EXHIBIT 10.6
THIS WARRANT
AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR QUALIFIED UNDER ANY APPLICABLE SECURITIES
LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION
UNDER SUCH STATE SECURITIES LAWS OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
QUALIFICATION IS NOT REQUIRED.
CROWDGATHER, INC.
WARRANT TO PURCHASE SHARES OF
COMMON STOCK
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No. __________
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May __, 2009
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THIS CERTIFIES THAT , for value received, _____________________, a
________________________ (the “ Investor ”), or
Investor’s assigns (Investor and Investor’s assigns
being the “ Holder ”), is entitled to subscribe
for and purchase at any time during the Exercise Period from
CrowdGather, Inc., a Nevada corporation, with its principal office
at 20300 Ventura Blvd., Suite 330, Woodland Hills, California
91364 (the “ Company ”), a number of shares
of Common Stock equal to the Share Number at a per share price
equal to the Exercise Price in effect at such time. This
Warrant is issued in conjunction with the 8% Secured Straight
Convertible Debenture, dated of even date herewith (the “
Debenture ”) by and between the Company and the
investor listed on the Debenture.
DEFINITIONS. As used herein, the
following terms shall have the following respective
meanings:
“Aggregate Warrant Price” shall mean
the dollar value obtained by multiplying $0.70 by
_______.
“Common Stock” shall mean the common
stock of the Company.
“Exercise Period” shall mean the
period commencing on the original date of issuance of this Warrant
and terminating on the Maturity Date of the Debenture (as that term
is defined therein), unless (i) said Maturity Date has been
extended by the Holder or (ii) all of the initial principal
thereunder has been converted to Common Stock in accordance with
the terms and conditions thereof. In the event that the
Maturity Date has been extended, the Exercise Period hereof shall
terminate as of such extended Maturity Date, unless all of the
initial principal thereunder has been converted to Common Stock in
accordance with the terms and conditions thereof. In the
event that all of the initial principal thereunder has been
converted to Common Stock in accordance with the terms and
conditions under the Debenture, the Exercise Period hereof shall
terminate two years after the Maturity Date, or extended Maturity
Date, of the Debenture.
“Exercise Price” shall mean $0.70
per share of Common Stock.
“Exercise Shares” shall mean any
Common Stock acquired upon exercise of this Warrant.
“Share Number,” at any time, shall
mean (i) the Aggregate Warrant Price minus the aggregate exercise
price previously paid upon exercise of this Warrant, divided by
(ii) the Exercise Price then in effect.
The rights represented by this Warrant may be
exercised as a whole or in part at any time during the Exercise
Period, by delivery of the following to the Company at its address
set forth above (or at such other address as it may designate by
notice in writing to the Holder):
An executed Notice of Exercise in the form
attached hereto;
Payment of the Exercise Price either in cash or
by check; and
Upon the exercise of the rights represented by
this Warrant, a certificate or certificates for the Exercise Shares
so purchased, registered in the name of the Holder or persons
affiliated with the Holder, if the Holder so designates (and such
designation is in compliance with applicable securities laws and
any stockholders, investor rights or similar agreement), shall be
issued and delivered to the Holder as promptly as practicable after
the rights represented by this Warrant shall have been so
exercised.
The person in whose name any certificate or
certificates for Exercise Shares are to be issued upon exercise of
this Warrant shall be deemed to have become the holder of record of
such shares on the date on which this Warrant was surrendered and
payment of the Exercise Price was made, irrespective of the date of
delivery of such certificate or certificates, except that, if the
date of such surrender and payment is a date when the stock
transfer books of the Company are closed, such person shall be
deemed to have become the holder of such shares at the close of
business on the next succeeding date on which the stock transfer
books are open.
Notwithstanding anything to the contrary set
forth in this Warrant, at no time may the Holder exercise this
Warrant if the number of shares of Common Stock to be issued
pursuant to such exercise would exceed, when aggregated with all
other shares of Common Stock owned by such Holder at such time, the
number of shares of Common Stock that would result in such Holder
beneficially owning (as determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended, and the rules
thereunder) in excess of 4.99% of the then-issued and outstanding
shares of Common Stock; provided , however , that,
upon the Holder providing the Company with sixty-one (61) days
notice (the “ Waiver Notice ”) that such Holder
would like to waive this Section 2(d) with regard to any or all
shares of Common Stock issuable upon exercise of this Warrant, this
Section 2(d) will be of no force or effect with regard to all or a
portion of the Warrant referenced in the Waiver Notice;
provided , further , that this provision shall be of
no further force or effect during the sixty-one (61) days
immediately preceding the expiration of the term of this
Warrant.
COVENANTS OF
THE COMPANY.
Covenants as to Exercise Shares
. The Company covenants
and agrees that all Exercise Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon
issuance, be validly issued and outstanding, fully paid and
nonassessable, and free from all taxes, liens and charges with
respect to the issuance thereof. The Company further
covenants and agrees that the Company will at all times during the
Exercise Period have authorized and reserved, free from preemptive
rights, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this
Warrant. If at any time during the Exercise Period the
number of authorized but unissued shares of Common Stock shall not
be sufficient to permit exercise of this Warrant, the Company will
take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for
such purposes.
No Impairment . Except and to the extent as waived
or consented to by the Holder, the Company will not, by amendment
of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the
provisions of this Warrant and in the taking of all such action as
may be necessary or appropriate in order to protect the exercise
rights of the Holder against impairment.
Notices of Record Date . In the event of any taking by the
Company of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to
receive any dividend (other than a cash dividend which is the same
as cash dividends paid in previous quarters) or other distribution,
the Company shall mail to the Holder, at least ten (10) days prior
to the date specified herein, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend or
distribution.
REPRESENTATIONS OF HOLDER.
Acquisition of Warrant for Personal
Account . The
Holder represents and warrants that it is acquiring the Warrant and
any shares of capital stock issued or issuable upon exercise or
conversion of the Warrant for investment purposes only and not with
a view to or for resale in connection with any distribution or
public offering thereof within the meaning of the Act (as defined
below). The Holder also represents that the entire legal
and beneficial interests of the Warrant and Exercise Shares the
Holder is acquiring is being acquired for, and will be held for,
the account of the Holder only.
Accredited Investor Status
. The Holder represents
and warrants that it is either (a) an “accredited
investor” as such term is defined in Rule 501 under the
Securities Act of 1933, as amended (the “ Act ”)
or (b) not a U.S. Person and the offer or sale of the Debentures
and this Warrant were made in an “ offshore
transaction ,” as that term is defined in Rule 902(h), as
promulgated under the Act. In either event, if required
by the Company, the Holder shall provide the Company with such
additional information as the Company may reasonably request with
respect to this representation and warranty.
Securities Are Not Registered
.
The Holder understands that the Warrant and the
Exercise Shares have not been registered under the Act, on the
basis that no distribution or public offering of the stock of the
Company is to be effected, or registered or qualified under any
applicable state securities laws. The Holder realizes
that the basis for the exemption may not be present if,
notwithstanding its representations, the Holder has a present
intention of acquiring the securities for a fixed or determinable
period in the future, selling (in connection with a distribution or
otherwise), granting any participatio