Exhibit 10.3
NEITHER THIS SECURITY NOR THE
SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
Original Issue Date: February 23,
2009
COMMON STOCK PURCHASE WARRANT
To Purchase 31,450,000 Shares of Common Stock
of
CORNERWORLD CORPORATION
THIS
COMMON STOCK PURCHASE WARRANT (the “ Warrant ”)
certifies that, for value received, Ned B. Timmer or his registered
assigns (the “ Holder ”), is entitled, upon the
terms and subject to the conditions hereinafter set forth, at any
time on or after the date hereof (the “ Initial Exercise
Date ”) and on or prior to the close of business on
February 23, 2016 (the “ Termination Date ”) to
purchase up to 31,450,000 shares (the “ Warrant Shares
”) of Common Stock, par value $0.001 per share (the “
Common Stock ”), of Cornerworld Corporation, a Nevada
corporation (the “ Company ”). This Warrant is
issued pursuant to that certain Stock Purchase Agreement by and
among Woodland Holdings Corp., the Company, Ned B. Timmer and HCC
Foundation (“the Agreement ”). The aggregate
purchase price of the Warrant Shares under this Warrant shall be
equal to the Exercise Price, as defined in Section 2(b).
Section 1 . Definitions . Capitalized terms
used and not otherwise defined herein shall have the meanings set
forth in the Agreement.
Section 2 . Exercise .
a)
Exercise of Warrant . Exercise of the purchase rights
represented by this Warrant may be made, in whole or in part, at
any time or times on or after the Initial Exercise Date and on or
before the Termination Date by delivery to the Company of a duly
executed facsimile copy of the Notice of Exercise Form annexed
hereto (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 such Holder appearing on the books of the Company); and,
within five Trading Days of the date said Notice of Exercise is
delivered to the Company, the Company shall have received payment
of the aggregate Exercise Price of the shares thereby purchased by
wire transfer or cashier’s check drawn on a United
States
bank.
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 Trading Days of the date the final Notice
of Exercise is delivered to the Company. Partial exercises of this
Warrant resulting in purchases of a portion of the total number of
Warrant Shares available hereunder shall have the effect of
lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant
Shares purchased. The Holder and the Company shall maintain records
showing the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of
Exercise Form within two Business Days 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, negligence or willful misconduct. The Holder, by
acceptance of this Warrant, acknowledges and agrees 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.
In
lieu of the payment of the aggregate Exercise Price, the Holder
shall have the right (but not the obligation), to require the
Company to convert this Warrant, in whole or in part, into shares
of Common Stock (the “ Cashless Exercise Right
”). Upon exercise of the Cashless Exercise Right, the Company
shall deliver to the Holder (without payment of the Exercise Price)
that number of shares of Common Stock equal to the quotient
obtained by dividing (i) the value of this Warrant or portion
thereof at the time the Cashless Exercise Right is exercised
(determined by subtracting the aggregate Exercise Price at the time
of the exercise of the Cashless Exercise Right from the aggregate
VWAP of the shares of Common Stock to be issued upon such exercise)
by (ii) the VWAP of one share of Common Stock at the time of the
exercise of the Cashless Exercise Right. The Cashless Exercise
Right may be exercised by surrendering this Warrant to the Company,
with an executed Notice of Exercise with the Cashless Exercise
Right section completed, exercising the Cashless Exercise Right and
specifying the total number of shares of Common Stock that the
Holder will be issued pursuant to the exercise of such Cashless
Exercise Right.
b)
Exercise Price . The exercise price for all the Warrant
Shares under this Warrant shall be $100.00 in the aggregate, or a
pro rata portion thereof with respect to less than all of the
Warrant Shares (the “ Exercise Price
”).
c)
Mechanics of Exercise .
i.
Authorization of Warrant Shares . The Company covenants that
all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and the payment of
the Exercise Price, be duly authorized, validly issued, fully paid
and nonassessable and free from all taxes, liens and charges
created by the
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Company in respect of the issue thereof (other
than taxes in respect of any transfer occurring contemporaneously
with such issue).
ii.
Delivery of Certificates Upon Exercise . Certificates for
shares purchased hereunder shall be transmitted by the transfer
agent of the Company 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 a participant in such
system, and otherwise by physical delivery to the address specified
by the Holder in the Notice of Exercise within five Trading Days
from the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant (if required) and payment of the
aggregate Exercise Price as set forth above (“ Warrant
Share Delivery Date ”). This Warrant shall be deemed to
have been exercised on the date the Exercise Price is received by
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 by payment to the Company of the Exercise Price and all
taxes required to be paid by the Holder, if any, pursuant to
Section 2(c)(vi) prior to the issuance of such shares, have been
paid.
iii.
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.
iv.
Rescission Rights . If the Company fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to Section
2(c)(ii) by the Warrant Share Delivery Date, then the Holder will
have the right to rescind such exercise.
v.
No Fractional Shares or Scrip . No fractional shares or
scrip representing fractional shares shall be issued upon the
exercise of this Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such exercise,
the Company shall at its election, either pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole
share.
vi.
Charges, Taxes and Expenses . Issuance of 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
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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 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.
vii.
Closing of Books . The Company will not close its
stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms hereof.
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Section 3 . Certain Adjustments
.
a)
Stock Dividends and Splits . If the Company, at any time
while this Warrant is outstanding: (A) 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), (B) subdivides outstanding shares
of Common Stock into a larger number of shares, (C) combines
(including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by
reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case, the number of
Warrant Shares shall be increased so that immediately following
such event this Warrant shall be exercisable for the same
percentage of the outstanding Common Stock as it was immediately
prior to such event. Any adjustment made pursuant to this Section
3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend
or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
b)
Fundamental Transaction . If, at any time while this Warrant
is outstanding, (A) the Company effects any merger or consolidation
of the Company with or into another Person, (B) the Company effects
any sale of all or substantially all of its assets in one or a
series of related transactions, (C) any tender offer or exchange
offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender
or exchange their shares for other securities, cash or property, or
(D) the Company effects any reclassification of the Common Stock or
any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash
or property (in any such case, a “ Fundamental
Transaction ”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
1 Note: Holder to confirm Schedule 13D and Section
16 obligations.
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Transaction, at the option of the Holder, (a)
upon exercise of this Warrant, the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it
is the surviving corporation, and any additional consideration (the
“ Alternate Consideration ”) receivable upon or
as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a Holder of the number of
shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is acquired
in an all cash transaction, cash equal to the value of this Warrant
as determined in accordance w
