
investment and not with a view toward the resale or distribution to others. The
Purchaser, if an entity, further represents that it was not formed for the
purpose of purchasing the Units.
1.9 The Purchaser consents to the placement of a legend on any
certificate or other document evidencing the Securities that such Securities
have not been registered under the Securities Act or any state securities or
"blue sky" laws and setting forth or referring to the restrictions on
transferability and sale thereof contained in this Agreement. The Purchaser is
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aware that the Company will make a notation in its appropriate records with
respect to the restrictions on the transferability of such Securities. The
legend to be placed on each certificate shall be in form substantially similar
to the following:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER SAID ACT OR (II) AN OPINION OF COMPANY COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED."
1.10 The Purchaser understands that the Company will review this
Agreement and is hereby given authority by the Purchaser to call Purchaser's
bank or place of employment or otherwise review the financial standing of the
Purchaser; and it is further agreed that the Company, at its sole discretion,
reserves the unrestricted right, without further documentation or agreement on
the part of the Purchaser, to reject or limit any purchase, to accept purchases
for fractional Units and to withdraw the offer to the Purchaser at any time and
that the Company will issue stop transfer instructions to its transfer agent
with respect to the Shares.
1.11 The Purchaser hereby represents that the address of the Purchaser
furnished by Purchaser on the signature page hereof is the Purchaser's principal
residence if Purchaser is an individual or its principal business address if it
is a corporation or other entity.
1.12 The Purchaser represents that the Purchaser has full power and
authority (corporate, statutory and otherwise) to execute and deliver this
Agreement and to purchase the Units. This Agreement constitutes the legal, valid
and binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms.
1.13 If the Purchaser is a corporation, partnership, limited liability
company, trust, employee benefit plan, individual retirement account, Keogh
Plan, or other tax-exempt entity, it is authorized and qualified to invest in
the Company and the person signing this Agreement on behalf of such entity has
been duly authorized by such entity to do so.
1.14 The Purchaser acknowledges that if he or she is a Registered
Representative of an FINRA member firm, he or she must give such firm the notice
required by the FINRA's Rules of Fair Practice, receipt of which must be
acknowledged by such firm in Section 7.4 below.
1.15 The Purchaser acknowledges that at such time, if ever, as the
Shares and the Common Stock underlying the Warrants are registered pursuant to
the Securities Act, sales of the Securities will be subject to state securities
laws.
1.16 The Purchaser and the Company agree not to issue any public
statement with respect to the Purchaser's investment or proposed investment in
the Company or the terms of any agreement or covenant between them and the
Company without the other party's prior written consent, except such disclosures
as may be required under applicable law or under any applicable order, rule or
regulation. The Company agrees not to disclose the Purchaser by name in any of
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the Company's filings with the Securities and Exchange Commission, except such
disclosures as may be required under applicable law or under any applicable
order, rule or regulation.
1.17 The Purchaser agrees to hold the Company and its directors,
officers, employees, affiliates, controlling persons and agents and their
respective heirs, representatives, successors and assigns harmless and to
indemnify them against all liabilities, costs and expenses incurred by them as a
result of (a) any sale or distribution of the Securities by the Purchaser in
violation of the Securities Act or any applicable state securities or "blue sky"
laws; or (b) any false representation or warranty or any breach or failure by
the Purchaser to comply with any covenant made by the Purchaser in this
Agreement (including the Confidential Investor Questionnaire contained in
Article VII herein) or any other document furnished by the Purchaser to any of
the foregoing in connection with this transaction.
II. REPRESENTATIONS BY AND COVENANTS OF THE COMPANY
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The Company hereby represents and warrants to the Purchaser that:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and has full corporate power and authority to conduct its
business.
2.2 CAPITALIZATION AND VOTING RIGHTS. The authorized capital stock of
the Company consists of 495,000,000 shares of Common Stock of which 340,579,815
shares are issued and outstanding and 19,325,000 shares of Common Stock which
are reserved for issuance under the Company's stock option plan. The shares of
issued and outstanding capital stock of the Company have been duly authorized,
validly issued, fully paid and are nonassessable. Except as described in the
Offering Materials and Company Filings, there are no outstanding options,
warrants, agreements, convertible securities, preemptive rights or other rights
to subscribe for or to purchase any shares of capital stock of the Company.
Except as otherwise required by law, there are no restrictions upon the voting
or transfer of any of the shares of capital stock of the Company pursuant to the
Company's Articles of Incorporation (the "Articles of Incorporation"), Bylaws or
other governing documents or any agreement or other instruments to which the
Company is a party or by which the Company is bound.
2.3 AUTHORIZATION; ENFORCEABILITY. The Company has all corporate right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. All corporate action on the part of the
Company, its directors and stockholders necessary for the (a) authorization
execution, delivery and performance of this Agreement by the Company; and (b)
authorization, sale, issuance and delivery of the Units contemplated hereby and
the performance of the Company's obligations hereunder has been taken. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy. The Securities, when issued and fully paid
for in accordance with the terms of this Agreement, will be validly issued,
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fully paid and nonassessable. The issuance and sale of the Shares contemplated
hereby will not give rise to any preemptive rights or rights of first refusal on
behalf of any person which have not been waived in connection with this
offering.
2.4 NO CONFLICT; GOVERNMENTAL CONSENTS.
(a) The execution and delivery by the Company of this
Agreement and the consummation of the transactions contemplated hereby will not
result in the violation of any material law, statute, rule, regulation, order,
writ, injunction, judgment or decree of any court or governmental authority to
or by which the Company is bound, or of any provision of the Articles of
Incorporation or Bylaws of the Company, and will not conflict with, or result in
a material breach or violation of, any of the terms or provisions of, or
constitute (with due notice or lapse of time or both) a default under, any
lease, loan agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which the Company is a party or by which it is bound
or to which any of its properties or assets is subject, nor result in the
creation or imposition of any lien upon any of the properties or assets of the
Company.
(b) No consent, approval, authorization or other order of any
governmental authority is required to be obtained by the Company in connection
with the authorization, execution and delivery of this Agreement or with the
authorization, issue and sale of the Securities, except such filings as may be
required to be made with the SEC, FINRA, NASDAQ and with any state or foreign
blue sky or securities regulatory authority.
2.5 LICENSES. Except as disclosed in the Company Filings, , the Company
has sufficient licenses, permits and other governmental authorizations currently
required for the conduct of its business or ownership of properties and is in
all material respects in compliance therewith.
2.6 LITIGATION. The Company knows of no pending or threatened legal or
governmental proceedings against the Company which could materially adversely
affect the business, property, financial condition or operations of the Company
or which materially and adversely questions the validity of this Agreement or
any agreements related to the transactions contemplated hereby or the right of
the Company to enter into any of such agreements, or to consummate the
transactions contemplated hereby or thereby. The Company is not a party or
subject to the provisions of any order, writ, injunction, judgment or decree of
any court or government agency or instrumentality which could materially
adversely affect the business, property, financial condition or operations of
the Company. There is no action, suit, proceeding or investigation by the
Company currently pending in any court or before any arbitrator or that the
Company intends to initiate.
2.7 DISCLOSURE. The information set forth in the Offering Materials as
of the date hereof contains no untrue statement of a material fact nor omits to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
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2.8 INVESTMENT COMPANY. The Company is not an "investment company"
within the meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the SEC thereunder.
2.9 BROKERS. Neither the Company nor any of the Company's officers,
directors, employees or stockholders has employed or engaged any broker or
finder in connection with the transactions contemplated by this Agreement and no
fee or other compensation is or will be due and owing to any broker, finder,
underwriter, placement agent or similar person in connection with the
transactions contemplated by this Agreement. The Company is not party to any
agreement, arrangement or understanding whereby any person has an exclusive
right to raise funds and/or place or purchase any debt or equity securities for
or on behalf of the Company.
III. TERMS OF PURCHASE
----------------------
3.1 All funds paid hereunder shall be deposited with the Company in the
account identified in Section 1.1 hereof.
3.2 Certificates representing the Shares purchased by the Purchaser
pursuant to this Agreement will be prepared for delivery to the Purchaser within
15 business days following the closing of the purchase of Shares. The Purchaser
hereby authorizes and directs the Company to deliver the certificates
representing the Shares purchased by the Purchaser pursuant to this Agreement
directly to the Purchaser's residential or business address indicated on the
signature page hereto.
3.3 The Company will deliver all Warrants due to the Purchaser within
15 business days following the date on which the Company's planned one-for-five
reverse stock-split of its common stock is effected.
IV. CONDITIONS TO OBLIGATIONS OF THE PURCHASERS
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4.1 The Purchaser's obligation to purchase the Units at the closing at
which such purchase is to be consummated is subject to the fulfillment on or
prior to such closing of the following conditions, which conditions may be
waived at the option of each Purchaser to the extent permitted by law:
(a) Stock-Split. Prior to the closing, the Company will have
prepared all necessary paperwork to effect a one-for-five reverse stock-split of
the Company's common stock which split will not change the number of authorized
shares of the Company's common and preferred stock (i.e. the number of
authorized shares of the Company's common and preferred stock will remain
500,000,000 shares), and the Company will record the one-for-five reverse stock
split of the Company's common stock with the Nevada Secretary of State upon
satisfaction by the Company of all applicable filing and notification
requirements of the United States Securities and Exchange Commission (the "Split
Effective Date).
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(b) COVENANTS. All covenants, agreements and conditions
contained in this Agreement to be performed by the Company on or prior to the
date of such closing shall have been performed or complied with in all material
respects.
(c) NO LEGAL ORDER PENDING. There shall not then be in effect
any legal or other order enjoining or restraining the transactions contemplated
by this Agreement.
(d) NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall
not be in effect any law, rule or regulation prohibiting or restricting such
sale or requiring any consent or approval of any person, which shall not have
been obtained, to issue the Securities (except as otherwise provided in this
Agreement).
V. REGISTRATION RIGHTS
----------------------
If at any time after the date of this Agreement, the Company shall
decide to prepare and file with the SEC a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with the stock
option or other employee benefit plans, then the Company shall send to the
Purchaser a written notice of such determination and, if within fifteen days
after the date of such notice, the Purchaser shall so request in writing, the
Company shall include in such registration statement, all or any part of the
Shares and the Common Stock underlying the Warrants that the Purchaser request
to be registered; provided, however, that, the Company shall not be required to
register any shares of Common Stock that are eligible for resale pursuant to
Rule 144 promulgated under the Securities Act or that are the subject of a then
effective registration statement; provided, further, however, if the
registration so proposed by the Company involves an underwritten offering of the
securities so being registered for the account of the Company, to be distributed
by or through one or more underwriters of recognized standing, and the managing
underwriter of such underwritten offering shall advise the Company in writing
that, in its opinion, the distribution of all or a specified portion of the
Securities which the Purchaser has requested the Company to register and
otherwise concurrently with the securities being distributed by such
underwriters will materially and adversely affect the distribution of such
securities by such underwriters (such opinion to state the reasons therefor),
then the Company will promptly furnish the Purchaser with a copy of such
opinion, and by providing such written notice to the Purchaser, such Purchaser
may be denied the registration of all or a specified portion of such Securities
(in case of such a denial as to a portion of such shares of Common Stock);
provided, however, shares to be registered by the Company for issuance by the
Company shall have first priority, the Purchaser hereunder shall have second
priority, and any other shares being registered on account of other third
parties shall have third priority.
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VI. MISCELLANEOUS
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6.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, or delivered by hand against written receipt therefor,
addressed as follows:
If to the Company, to it at:
Warp 9, Inc.
6500 Hollister Ave., Suite 120
Goleta, CA 93117
Attn: William E. Beifuss, CEO
With a copy to (which shall not constitute notice):
Richardson & Associates
1453 Third Street #315
Santa Monica, CA 90401
Attn: Mark J. Richardson, Esq.
If to the Purchaser, to the Purchaser's address indicated on
the signature page of this Agreement.
Notices shall be deemed to have been given or delivered on the date of mailing,
except notices of change of address, which shall be deemed to have been given or
delivered when received.
6.2 Except as otherwise provided herein, this Agreement shall not be
changed, modified or amended except by a writing signed by the parties to be
charged, and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.
6.3 Subject to the provisions of Section 6.1, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and to their
respective heirs, legal representatives, successors and assigns. This Agreement
sets forth the entire agreement and understanding between the parties as to the
subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
6.4 Upon the execution and delivery of this Agreement by the Purchaser,
this Agreement shall become a binding obligation of the Purchaser with respect
to the purchase of Units as herein provided, subject, however, to the right
hereby reserved by the Company to enter into the same agreements with other
Purchasers and to add and/or delete other persons as Purchasers.
6.5 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY
ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND
PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF CALIFORNIA WITHOUT REGARD TO SUCH STATE'S PRINCIPLES OF
CONFLICTS OF LAW. IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE
FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE
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COURTS STATE OF CALIFORNIA IN AND FOR THE COUNTY OF LOS ANGELES OR THE FEDERAL
COURTS FOR SUCH STATE AND COUNTY, AND ALL RELATED APPELLATE COURTS, THE PARTIES
HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID
VENUE.
6.6 In order to discourage frivolous claims the parties agree that
unless a claimant in any proceeding arising out of this Agreement succeeds in
establishing his claim and recovering a judgment against another party
(regardless of whether such claimant succeeds against one of the other parties
to the action), then the other party shall be entitled to recover from such
claimant all of its/their reasonable legal costs and expenses relating to such
proceeding and/or incurred in preparation therefor.
6.7 The holding of any provision of this Agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect and enforceable to the extent they are valid, legal and
enforceable, and no provisions shall be deemed dependent upon any other covenant
or provision unless so expressed herein.
6.8 It is agreed that a waiver by either party of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.
6.9 The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
6.10 This Agreement may be executed in two or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
6.11 Nothing in this Agreement shall create or be deemed to create any
rights in any person or entity not a party to this Agreement.
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VII. CONFIDENTIAL INVESTOR QUESTIONNAIRE
----------------------------------------
7.1 The Purchaser represents and warrants that he, she or it comes
within one category marked below, and that for any category marked, he, she or
it has truthfully set forth, where applicable, the factual basis or reason the
Purchaser comes within that category. ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to furnish
any additional information which the Company deems necessary in order to verify
the answers set forth below.
Category A ____ The undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth, or
joint net worth with his or her spouse, presently
exceeds $1,000,000, exclusive of the value of his or
her primary residence.
Category B ____ The undersigned is an individual (not a partnership,
corporation, etc.) who had an income in excess of
$200,000 in each of the two most recent years, or
joint income with his or her spouse in excess of
$300,000 in each of those years (in each case
including foreign income, tax exempt income and full
amount of capital gains and losses but excluding any
income of other family members and any unrealized
capital appreciation) and has a reasonable
expectation of reaching the same income level in the
current year.
Category C ____ The undersigned is a director or executive officer of
the Company which is issuing and selling the Units.
Category D ____ The undersigned is a bank; a savings and loan
association; insurance company; registered investment
company; registered business development company;
licensed small business investment company ("SBIC");
or employee benefit plan within the meaning of Title
1 of ERISA and (a) the investment decision is made by
a plan fiduciary which is either a bank, savings and
loan association, insurance company or registered
investment advisor, or (b) the plan has total assets
in excess of $5,000,000 or (c) is a self directed
plan with investment decisions made solely by persons
that are accredited investors. (describe entity)
_____________________________________________________
_____________________________________________________
Category E ____ The undersigned is a private business development
company as defined in section 202(a)(22) of the
Investment Advisors Act of 1940. (describe entity)
_____________________________________________________
_____________________________________________________
Category F ____ The undersigned is a corporation, partnership,
Massachusetts business trust, or non-profit
organization within the meaning of Section 501(c)(3)
of the Internal Revenue Code, in each case not formed
for the specific purpose of acquiring the Shares and
with total assets in excess of $5,000,000. (describe
entity)
_____________________________________________________
_____________________________________________________
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Category G ____ The undersigned is a trust with total assets in
excess of $5,000,000, not formed for the specific
purpose of acquiring the Units, where the purchase is
directed by a "sophisticated investor" as defined in
Regulation 506(b)(2)(ii) under the Act.
Category H _X_ The undersigned is an entity (other than a trust) in
which all of the equity owners are "accredited
investors" within one or more of the above
categories. If relying upon this Category alone, each
equity owner must complete a separate copy of this
Agreement. (describe entity)
CORPORATION
_____________________________________________________
Category I ____ The undersigned is not within any of the categories
above and is therefore not an accredited investor.
The undersigned agrees that the undersigned will
notify the Company at any time on or prior to the
closing in the event that the representations and
warranties in this Agreement shall cease to be true,
accurate and complete.
7.2 SUITABILITY (please answer each question)
(a) For an individual Purchaser, please describe your current
employment, including the company by which you are employed and its principal
business:
_______________________________________________________________________
_______________________________________________________________________
(b) For an individual Purchaser, please describe any college or
graduate degrees held by you:
_______________________________________________________________________
_______________________________________________________________________
(c) For all Purchasers, please list types of prior investments:
STOCKS, OPTIONS, PRIVATE PLACEMENTS, MUTUAL FUNDS, PENNY STOCKS
_______________________________________________________________________
_______________________________________________________________________
(d) For all Purchasers, please state whether you have participated in
other PRIVATE PLACEMENTS before:
YES___X____ NO_______
-12-
(e) If your answer to question (d) above was "YES", please indicate
frequency of such prior participation in PRIVATE PLACEMENTS of:
PUBLIC OR PRIVATE COMPANIES
PUBLIC PRIVATE WITH NO, OR INSIGNIFICANT,
COMPANIES COMPANIES ASSETS AND OPERATIONS
---------------- ----------------- ---------------------------
Frequently X X X
---------------- ----------------- ---------------------------
Occasionally
---------------- ----------------- ---------------------------
Never
---------------- ----------------- ---------------------------
(f) For individual Purchasers, do you expect your current level of
income to significantly decrease in the foreseeable future:
YES_______ NO_______
(g) For trust, corporate, partnership and other institutional
Purchasers, do you expect your total assets to significantly decrease in the
foreseeable future:
YES_______ NO___X____
(h) For all Purchasers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need sudden cash
requirements in excess of cash readily available to you:
YES_______ NO___X____
(i) For all Purchasers, are you familiar with the risk aspects and the
non-liquidity of investments such as the securities for which you seek to
subscribe?
YES____X___ NO_______
(j) For all Purchasers, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing your
entire investment?
YES____X___ NO_______
7.3 MANNER IN WHICH TITLE IS TO BE HELD. (circle one)
(a) Individual Ownership
(b) Community Property
(c) Joint Tenant with Right of
Survivorship (both parties must sign)
(d) Partnership*
(e) Tenants in Common
(f) COMPANY*
--------
(g) Trust*
(h) Other*
*If Securities are being subscribed for by an entity, the attached
Certificate of Signatory must also be completed.
-13-
7.4 FINRA AFFILIATION.
Are you affiliated or associated with a FINRA member firm (please check one):
YES_______ NO___X____
If Yes, please describe:
________________________________________________________________________________
________________________________________________________________________________
*If Purchaser is a Registered Representative with a FINRA member firm, have the
following acknowledgment signed by the appropriate party:
The undersigned FINRA member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.
__________________________________
Name of FINRA Member Firm
By: ______________________________
Authorized Officer
Date: ____________________________
7.5 The undersigned is informed of the significance to the Company of
the foregoing representations and answers contained in the Confidential Investor
Questionnaire contained in this Article VI and such answers have been provided
under the assumption that the Company will rely on them.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-14-
140,095,815 UNITS X $0.0006/UNIT = $84,057.11 (THE "PURCHASE PRICE"),
REPRESENTING A TOTAL OF 140,095,815 PRE-SPLIT SHARES OF COMMON STOCK (28,019,037
POST-SPLIT SHARES) AND 140,095,815 PRE-SPLIT WARRANT SHARES (28,019,037
POST-SPLIT WARRANT SHARES)
Signature Signature (if purchasing jointly)
JAMES L. BARTLETT
------------------------------------ -----------------------------------
Name Typed or Printed Name Typed or Printed
CFO
------------------------------------ -----------------------------------
Title (if Purchaser is an Entity) Title (if Purchaser is an Entity)
WINGS FUND, INC.
------------------------------------ -----------------------------------
Entity Name (if applicable) Entity Name (if applicable
5662 CALLE REAL #115
------------------------------------ -----------------------------------
Address Address
SANTA BARBARA, CA 93117
------------------------------------ -----------------------------------
City, State and Zip Code City, State and Zip Code
(805) 964-4633
------------------------------------ -----------------------------------
Telephone-Business Telephone-Business
------------------------------------ -----------------------------------
Telephone-Residence Telephone-Residence
(805) 830-6340
------------------------------------ -----------------------------------
Facsimile-Business Facsimile-Business
------------------------------------ -----------------------------------
Facsimile-Residence Facsimile-Residence
88-0268879
------------------------------------ -----------------------------------
Tax ID # or Social Security # Tax ID # or Social Security #
Name in which securities should
be issued: WINGS FUND, INC.
-----------------------------------
Dated: APRIL 6, 2011
-------------------------------------
This Stock Purchase Agreement is agreed to and accepted as of
_______________, 2011.
Warp 9, Inc.
By:_______________________________
Name: William E. Beifuss, Jr.
Title: Chief Executive Officer
-15-
CERTIFICATE OF SIGNATORY
(To be completed if Units are
being subscribed for by an entity)
I, JAMES L. BARTLETT, am the CFO of WINGS FUND, INC. (the "Entity").
----------------- --- ----------------
I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement and to purchase and hold the
Securities, and certify further that the Subscription Agreement has been duly
and validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this 6TH day of APRIL 2011
---- ----------
------------------------------------
(Signature)
-16-
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC") OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AND, UNLESS SOLD PURSUANT TO RULE 144 UNDER
SAID ACT, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR AND
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE FORM AND SUBSTANCE OF
WHICH SHALL BE REASONABLY SATISFACTORY TO THE COMPANY. THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER BONA FIDE LOAN WITH A FINANCIAL INSTITUTION THAT IS AN
"ACCREDITED INVESTOR"AS DEFINED IN RULE 501(A) UNDER THE SECURITIES ACT.
WARP 9, INC.
COMMON STOCK PURCHASE WARRANT
Warrant Number: 001 Issuance Date: ___________, 2011
---
THIS COMMON STOCK PURCHASE WARRANT (the "WARRANT") certifies that, for
value received, WINGS FUND, INC. (the "HOLDER") is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after ___________, 2011 (the "ISSUANCE DATE") and on or prior
to the close of business on the five (5) year anniversary of the Issuance Date
but not thereafter (the "TERMINATION Date"), to subscribe for and purchase from
Warp 9, Inc., a Nevada corporation (the "COMPANY"), up to 28,019,037 shares of
Common Stock, subject to adjustment hereunder (the "WARRANT SHARES"). The
purchase price of one share of Common Stock under this Warrant shall be equal to
$0.003, subject to adjustment hereunder (the "Exercise Price").
SECTION 1. EXERCISE OF WARRANT.
-------- --------------------
(a) EXERCISE OF WARRANT. Exercise of the purchase rights represented by
this Warrant may be made, in whole or in part, at any time or times on or after
the Issuance Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within three (3) Trading Days of
the date said Notice of Exercise is delivered to the Company, the Company shall
have received payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or, if available, pursuant to the cashless exercise
procedure specified in Section 1(b) below. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically surrender this
Warrant to the Company until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full, in which case,
the Holder shall surrender this Warrant to the Company for cancellation within
three (3) Trading Days of the date the final Notice of Exercise is delivered to
the Company. Partial exercises of this Warrant resulting in purchases of a
portion of the total number of Warrant Shares available hereunder shall have the
effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased. The Holder may not exercise this Warrant more than ten times. The
Holder and the Company shall maintain records showing the number of Warrant
Shares purchased and the date of such purchases. The Company shall deliver any
objection to any Notice of Exercise Form within one (1) Business Day of receipt
of such notice. In the event of any dispute or discrepancy, the records of the
Holder shall be controlling and determinative in the absence of manifest error.
THE HOLDER AND ANY ASSIGNEE, BY ACCEPTANCE OF THIS WARRANT, ACKNOWLEDGE AND
AGREE THAT, BY REASON OF THE PROVISIONS OF THIS PARAGRAPH, FOLLOWING THE
PURCHASE OF A PORTION OF THE WARRANT SHARES HEREUNDER, THE NUMBER OF WARRANT
SHARES AVAILABLE FOR PURCHASE HEREUNDER AT ANY GIVEN TIME MAY BE LESS THAN THE
AMOUNT STATED ON THE FACE HEREOF.
(b) CASHLESS EXERCISE. Notwithstanding any provisions herein to the
contrary, if the Fair Market Value (as defined below) of one share of Common
Stock is greater than the Exercise Price (at the date of calculation as set
forth below), to the extent the Holder does not elect to pay cash upon the
deemed exercise of this Warrant, the Holder shall be deemed to have elected to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being cancelled) in which event the Company shall issue to the
holder a number of shares of Common Stock computed using the following formula:
X=Y (A-B)
---------
A
Where X= the number of shares of Common Stock to be issued to
the holder
Y= the number of shares of Common Stock deemed purchased
under the Warrant for which the Holder is not paying
cash
A= the Fair Market Value of one share of the Company's
Common Stock (at the date of such calculation)
B= Purchase Price (as adjusted to the date of such
calculation)
For purposes of Rule 144 promulgated under the 1933 Act, it is
intended, subject to applicable interpretations of the Securities and Exchange
Commission, that the Warrant Shares issued in a cashless exercise transaction
shall be deemed to have been acquired by the Holder, and the holding period for
the Warrant Shares shall be deemed to have commenced, on the date this Warrant
was originally issued.
Fair Market Value of a share of Common Stock as of a particular date
(the "Determination Date") shall mean:
(i) If the Company's Common Stock is traded on registered
national securities exchange such as NASDAQ, AMEX or NYSE, then the
closing or last sale price, respectively, reported for the last
business day immediately preceding the Determination Date;
(ii) If the Company's Common Stock is not traded on a
registered national securities exchange, but is traded in the
over-the-counter market, then the average of the closing bid and ask
prices reported for the last business day immediately preceding the
Determination Date;
(iii) Except as provided in clause (iv) below, if the
Company's Common Stock is not publicly traded, then as the Holder and
the Company agree, or in the absence of such an agreement, by
arbitration in accordance with the rules then standing of the American
Arbitration Association, before a single arbitrator to be chosen from a
panel of persons qualified by education and training to pass on the
matter to be decided; or
-2-
(iv) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company's articles of
incorporation, then all amounts to be payable per share to holders of
the Common Stock pursuant to the articles of incorporation in the event
of such liquidation, dissolution or winding up, plus all other amounts
to be payable per share in respect of the Common Stock in liquidation
under the articles of incorporation, assuming for the purposes of this
clause (iv) that all of the shares of Common Stock then issuable upon
exercise of all of the Warrants are outstanding at the Determination
Date.
(c) MECHANICS OF EXERCISE.
(i) DELIVERY OF CERTIFICATES UPON EXERCISE. Certificates for
shares purchased hereunder shall be transmitted by the Company's
transfer agent to the Holder by crediting the account of the Holder's
prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission ("DWAC") system if the Company is then a
participant in such system and either (A) there is an effective
Registration Statement permitting the resale of the Warrant Shares by
the Holder or (B) the shares are eligible for resale by the Holder
without volume or manner-of-sale limitations pursuant to Rule 144, and
otherwise by physical delivery to the address specified by the Holder
in the Notice of Exercise by the date that is three (3) Trading Days
after the latest of (A) the delivery to the Company of the Notice of
Exercise Form, (B) surrender of this Warrant (if required), and (C)
payment of the aggregate Exercise Price as set forth above (including
by cashless exercise, if permitted) (such date, the "WARRANT SHARE
DELIVERY DATE"). This Warrant shall be deemed to have been exercised on
the first date on which all of the foregoing have been delivered to the
Company. The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be
deemed to have become a holder of record of such shares for all
purposes, as of the date the Warrant has been exercised, with payment
to the Company of the Exercise Price (or by cashless exercise, if
permitted) and all taxes required to be paid by the Holder, if any,
having been paid.
(ii) DELIVERY OF NEW WARRANTS UPON EXERCISE. If this Warrant
shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of
delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased Warrant Shares called for by this Warrant,
which new Warrant shall in all other respects be identical with this
Warrant.
(iii) NO FRACTIONAL SHARES OR SCRIP. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would
otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such
final fraction in an amount equal to such fraction multiplied by the
Exercise Price or round up to the next whole share.
(iv) CHARGES, TAXES AND EXPENSES. Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any issue
or transfer tax or other incidental expense in respect of the issuance
of 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 or in such name or names as may be directed by the Holder;
provided, however, that in the event certificates for Warrant Shares
-3-
are to be issued in a name other than the name of the Holder, this
Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder and the
Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
(d) HOLDER'S EXERCISE LIMITATIONS. The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 1 or otherwise, to the extent that
after giving effect to such issuance after exercise as set forth on the
applicable Notice of Exercise, the Holder (together with the Holder's
Affiliates, and any other Persons acting as a group together with the Holder or
any of the Holder's Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by
the Holder and its Affiliates shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised portion of
this Warrant beneficially owned by the Holder or any of its Affiliates and (ii)
exercise or conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its
Affiliates. Except as set forth in the preceding sentence, for purposes of this
Section 1(d), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith. To the extent that the limitation
contained in this Section 1(d) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of
a Notice of Exercise shall be deemed to be the Holder's determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 1(d), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as
reflected in (A) the Company's most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by the
Company or (C) a more recent written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding. Upon the written
or oral request of a Holder, the Company shall within two Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the Company, including this Warrant, by the Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock was reported.
The "BENEFICIAL OWNERSHIP LIMITATION" shall be 4.99%, or 9.99% if the Company
does not have any class of securities registered under Section 12 of the
Exchange Act, of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock
issuable upon exercise of this Warrant. The Holder may decrease or, upon not
less than 61 days' prior notice to the Company, may increase the Beneficial
Ownership Limitation provisions of this Section 1(d). Any such increase will not
be effective until the 61st day after such notice is delivered to the Company.
The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 1(d) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
-4-
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
SECTION 2. CERTAIN ADJUSTMENTS.
------------------------------
(a) STOCK DIVIDENDS AND SPLITS. If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any other equity
or equity equivalent securities payable in shares of Common Stock (which, for
avoidance of doubt, shall not include any shares of Common Stock issued by the
Company upon exercise of this Warrant), (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, (iii) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares or (iv) issues by reclassification of shares of the Common Stock any
shares of capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event, and the
number of shares issuable upon exercise of this Warrant shall be proportionately
adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 2(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
(b) SUBSEQUENT EQUITY SALES. If the Company or any Subsidiary thereof,
as applicable, at any time while this Warrant is outstanding, shall sell or
grant any option to purchase, or sell or grant any right to reprice, or
otherwise dispose of or issue (or announce any offer, sale, grant or any option
to purchase or other disposition) any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock, or adjust, whether by
operation of purchase price adjustment, reset provision, floating conversion or
otherwise, any outstanding warrant, option or other right to acquire Common
Stock or outstanding Common Stock Equivalents, at an effective price per share
less than the then Exercise Price (such lower price, the "BASE SHARE PRICE" and
such issuances collectively, a "DILUTIVE ISSUANCE"), then until this Warrant is
no longer outstanding, the Exercise Price shall be reduced to the Base Share
Price. The Company shall notify the Holder, in writing, no later than the
Trading Day following the issuance of any Common Stock or Common Stock
Equivalents subject to this Section 2(b), indicating therein the applicable
issuance price, or applicable reset price, exchange price, conversion price and
other pricing terms (such notice, the "DILUTIVE ISSUANCE NOTICE"). For purposes
of clarification, whether or not the Company provides a Dilutive Issuance Notice
pursuant to this Section 2(b), upon the occurrence of any Dilutive Issuance,
after the date of such Dilutive Issuance the Holder is entitled to receive the
benefit of the adjusted Exercise Price regardless of whether the Holder
accurately refers to the adjusted Exercise Price in the Notice of Exercise.
"Exempt Issuance" means the issuance of (a) shares of Common
Stock or options to employees, officers or directors of the Company pursuant to
any existing stock or option plan or any future stock option plan duly adopted
for such purpose, by a majority of the non-employee members of the Board of
Directors or a majority of the members of a committee of non-employee directors
established for such purpose, (b) securities upon the exercise or exchange of or
conversion of any securities issued hereunder and/or other securities
exercisable or exchangeable for or convertible into shares of Common Stock
issued and outstanding on the date hereof, provided that such securities have
not been amended since the date hereof to increase the number of such securities
or to decrease the exercise price, exchange price or conversion price of such
-5-
securities and (c) securities issued pursuant to acquisitions or strategic
transactions, provided that any such issuance shall only be to a Person (or to
the equity holders of a Person) which is, itself or through its subsidiaries, an
operating company or an owner of assets in or used in a business synergistic
with the business of the Company and such acquisition or strategic transaction
shall be likely to provide to the Company additional benefits other than the
investment of funds, and shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities.
(c) PRO RATA DISTRIBUTIONS. If the Company, at any time while this
Warrant is outstanding, shall distribute to all holders of Common Stock (and not
to the Holders) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security other
than the Common Stock (which shall be subject to Section 2(b)), then in each
such case the Exercise Price shall be adjusted by multiplying the Exercise Price
in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the then
per share fair market value at such record date of the portion of such assets or
evidence of indebtedness or rights or warrants so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of Directors in
good faith. Additionally, the number of Warrant Shares issuable hereunder shall
be increased such that the aggregate Exercise Price payable hereunder, after
taking into account the decrease in the Exercise Price, shall be equal to the
aggregate Exercise Price prior to such adjustment. In either case the
adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
"VWAP" means, for any date, (i) the daily volume weighted
average price of the Common Stock for such date on the OTC Bulletin Board or a
registered national securities exchange, as reported by Bloomberg Financial L.P.
(based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time);
(ii) if the Common Stock is not then listed or quoted on the OTC Bulletin Board
and if prices for the Common Stock are then reported in the "Pink Sheets"
published by the Pink Sheets, LLC (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported; or (iii) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holder and reasonably acceptable to the
Maker.
(d) CALCULATIONS. All calculations under this Section 2 shall be made
to the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 2, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the number of
shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.
(e) NOTICE TO HOLDER. Whenever the Exercise Price is adjusted pursuant
to any provision of this Section 2, the Company shall promptly mail to the
Holder a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
SECTION 3. TRANSFER OF WARRANT.
------------------------------
(a) TRANSFERABILITY. Subject to compliance with any applicable
securities laws and the conditions set forth in Section 3(d) hereof, this
Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon five (5) days
written notice to the Company and the surrender of this Warrant at the principal
-6-
office of the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees, as applicable, and
in the denomination or denominations specified in such instrument of assignment,
and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled. The
Warrant, if properly assigned in accordance herewith, may be exercised by a new
holder for the purchase of Warrant Shares without having a new Warrant issued.
(b) NEW WARRANTS. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 3(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or
exchanges shall be dated the Issuance Date and shall be identical with this
Warrant except as to the number of Warrant Shares issuable pursuant thereto.
(c) WARRANT REGISTER. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose, in the name of the
record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
(d) COMPLIANCE WITH SECURITIES LAWS.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this Warrant
and all certificates representing shares of Warrant Stock issued upon
exercise hereof shall be stamped or imprinted with a legend in
substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND
UNDER APPLICABLE STATE SECURITIES LAWS OR WARP 9, INC. SHALL
HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS
OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
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(iii) The restrictions imposed by this subsection (d) upon the
transfer of this Warrant or the shares of Warrant Stock to be purchased
upon exercise hereof shall terminate (A) when such securities shall
have been resold pursuant to an effective registration statement under
the Securities Act, (B) upon the Company's receipt of an opinion of
counsel, in form and substance reasonably satisfactory to the Company,
addressed to the Company to the effect that such restrictions are no
longer required to ensure compliance with the Securities Act and state
securities laws or (C) upon the Company's receipt of other evidence
reasonably satisfactory to the Company that such registration and
qualification under the Securities Act and state securities laws are
not required. Whenever such restrictions shall cease and terminate as
to any such securities, the Holder thereof shall be entitled to receive
from the Company (or its transfer agent and registrar), without expense
(other than applicable transfer taxes, if any), new Warrants (or, in
the case of shares of Warrant Stock, new stock certificates) of like
tenor not bearing the applicable legend required by paragraph (ii)
above relating to the Securities Act and state securities laws.
(e) REPRESENTATION BY THE HOLDER. The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon any exercise
hereof, will acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling such Warrant or
Warrant Shares; provided that this representation shall not be breached by any
act of the Holder that complies with the Securities Act and any applicable state
securities law.
SECTION 4. REGISTRATION RIGHTS.
------------------------------
If at any time during the term of this Warrant, the Company shall
decide to prepare and file with the SEC a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with the stock
option or other employee benefit plans, then the Company shall send to the
Holder a written notice of such determination and, if within fifteen days after
the date of such notice, the Holder shall so request in writing, the Company
shall include in such registration statement, all or any part of the and the
Common Stock underlying the Warrants that the Holder request to be registered;
provided, however, that, the Company shall not be required to register any
shares of Common Stock that are eligible for resale pursuant to Rule 144
promulgated under the Securities Act or that are the subject of a then effective
registration statement; provided, further, however, if the registration so
proposed by the Company involves an underwritten offering of the securities so
being registered for the account of the Company, to be distributed by or through
one or more underwriters of recognized standing, and the managing underwriter of
such underwritten offering shall advise the Company in writing that, in its
opinion, the distribution of all or a specified portion of the shares of Common
Stock which the Holder has requested the Company to register and otherwise
concurrently with the securities being distributed by such underwriters will
materially and adversely affect the distribution of such securities by such
underwriters (such opinion to state the reasons therefor), then the Company will
promptly furnish the Holder of shares of Common Stock hereto with a copy of such
opinion, and by providing such written notice to the Holder, such Holder may be
denied the registration of all or a specified portion of such shares of Common
Stock (in case of such a denial as to a portion of such shares of Common Stock);
provided, however, shares to be registered by the Company for issuance by the
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Company shall have first priority, the Holder hereunder shall have second
priority, and any other shares being registered on account of other third
parties shall have third priority.
5. MISCELLANEOUS.
----------------
(a) NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. This Warrant does not
entitle the Holder to any voting rights, dividends or other rights as a
stockholder of the Company prior to the exercise hereof as set forth in Section
1(c)(i).
(b) LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
(c) SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then, such action may be taken or such right
may be exercised on the next succeeding Business Day.
(d) AUTHORIZED SHARES. The Company covenants that, during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the trading market upon
which the Common Stock may be listed. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
(e) GOVERNING LAW; CONSENT TO JURISDICTION. This Warrant shall be
governed by, and construed in accordance with, the internal laws of the STATE OF
NEVADA, without reference to the choice of law provisions thereof. The Company
and, by accepting this Warrant, the Holder, each irrevocably submits to the
exclusive jurisdiction of the courts of the STATE OF NEVADA located in NEVADA
and the United States District Court situated therein for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this Warrant
and the transactions contemplated hereby. Service of process in connection with
any such suit, action or proceeding may be served on each party hereto anywhere
in the world by the same methods as are specified for the giving of notices
under this Warrant. The Company and, by accepting this Warrant, the Holder, each
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. The Company and,
by accepting this Warrant, the Holder, each irrevocably waives any objection to
the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum..
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(f) RESTRICTIONS. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws.
(g) NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the
Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
(h) NOTICES. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given as hereinafter described (i) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (ii) if given by
telex or facsimile, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the
recipient or (B) three days after such notice is deposited in first class mail,
postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one business day after
delivery to such carrier. All notices shall be addressed as follows: if to the
Holder, at its address as set forth in the Company's books and records and, if
to the Company, at the address as follows, or at such other address as the
Holder or the Company may designate by ten days' advance written notice to the
other.(i) LIMITATION OF LIABILITY. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
(j) REMEDIES. The Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive and not to assert the defense in any action for specific performance that
a remedy at law would be adequate.
(k) SUCCESSORS AND ASSIGNS. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
Company and the successors and permitted assigns of Holder. The provisions of
this Warrant are intended to be for the benefit of any Holder from time to time
of this Warrant and shall be enforceable by the Holder or holder of Warrant
Shares.
(l) AMENDMENT. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the Holder.
(m) SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
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(n) HEADINGS. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.
********************
(SIGNATURE PAGES FOLLOW)
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SIGNATURE PAGE
TO
WARP 9, INC.
COMMON STOCK PURCHASE WARRANT
IN WITNESS WHEREOF, the Company has caused this Warrant Number: 001 to
be executed in its name by its duly authorized officer, and to be dated as of
the date first above written.
WARP 9, INC.
By:_________________________________
William E. Beifuss, Jr., CEO
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NOTICE OF EXERCISE
WARP 9, INC.
WARRANT NUMBER: 001
(1) The undersigned hereby elects to purchase ________ Warrant Shares
of the Company pursuant to the terms of the attached Warrant (only if exercised
in full), and tenders herewith payment of the exercise price in full, together
with all applicable transfer taxes, if any.
/__/ The undersigned represents that this purchase will exceed the
Beneficial Ownership Limitation described in Section 1(d) and hereby provides
the required 61 days prior notice. The Company is hereby instructed to issue the
Warrant Shares 61 days after the date of this notice.
(2) Payment shall take the form of (check applicable box):
/__/ in lawful money of the United States; or
/__/ the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in Section 1(b), to exercise
this Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in Section 1(b).
(3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:
-------------------------------
The Warrant Shares shall be delivered to the following DWAC Account
Number, issued as DRS shares by the transfer agent directly to Holder, or by
physical delivery of a certificate to:
-------------------------------
-------------------------------
(4) ACCREDITED INVESTOR. Unless the undersigned exercises this Warrant
by cashless exercise pursuant to Section 1(b) of the Warrant, the undersigned
hereby represents and warrants that it is an "accredited investor" as defined in
Regulation D promulgated under the Securities Act of 1933, as amended, and
satisfies the criteria set forth in Rule 501(a) therein.
(5) LEGEND. Unless otherwise permitted under and each purchaser
signatory thereto, the certificates representing these securities will bear a
legend restricting transfer under the Securities Act and applicable state
securities laws. In the case of a cashless exercise 12 months after the Issuance
Date, the Company shall contemporaneously deliver the appropriate Rule 144
opinion letter to its transfer agent with instructions to issue the Warrant
Shares without a restrictive legend, unless applicable law, order or regulations
prohibit such issuance.
[SIGNATURE OF HOLDER]
Name of Investing Entity:______________________________________________
Signature of Authorized Signatory of Investing Entity:_________________
Name of Authorized Signatory:__________________________________________
Title of Authorized Signatory:_________________________________________
Date:__________________________________________________________________
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ASSIGNMENT FORM
WARP 9, INC.
WARRANT NUMBER: 001
(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [_] all of or [__________] shares of the foregoing
Warrant and all rights evidenced thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________
_______________________________________________________________.
Dated: ______________, _______
Holder's Signature:
___________________________________________
Holder's Address: ___________________________________________
___________________________________________
___________________________________________
Authorized Signature:
___________________________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
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