Exhibit 4.1(vi)(a)
CLASS A WARRANT AGREEMENT
THIS CLASS A WARRANT AGREEMENT (this "Agreement") is entered
into as of November 20, 2007, by and between HYBRID DYNAMICS
CORPORATION, a Nevada corporation (the "Company"), and Corporate
Stock Transfer, Inc. a Colorado corporation (hereinafter referred
to, together with any successors and assigns, as the "Warrant
Agent").
A. WHEREAS, the Company intends to offer for sale to prospective
investors, in one or more offerings, units of the Company’s
securities, which shall include, among other things, the
Company’s warrants; and
B. WHEREAS, in connection with the proposed offerings and as part
of the transactions to be consummated pursuant to the offerings,
the warrants to be issued by the Company shall provide for the
purchase of one (1) share of the Company’s Common Stock, par
value $0.00015 per share, for each warrant (each, a "Class A
Warrant" or “Warrant”); and
C. WHEREAS, the Company desires to provide for the issuance of up
to Six Million Six Hundred Thousand (6,600,000) Class A Warrants
and to issue up to Six Million Six Hundred Thousand (6,600,000)
shares of Common Stock deliverable upon exercise of the Class A
Warrants (each, a "Warrant Share"); and
D. WHEREAS, the Company wishes the Warrant Agent to act on behalf
of the Company, and the Warrant Agent is willing to so act, in
connection with the issuance, division, transfer, exchange and
exercise of Warrants.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises and covenants contained herein and for other good
and valuable consideration, the receipt and adequacy of which
hereby are acknowledged, and for the purpose of defining the terms
and provisions of the Class A Warrants and the respective rights
and obligations thereunder of the Company and the registered owners
of the Class A Warrants and any security into which they may be
exchanged, the parties hereto covenant and agree as follows:
1. DEFINITIONS
In this Agreement, the following terms have the meanings specified
or referred to in this Section 1 and shall be equally applicable to
both the singular and plural forms. Any agreement referred to below
shall mean such agreement as amended, supplemented and modified
from time to time to the extent permitted by the applicable
provisions thereof and by this Agreement.
1.1. “Black Scholes Warrant Value,” as of any date,
shall mean the value of one Warrant to purchase one Warrant Share
as of that date using the Black Scholes method to determine such
value with the following inputs on the Bloomberg page titled CHTR
EQUITY OV (Exotic Option Type 4) (or any subsequent page that
hereafter replaces such page), and utilizing a term equal to the
duration of the then remaining Exercise Period, a strike price
equal to the then
Exercise Price, and a volatility of 50. In the event that the
Company’s (or any successor’s) common stock ceases to
be traded on any exchange or electronic share price quotation
system (or such calculation is not available via the Bloomberg page
for any other reason), the Black Scholes Warrant Value shall be
calculated using assumptions determined in good faith by the
Company’s Board of Directors.
1.2. "Business Day" shall mean a day other than (a) a Saturday or
Sunday, (b) any day on which banking institutions located in the
City of New York, New York are required or authorized by law or by
local proclamation to close or (c) any day on which the New York
Stock Exchange is closed.
1.3. "Common Stock" shall mean the shares of the Company's common
stock, par value $0.00015 per share.
1.4. "Commercially Reasonable Best Efforts," when used with respect
to any obligation to be performed or term or provision to be
observed hereunder, shall mean such efforts as a prudent Person
seeking the benefits of such performance or action would make, use,
apply or exercise to preserve, protect or advance its rights or
interests; provided that such efforts do not require the Person
whose performance or observance is required hereunder to incur a
material financial cost or a substantial risk of material liability
unless such cost or liability (i) is specifically contained in this
Agreement; (ii) would customarily be incurred in the course of
performance or observance of the relevant obligation, term or
provision, (iii) is caused by or results from the wrongful act or
negligence of the Person whose performance or observance is
required hereunder; or (iv) is not excessive or unreasonable in
view of the rights or interests to be preserved, protected or
advanced. Such efforts may include, without limitation, the
expenditure of such funds and retention by such Person of such
accountants, attorneys or other experts or advisors as may be
necessary or appropriate to effect the relevant action; the
undertaking of any special audit or internal investigation that may
be necessary or appropriate to effect the relevant action; and the
commencement, termination or settlement of any action, suit or
proceeding involving the Person whose performance or observance is
required hereunder to the extent necessary or appropriate to effect
the relevant action.
1.5. “Effective Date” shall mean the effective date of
the Registration Statement referred to in paragraph 1.15
hereof.
1.6. "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.7. "Exercise Period" shall mean the period commencing on the
later of (x) the date the Warrants are issued to the initial
Holders and (y) the Termination Date, ending at 5:00 p.m., New York
City time, on December 31, 2012.
1.8. "Exercise Price" shall mean the purchase price for each
Warrant Share, which shall be one dollar ($1.00 USD) per Warrant
for each Warrant Share, as adjusted from time to time pursuant to
Sections 9.1 and 9.2 hereof.
1.9. “Holder” shall mean the owner of a Class A
Warrant and any security into which the Warrant may be exchanged
who have been registered on the books of the Warrant Agent, in
accordance with the provisions of Section 2.2 hereof.
Notwithstanding any rights to which
a Person may be entitled under local law, a holder in due course of
any particular Class A Warrant or any particular security into
which the Warrant may be exchanged shall not be considered nor
treated as a “Holder” hereunder unless and until such
Person shall have been registered as an owner of such particular
Warrant or security on the books of the Warrant Agent
(notwithstanding that such Person may previously have been
registered as an owner with respect to other Class A Warrants or
securities into which the Warrant may be exchanged).
1.10. "Market" shall mean the over-the-counter market as reported
by the National Association of Securities Dealers Automated
Quotation System (“OTCBB”), or if the Common Stock is
no longer authorized for quotation on such system, such electronic
quotation system upon which the Common Stock is listed, including
but not limited to, the electronic quotation system maintained by
PinkSheets, LLC.
1.11. “Offering” shall mean that sale by the Company of
units of its securities (consisting of Warrants, the
Company’s preferred stock and Common Stock), pursuant to the
terms of a private placement memorandum of contemporaneous date
herewith.
1.12. "Person" shall mean a natural person, corporation,
partnership, joint venture, association, joint stock company,
trust, unincorporated organization, limited liability company,
limited liability partnership, government or any agency or
political subdivision thereof or any other entity or
organization.
1.13. "Qualifying Prospectus" shall mean a prospectus contained in
a Registration Statement that satisfies all legal requirements.
1.14. “Registrable Securities” shall mean the Class A
Warrants and the shares of Common Stock acquired upon exercise of
the Class A Warrants until such time as (1) a Registration
Statement covering such Registrable Securities has been declared
effective by the Commission and such Registrable Securities have
been disposed of pursuant to such effective Registration Statement
or (2) such Registrable Securities are saleable pursuant to Rule
144K (or any similar provision then in force) under the Securities
Act, without any restriction, whichever is earlier.
1.15. "Registration Statement" shall mean a registration statement
relating to the resale of the Registrable Securities.
1.16. "SEC" shall mean the United States Securities and Exchange
Commission, or any successor governmental agency or authority
thereto.
1.17. "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.18. "Warrant Agent" shall mean Corporate Stock Transfer, Inc. and
any successor hereunder.
1.19. “Warrant Shares” shall mean the shares of the
Company’s $0.00015 par value Common Stock issuable upon the
exercise of Class A Warrants.
2. FORM OF WARRANT; EXECUTION; REGISTRATION
2.1. Form of Class A Warrant; Execution of Class A Warrants. The
certificates evidencing the Class A Warrants (the "Warrant
Certificates") shall be in a form satisfying the requirements
of
the Market. The Warrant Certificates shall be signed on behalf of
the Company by its Chief Executive Officer, Chief Operating
Officer, President or one of its Vice Presidents. The signature of
any such officer on the Warrant Certificates may be manual or by
facsimile. Any Warrant Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company
to sign such Warrant Certificate. Each Warrant Certificate shall be
dated the date it is countersigned by the Warrant Agent pursuant to
Section 2.3 hereof.
2.2. Registration. The Warrant Certificates shall be numbered and
shall be registered on the books of the Company maintained at the
principal office of the Warrant Agent initially in Denver, Colorado
(or such other place in the continental United States as the
Warrant Agent shall from time to time notify the Company and the
Holders in writing) (the "Warrant Register") as they are issued.
The Company and the Warrant Agent shall be entitled to treat the
registered owner of any Warrant as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other
person.
2.3. Countersignature of Warrants. The Warrant Certificates shall
be countersigned by the Warrant Agent and shall not be valid for
any purpose unless so countersigned. Warrant Certificates may be
countersigned, however, by the Warrant Agent and may be delivered
by the Warrant Agent notwithstanding that the persons whose manual
or facsimile signatures appear thereon as proper officers of the
Company shall have ceased to be such officers at the time of such
countersignature, issuance or delivery. The Warrant Agent shall,
upon written instructions of the Chief Executive Officer, the Chief
Operating Officer, the President, any Vice President, the Treasurer
or the Secretary of the Company, countersign, issue and deliver
Warrant Certificates entitling the Holders thereof to purchase not
more than an aggregate of six hundred thousand (600,000) Warrant
Shares (subject to adjustment pursuant to Section 9 hereof) and
shall countersign, issue and deliver Warrant Certificates as
otherwise provided in this Agreement.
3. TRANSFER AND EXCHANGE OF WARRANTS
Subject to the terms hereof, the Warrant Agent shall initially
countersign, register in the Warrant Register and deliver Warrants
hereunder in accordance with the written instructions of the
Company. Subject to the terms hereof and the receipt of such
documentation as the Warrant Agent may reasonably require, the
Warrant Agent shall thereafter from time to time register the
transfer of any outstanding Warrants upon the Warrant Register upon
surrender of the Warrant Certificate or Certificates evidencing
such Warrants duly endorsed or accompanied (if so required by it)
by a written instrument or instruments of transfer in form
reasonably satisfactory to the Warrant Agent, duly executed by the
registered Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Subject to
the terms of this Agreement, each Warrant Certificate may be
exchanged for another Warrant Certificate or Certificates entitling
the Holder thereof to purchase a like aggregate number of Warrant
Shares as the Warrant Certificate or Certificates surrendered then
entitles such Holder to purchase. Any Holder desiring to exchange a
Warrant Certificate or Certificates shall make such request in
writing delivered to the Warrant Agent, and shall surrender, duly
endorsed or accompanied (if so required by the Warrant Agent) by a
written instrument or instruments of transfer in form reasonably
satisfactory to the Warrant Agent, the Warrant Certificate or
Certificates to be so exchanged. Upon registration of transfer, the
Company shall issue and the Warrant Agent
shall countersign and deliver by certified mail a new Warrant
Certificate or Certificates to the persons entitled thereto.
No service charge shall be made for any exchange or registration of
transfer of a Warrant Certificate or of Warrant Certificates, but
the Company may require payment of a sum sufficient to cover any
stamp tax or other tax or other governmental charge that is imposed
in connection with any such exchange or registration of transfer
pursuant to Section 5 hereof.
By accepting the initial delivery, transfer or exchange of
Warrants, each Holder shall be deemed to agree to the terms of this
Agreement as it may be in effect from time to time, including any
amendments or supplements duly adopted in accordance with Section
15.3 hereof. A Holder may obtain a copy of this Agreement without
cost upon written request to the Company at its principal office or
the Warrant Agent.
4. TERM OF WARRANTS; EXERCISE OF WARRANTS; REGISTRATION OF WARRANT
SHARES
4.1. Term of Warrants. Subject to the terms of this Agreement, each
Holder shall have the right, which may be exercised on any Business
Day during the Exercise Period, to receive from the Company the
number of Warrant Shares which the Holder may at the time be
entitled to receive upon exercise of such Warrants and payment of
the Exercise Price then in effect for such Warrant Shares, and the
Warrant Shares issued to a Holder upon exercise of its Warrants
shall be duly authorized, validly issued, fully paid,
non-assessable and shall not have been issued in violation of or
subject to any preemptive rights. Each Warrant not exercised prior
to the expiration of the Exercise Period shall become void, and all
rights thereunder and all rights in respect thereof under this
Agreement shall cease as of the expiration of the Exercise Period,
provided, however, that if the Exercise Period ends during a
suspension pursuant to Section 4.3 hereof, the Exercise Period
shall be extended for an additional period of time equal to the
longer of the period of such suspension during the Exercise Period
and twenty (20) Business Days after the date on which the Warrant
Agent sends notice to the Holders of the expiration of such
suspension period. As used herein, the term "Effective Date" means
the first date on which the Company's Registration Statement is
declared effective by the SEC.
4.2. Exercise of Warrants. During the Exercise Period, except as
such may be suspended from time to time as set forth in Section 4.3
hereof, each Holder may, subject to the terms of this Agreement,
exercise from time to time some or all of the Warrants evidenced by
its Warrant Certificate(s) by (i) surrendering to the Company at
the principal office of the Warrant Agent such Warrant
Certificate(s) with the form of notice attached thereto duly filled
in and signed, which signature shall be guaranteed by an eligible
guarantor institution (a bank, savings and loan association or
credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule l7Ad-15 of the Exchange Act,
and (ii) paying to the Warrant Agent for the account of the Company
the aggregate Exercise Price for the number of Warrant Shares in
respect of which such Warrants are exercised. Warrants shall be
deemed exercised on the date such Warrant Certificate(s) are
surrendered to the Warrant Agent and tender of payment of the
aggregate Exercise Price is made. Payment of the aggregate Exercise
Price shall be made by wire transfer of immediately available funds
to the Warrant Agent for the account of the Company or by certified
or official bank check or checks to the order of the Company, or by
any combination thereof or by such other form or method of payment
acceptable to
the Warrant Agent. All payments required to be made hereunder shall
be made in lawful money of the United States of America.
Upon the exercise of any Warrants in accordance with this
Agreement, the Company shall cause the Warrant Agent, on the
Company's behalf, to issue and deliver 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 number of full Warrant Shares issuable upon
the exercise of such Warrants and shall take such other actions or
cause the Warrant Agent to take such other actions at the Company's
sole expense as are necessary to complete the exercise of the
Warrants (including, without limitation, payment of any cash with
respect to fractional interests required under Section 10 hereof).
The certificate or certificates representing such Warrant Shares
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 Warrant Shares as of the date the Warrants are exercised
hereunder. Each Warrant Share, when issued upon exercise of the
Warrants, shall be duly authorized, validly issued, fully paid and
non-assessable and will not have been issued in violation of or
subject to any preemptive rights.
In the event that less than all of the Warrants evidenced by a
Warrant Certificate are exercised, the Holder thereof shall be
entitled to receive a new Warrant Certificate or Certificates as
specified by such Holder evidencing the remaining Warrant or
Warrants, and the Warrant Agent is hereby irrevocably authorized by
the Company to countersign, issue and deliver the required new
Warrant Certificate or Certificates evidencing such remaining
Warrant or Warrants pursuant to the provisions of this Section 4.2
and of Section 3 hereof. The Company, whenever requested by the
Warrant Agent, will supply the Warrant Agent with Warrant
Certificates duly executed on behalf of the Company for such
purpose.
Upon delivery of the Warrant Shares issuable upon exercise of a
Warrant in accordance herewith and of any required new Warrant
Certificates, the Company shall direct the Warrant Agent by written
order to cancel the Warrant Certificates surrendered upon exercise.
Such canceled Warrant Certificates shall then be prominently marked
as “CANCELLED” on the front and back of the Warrant
Certificate by the Warrant Agent and maintained with all records,
notices and other documents relating to the exercise of the
Warrant, or delivered to the Company, in accordance with the
Company’s written instructions to the Warrant Agent. The
Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all amounts
received by the Warrant Agent upon exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the
Holders during normal business hours at its office. The Company
shall at its sole expense supply the Warrant Agent from time to
time with such numbers of copies of this Agreement as the Warrant
Agent may reasonably request.
4.3. Registration of Warrant and Warrant Shares; Suspension of
Exercise Period.
4.3.1. The Company shall file, and keep effective at all times
during the Exercise Period, a Registration Statement providing for
the resale, under the Securities Act, of the Warrants and all
shares of Common Stock issuable upon exercise of the Warrants
within one hundred twenty (120) days of the final closing of the
Offering, and will make such number of Qualifying Prospectuses
available to Holders as they shall reasonably request.
Notwithstanding the foregoing,
no shares of Common Stock shall be issued, and the right to
exercise all Warrants shall be suspended, for all periods during
which there is not an effective Registration Statement and/or there
is not a Qualifying Prospectus available to Holders; provided,
however, that the Company will at all times employ its Reasonable
Best Efforts to remedy any circumstances which causes the
Registration Statement to not be effective and/or which causes
Qualifying Prospectuses to not be available to Holders. The Company
shall promptly notify the Warrant Agent of any such suspension, and
the Warrant Agent shall have no duty, responsibility or liability
in respect of any shares of Common Stock issued or delivered prior
to its receipt of such notice. The Company shall promptly notify
the Warrant Agent of the termination of any such suspension and the
Company shall cause the Warrant Agent to notify the Holders of the
termination of such suspension within twenty (20) business days
following notice to the Warrant Agent by the Company.
4.3.2. Notwithstanding the foregoing, the Company shall have the
right, exercisable by giving written notice of the exercise of such
right to the Warrant Agent, at any time and from time to time, to
suspend the Exercise Period or delay filing for a period not in
excess of sixty (60) days beginning on the date on which such
notice is given, or such shorter period of time as may be specified
in such notice or in a subsequent notice delivered by the Company
to such effect, upon the occurrence of any of the following: (i)
the Company shall have previously entered into an agreement or
letter of intent contemplating an underwritten public offering on a
firm commitment basis of Common Stock or securities convertible
into or exchangeable for Common Stock and the managing underwriter
of such proposed public offering advises the Company in writing
that in its opinion such proposed underwritten offering would be
materially and adversely affected by a concurrent registered
offering of Registrable Securities (such opinion to state the
reasons therefore), or (ii) During the two (2) month period
immediately preceding such request, the Company shall have entered
into an agreement or letter of intent, which has not expired or
otherwise terminated, contemplating a material business acquisition
by the Company or its subsidiaries whether by way of merger,
consolidation, acquisition of assets, acquisition of securities or
otherwise; or (iii) At the time of receipt of a registration
request, the Company is engaged, or its board of directors has
adopted by resolution a plan to engage, in any program for the
purchase of Common Stock or securities convertible into or
exchangeable for Common Stock and, in the opinion of counsel,
reasonably satisfactory to the requesting Holders, the distribution
of the Common Stock to be registered would cause such purchase to
be in violation of Regulation M promulgated under the Exchange
Act.
4.3.3. The rights to cause the Company to register Registrable
Securities granted pursuant to the provisions hereof may be
transferred or assigned by any Holder to a transferee or assignee;
provided; however , that the transferee or assignee of such
rights assumes the obligations of such transferor or assignor, as
the case may be, hereunder.
5. PAYMENT OF TAXES
The Company will pay all documentary stamp and other like taxes, if
any, attributable to the initial issuance and delivery of the
Warrants and the initial issuance and delivery of the Warrant
Shares upon the exercise of Warrants; provided that the Company
shall not be required to pay any tax or taxes which may be payable
in respect of any transfer of the Warrants or involved in the
issuance or delivery of any Warrant Shares in a name other than
that of the Holder of the Warrants being exercised, and the Warrant
Agent shall not register any such transfer or issue or deliver any
Warrant Certificate(s) or Warrant Shares unless or until
the persons requesting the registration or issuance shall have paid
to the Warrant Agent for the account of the Company the amount of
such tax, if any, or shall have established to the reasonable
satisfaction of the Company that such tax, if any, has been
paid.
6. MUTILATED OR MISSING WARRANT CERTIFICATES
In the event that any Warrant Certificate shall be mutilated, lost,
stolen or destroyed, the Company shall issue, and at the direction
of the Company by written order the Warrant Agent shall countersign
and deliver in exchange and substitution for and upon cancellation
of the mutilated Warrant Certificate or in lieu of and substitution
for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent
right or interest, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss,
theft or destruction of such Warrant Certificate and an indemnity
or bond, if requested by the Company or the Warrant Agent, also
reasonably satisfactory to them. An applicant for such a substitute
Warrant Certificate shall also comply with such other reasonable
procedures as the Company or the Warrant Agent may reasonably
require.
7. RESERVATION OF WARRANT SHARES
There have been reserved, and the Company shall at all times keep
reserved, out of its authorized Common Stock, free of all
preemptive rights, a number of shares of Common Stock sufficient to
provide for the exercise of the rights of purchase of Warrant
Shares represented by the outstanding Warrants. The transfer agent
for the Common Stock and every subsequent or other transfer agent
for any shares of the Company's capital stock issuable upon the
exercise of the Warrants (each, a "Transfer Agent") will be and are
hereby irrevocably authorized and directed at all times to reserve
such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file
with each Transfer Agent. The Warrant Agent is hereby irrevocably
authorized to requisition from time to time from the Company or a
Transfer Agent, as the case may be, the certificate for Warrant
Shares required to honor outstanding Warrants upon exercise thereof
in accordance with the terms of this Agreement. The Company will
supply its Transfer Agent with duly executed stock certificates for
such. The Company will furnish to its Transfer Agent a copy of all
notices of adjustments and certificates related thereto,
transmitted to each Holder pursuant to Section 9.3 hereof. The
Company will give the Warrant Agent prompt notice of any change in
any Transfer Agent or any change of address of any Transfer
Agent.
Before taking any action, which would cause an adjustment pursuant
to Section 9 reducing the Exercise Price, the Company will take any
and all corporate action which may be necessary in order that the
Company may validly and legally issue fully paid and non-assessable
Warrant Shares at the Exercise Price as so adjusted.
8. STOCK EXCHANGE LISTINGS
The Company may, in its sole discretion, use its Commercially
Reasonable Efforts (including requests for waivers) to have the
Warrants listed for quotation on the Market, and shall use its
Commercially Reasonable Efforts to maintain such listing or
inclusion. In the event the Warrants do not qualify for such
listing or inclusion, the Company may, in its sole discretion, use
its Commercially Reasonable Efforts (including, requests for
waivers) to effect such inclusion or listing whenever the Warrants
qualify therefore. Any such listing and inclusion shall be
at the Company's sole expense. In connection with any such listing
or inclusion, the Company shall cause a CUSIP number to be provided
for the Warrants.
9. ADJUSTMENT OF EXERCISE PRICE; NUMBER OF WARRANT SHARES AND
SHARES OF CAPITAL STOCK INTO WHICH WARRANTS ARE EXERCISABLE;
REDEMPTION
The number and kind of securities purchasable upon the exercise of
each Warrant, and the Exercise Price, shall be subject to
adjustment from time to time upon the happening of certain events,
as hereinafter described.
9.1. Mechanical Adjustments. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Exercise
Price shall be subject to adjustment as follows:
(a) Adjustment for Change in Capital Stock. Subject to paragraph
(b) below, in case the Company shall (i) pay a dividend on its
outstanding shares of Common Stock in shares of Common Stock or
make a distribution of shares of Common S
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