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INITIAL WARRANT
THE
WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF
COMMON STOCK DELIVERABLE UPON EXERCISE HEREUNDER, HAVE BEEN
AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (“THE ACT”) AND MAY NOT BE
SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED
WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (A) THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH
SUCH DISPOSITION OR (B) THE SALE OF SUCH SECURITIES IS MADE
PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE
144.
Date:
, 2008
WARRANT TO PURCHASE COMMON STOCK
OF
INTERMETRO COMMUNICATIONS, INC.
THIS
CERTIFIES THAT, for value
received,
(“
Holder ”),
is entitled, subject to the terms and conditions of this Warrant,
at any time or from time to time on or after the date hereof, to
purchase up to
(
) shares of Common Stock (the “Warrant Shares”), from
InterMetro Communications, Inc., a Nevada corporation (the
“
Company ”),
at an exercise price per share equal to one dollar ($1.00) (as
adjusted from time to time, the “Purchase Price). This
Warrant shall expire at 5:00 p.m. Pacific time
on
, 2013 (the “
Expiration Date ”).
Both the number of shares of Common Stock purchasable upon exercise
of this Warrant (the “
Warrant Shares ”)
and the Purchase Price are subject to adjustment and change as
provided herein. This Warrant is one constituent part of a
multi-part Unit issued pursuant to the Loan and Security Agreement
dated January 16, 2008, between the Company, the Subsidiaries, the
Agent and the Lenders named therein, including Holder (the
“Loan Agreement”).
1.
CERTAIN DEFINITIONS .
As used in this Warrant the following terms shall have the
following respective meanings:
“
1933 Act ”
shall mean the Securities Act of 1933, as amended.
“
Common Stock ”
shall mean the Common Stock, par value $0.001 per share, of the
Company and any other securities at any time receivable or issuable
upon exercise of this Warrant.
“
Fair Market Value ”
or “
FMV ”
of a share of Common Stock as of a particular date shall
mean:
(a)
If traded on a national securities exchange or the Nasdaq
Capital Market, the Fair Market Value shall be deemed to be
the average of the closing prices of the Common Stock of the
Company on such exchange or market over the five (5) trading
days ending immediately prior to the applicable date of
valuation;
(b)
If actively traded over-the-counter, the Fair Market Value
shall be deemed to be the average of the closing bid prices
over the 10 trading days ending immediately prior to the
applicable date of valuation; and
(c)
If there is no active public market, the Fair Market Value
shall be the value as determined in good faith by the
Company’s Board of Directors upon a review of relevant
factors, including due consideration of the Holder’s
determination of the value of the Company. The foregoing
notwithstanding, if Holder advises the Board of Directors in
writing that Holder disagrees with such determination, then
the Company and Holder shall promptly agree upon a reputable
investment banking firm to undertake such valuation. If the
valuation of such investment banking firm is greater than that
determined by the board of directors, then all fees and
expenses of such investment banking firm shall be paid by the
Company. In all other circumstances, such fees and expenses
shall be paid by Holder.
“
Note ”
shall mean the Company’s Secured Convertible Promissory Note
issued to Holder pursuant to the Loan Agreement.
“
SEC ”
shall mean the Securities and Exchange Commission.
2.
EXERCISE OF WARRANT
2.1
Payment .
Subject to compliance with the terms and conditions of this Warrant
and applicable securities laws and subject to the limitation in
Section 21.2 hereof, this Warrant may be exercised, in whole or in
part at any time or from time to time, on or before the Expiration
Date by the delivery (including, without limitation, delivery by
facsimile) of the form of Notice of Exercise attached hereto
as
Exhibit 1 (the
“
Notice of Exercise ”),
duly executed by the Holder, at the address of the Company as set
forth herein, and as soon as practicable after such
date,
(a)
surrendering this Warrant at the address of the Company, and
either
(b)
providing payment, by check or by wire transfer, or, if
applicable, by cancellation of any debt of the Company to the
Holder or Section 21 Payment (as defined in Section 21)
payable to the Holder as of immediately prior to such
exercise, of an amount equal to the product obtained by
multiplying the number of shares of Common Stock being
purchased upon such exercise by the then effective Purchase
Price (the “
Exercise Amount ”),
or
(c)
electing, by written notice to the Company on the Notice of
Exercise duly executed by the Holder, to receive a number of
Warrant Shares, determined in accordance with the formula set
forth below (the “Election”), in which event the
Company shall issue to the Holder a number of Warrant Shares
computed using the following formula:
X=
Y(A-B)
A
Where
X = The number of Warrant Shares to be issued to the Holder
upon an Election.
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Y
=
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The
number of Warrant Shares in respect of which this Warrant is
being exercised.
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A
=
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The
FMV of one Warrant Share on the date that the relevant Notice
of Exercise is received by the Company.
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B
=
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The
Purchase Price (as adjusted to the date of the Election) in
accordance with Section 4 hereof
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2.2
Common Stock Certificates; Fractional Shares
. As soon as practicable on or after the date of an exercise of
this Warrant and in any event within 10 days thereafter, the
Company shall deliver to the person or persons entitled to receive
the same a certificate or certificates for the number of whole
shares of Common Stock issuable upon such exercise. No fractional
shares or scrip representing fractional shares of Common Stock
shall be issued upon an exercise of this Warrant. In lieu thereof
the Company shall pay Holder the Fair Market Value of such
fractional share.
2.3
Partial Exercise: Effective Date of Exercise
. In case of any partial exercise of this Warrant, the Holder and
the Company shall cancel this Warrant upon surrender hereof and
shall execute and deliver a new Warrant of like tenor and date for
the balance of the shares of Common Stock purchasable hereunder.
This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for
exercise as provided above. The Company acknowledges that the
person entitled to receive the shares of Common Stock issuable upon
exercise of this Warrant shall be treated for all purposes as the
holder of record of such shares as of the close of business on the
date the Holder is deemed to have exercised this
Warrant.
3.
TAXES .
The Company shall pay all taxes and other governmental charges that
may be imposed in respect of the delivery of shares upon exercise
of this Warrant;
provided ,
however ,
that the Company shall not be required to pay any tax or other
charge imposed in connection with any transfer involved in the
delivery of any certificate for shares of Common Stock in any name
other than that of the Holder of this Warrant, and in such case the
Company shall not be required to deliver any stock certificate
until such tax or other charge has been paid, or it has been
established to the Company’s reasonable satisfaction that no
tax or other charge is due.
4.
ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON
STOCK .
The number of shares of Common Stock deliverable upon exercise of
this Warrant (or any shares of stock or other securities or
property receivable upon exercise of this Warrant) and the Purchase
Price are subject to adjustment upon occurrence of the
following:
4.1
Adjustment for Stock Splits, Stock Subdivisions or Combinations of
Shares of Common Stock .
The Purchase Price of this Warrant shall be proportionally
decreased and the number of shares of Common Stock deliverable upon
exercise of this Warrant (or any shares of stock or other
securities at the time deliverable upon exercise of this Warrant)
shall be proportionally increased to reflect any stock split or
subdivision of the Company’s Common Stock. The Purchase Price
of this Warrant shall be proportionally increased and the number of
shares of Common Stock deliverable upon exercise of this Warrant
(or any shares of stock or other securities at the time deliverable
upon exercise of this Warrant) shall be proportionally decreased to
reflect any combination of the Company’s Common
Stock.
4.2
Adjustment for Dividends or Distributions of Stock or Other
Securities or Property .
In case the Company shall make or issue, or shall fix a record date
for the determination of eligible holders entitled to receive, a
dividend or other distribution with respect to the Common Stock (or
any shares of stock or other securities at the time issuable upon
exercise of the Warrant) payable in (a) securities of the Company
or (b) assets (excluding cash dividends paid or payable solely out
of retained earnings), then, in each such case, the Holder of this
Warrant on exercise hereof at any time after the consummation,
effective date or record date of such dividend or other
distribution, shall receive, in addition to the shares of Common
Stock (or such other stock or securities) issuable on such exercise
prior to such date, and without the payment of additional
consideration therefor, the securities or such other assets of the
Company to which such Holder would have been entitled upon such
date if such Holder had exercised this Warrant immediately prior to
such making, issuance or record date.
4.3
Reclassification, Conversion .
If the Company, by reclassification of securities or conversion of
securities or otherwise, shall change any of the securities as to
which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this
Warrant shall thereafter represent the right to acquire such number
and kind of securities as would have been issuable if this Warrant
had been exercised immediately prior to such reclassification or
conversion or other change and the Purchase Price therefore shall
be appropriately adjusted, all subject to further adjustment as
provided in this Section 4.
4.4
Adjustment for Capital Reorganization. Merger or
Consolidation .
In case of any capital reorganization of the capital stock of the
Company (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), or any merger
or consolidation of the Company with or into another corporation,
or the sale of all or substantially all the assets of the Company
then, and in each such case, as a part of such reorganization,
merger, consolidation, sale or transfer, lawful provision shall be
made so that the Holder of this Warrant shall thereafter be
entitled to receive upon exercise of this Warrant the number of
shares of stock or other securities or property that a holder of
the shares deliverable upon exercise of this Warrant would have
been entitled to receive in such reorganization, consolidation,
merger, sale or transfer if this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale
or transfer, all subject to further adjustment as provided in this
Section 4. The foregoing provisions of this Section 4.4 shall
similarly apply to successive reorganizations, consolidations,
mergers, sales and transfers and to the stock or securities of any
other corporation that are at the time receivable upon the exercise
of this Warrant. If the per-share consideration payable to the
Holder hereof for shares in connection with any such transaction is
in a form other than cash or marketable securities, then the value
of such consideration shall be determined in good faith by the
Company’s Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company’s
Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests
of the Holder after the transaction, to the end that the provisions
of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this
Warrant.
4.5
Notice of Adjustment .
Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant or the Purchase Price is adjusted, or the
Company’s Board of Directors makes a determination of Fair
Market Value in connection with any such adjustment, the Company
shall promptly notify the Holder in writing of any such adjustment
or FMV determination, setting forth a brief statement of the facts
requiring such adjustment, the computation by which such adjustment
was made, and the basis for the FMV determination.
4.6
No Impairment .
The Company will not, by any voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this
Warrant to be observed or performed by the Company, but shall at
all times in good faith assist in the carrying out of all
provisions of this Section 4 and in the taking of all such action
as may be necessary or appropriate in order to protect the rights
of the Holder of this Warrant against impairment.
5.
LOSS OR MUTILATION .
Upon receipt of evidence reasonably satisfactory to the Company of
the ownership of and the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to it, and
(in the case of mutilation) upon surrender and cancellation of this
Warrant, the Company will cause to be executed and delivered in
lieu thereof a new Warrant of like tenor as the lost, stolen,
destroyed or mutilated Warrant.
6.
REPRESENTATION AND COVENANT. The
Company hereby represents and warrants that all shares issuable
pursuant to this Warrant, when delivered pursuant to the terms
hereof, shall be validly issued, fully paid and nonassessable and
free and clear of all liens, security interests, charges and other
encumbrances or restrictions on sale and free and clear of all
preemptive rights, except encumbrances or restrictions arising
under federal or state securities laws. Further, the Company hereby
covenants to reserve such number of authorized but unissued shares
of Common Stock as needed for issuance pursuant to this
Warrant.
7.
TRANSFER .
Subject to Section 10, this Warrant and all rights hereunder may be
transferred by the Holder upon delivery of the form of Assignment
attached hereto as
Exhibit 2 (the
“
Assignment ”),
duly execu
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