EXHIBIT 10-c
WARRANT TO PURCHASE COMMON STOCK
(CONVERSION WARRANTS)
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT FOR DISTRIBUTION, AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED NEITHER THE WARRANT NOR THE SHARES MAY
BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED. THIS WARRANT MUST BE SURRENDERED TO THE
COMPANY OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE
OR OTHER TRANSFER OF ANY INTEREST IN THIS WARRANT OR THE SHARES ISSUABLE
HEREUNDER.
Issuer: Ultradata Systems, Inc.
Class of Stock: Common Stock
Issue Date: February 14, 2005
Expiration Date: February 14, 2007
THIS WARRANT TO PURCHASE COMMON STOCK is being issued pursuant to
that certain Securities Purchase Agreement dated as of the date hereof (the
"Purchase Agreement") between Ultradata Systems, Incorporated, a Delaware
corporation (the "Company") and Golden Gate Investors, Inc. ("Holder").
1.1 Warrants. The Company hereby grants to Holder the right
to purchase 300,000 shares of the Company's Common Stock (the "Shares" or
"Warrant Shares"). This Warrant is exercisable concurrently with, and not
subsequent to, the issuance of a Conversion Notice under the Debenture. The
date that the Holder issues a Conversion Notice under the Debenture is
hereafter referred to as the "Conversion Date." Defined terms not defined
herein shall have the meanings ascribed to them in the Debenture or the
Purchase Agreement.
▇▇▇▇▇▇ agrees that, beginning in the first full calendar month after the
Registration Statement is declared effective, Holder will exercise at least
3% of the Warrants per calendar month, provided that the Common Shares are
available, registered and freely tradable. If Holder exercises more than 3%
of the Warrants in any calendar month, the excess over 3% shall be credited
against the next month's minimum exercise amount. In the event Holder does
not exercise at least 3% of the Warrants in any particular calendar month,
Holder shall not be entitled to collect interest on the Debenture for that
month if the Company gives Holder written notice, at least 5 business days
prior to the end of the month, of ▇▇▇▇▇▇'s failure to convert the minimum
required amount for that month. Provided, however, that, at anytime that is
more than 90 days after the Deadline, if the Volume Weighted Average Price
is less than $0.50 at anytime during the month, Holder may elect to convert
up to $100,000 Principal Amount of the Debenture only per month, without
exercising the related Warrants.
This Warrant shall expire and Holder shall no longer be able to purchase
the Warrant Shares on the Expiration Date.
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ARTICLE 2
EXERCISE
2.1 Method of Exercise. Holder may exercise this Warrant by
delivering a duly executed Warrant Notice of Exercise in substantially the
form attached as Appendix 1 to the principal office of the Company.
2.2 Delivery of Certificate and New Warrant. As promptly as
practicable after the receipt of the Warrant Notice of Exercise, but in any
event not more than three (3) Business Days after the Company's receipt of
the Warrant Notice of Exercise, the Company shall issue the Shares and
cause to be mailed for delivery by overnight courier, or if a Registration
Statement covering the Shares has been declared effective by the SEC cause
to be electronically transferred, to Holder a certificate representing the
Shares acquired and, if this Warrant has not been fully exercised and has
not expired, a new Warrant substantially in the form of this Warrant
representing the right to acquire the portion of the Shares not so
acquired.
2.3 Replacement of Warrants. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction,
on delivery of an indemnity agreement reasonably satisfactory in form and
amount to the Company or, in the case of mutilation, or surrender and
cancellation of this Warrant, the Company at its expense shall execute and
deliver, in lieu of this Warrant, a new warrant of like tenor.
2.4 Exercise Price. The Exercise Price of this Warrant shall
be $10.00.
2.5 Cashless Exercise. Notwithstanding anything to the
contrary contained in this Warrant, if the resale of the Warrant Shares by
▇▇▇▇▇▇ is not then registered pursuant to an effective Registration
Statement, upon the expiration of one year from the Issue Date, this
Warrant may be exercised by presentation and surrender of this Warrant to
the Company at its principal executive offices with a written notice of
▇▇▇▇▇▇'s intention to effect a cashless exercise, including a calculation
of the number of shares of Common Stock to be issued upon such exercise in
accordance with the terms hereof ( a "Cashless Exercise"). In the event of
a Cashless Exercise, in lieu of paying the Exercise Price in cash, Holder
shall surrender this Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares to which it
otherwise would be entitled by a fraction, the numerator of which shall be
the difference between the then current Market Price per share of the
Common Stock and the Exercise Price, and the denominator or which shall be
the then current Market Price per share of Common Stock.
ARTICLE 3
ADJUSTMENT TO THE SHARES
The number of Shares purchasable upon the exercise of this Warrant
and the Exercise Price shall be subject to adjustment from time to time
upon the occurrence of certain events, as follows:
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3.1 Reclassification. In case of any reclassification or
change of outstanding securities of the class issuable upon exercise of
this Warrant then, and in any such case, the Holder, upon the exercise
hereof at any time after the consummation of such reclassification or
change, shall be entitled to receive in lieu of each Share theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of
stock, other securities, money and/or property received upon such
reclassification or change by a holder of one Share. The provisions of
this Section 2.1 shall similarly apply to successive reclassifications or
changes.
3.2 Subdivision or Combination of Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its Shares, the Exercise Price shall be
proportionately decreased in the case of a subdivision or increased in the
case of a combination.
3.3 Stock Dividends. If the Company, at any time while this
Warrant is outstanding shall pay a dividend with respect to its Shares
payable in Shares, or make any other distribution of Shares with respect to
Shares (except any distribution specifically provided for in Section 2.1
and Section 2.2 above), then the Exercise Price shall be adjusted,
effective from and after the date of determination of shareholders entitled
to received such dividend or distribution, to that price determined by
multiplying the Exercise Price in effect immediately prior to such date of
determination by a fraction, (a) the numerator of which shall be the total
number of Shares outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total number of
Shares outstanding immediately after such dividend or distribution.
3.4 Non-Cash Dividends. If the Company at any time while
this Warrant is outstanding shall pay a dividend with respect to Shares
payable in securities other than Shares or other non-cash property, or make
any other distribution of such securities or property with respect to
Shares (except any distribution specifically provided for in Section 2.1
and Section 2.2 above), then this Warrant shall represent the right to
acquire upon exercise of this Warrant such securities or property which a
holder of Shares would have been entitled to receive upon such dividend or
distribution, without the payment by the Holder of any additional
consideration for such securities or property.
3.5 Effect of Reorganization and Asset Sales. If any (i)
reorganization or reclassification of the Common Stock (ii) consolidation
or merger of the Company with or into another corporation, or (iii) sale or
all or substantially all of the Company's operating assets to another
corporation followed by a liquidation of the Company (any such transaction
shall be referred to herein as an "Event"), is effected in such a way that
holders of common Stock are entitled to receive securities and/or assets
as a result of their Common Stock ownership, the Holder, upon exercise of
this Warrant, shall be entitled to receive such shares of stock securities
or assets which the Holder would have received had it fully exercised this
Warrant on or prior the record date for such Event. The Company shall not
merge into or consolidate with another corporation or sell all of its
assets to another corporation for a consideration consisting primarily of
securities of such corporation, unless the successor or acquiring
corporation, as the case may be, shall expressly assume the due and
punctual observance and performance of each and every covenant and
condition of this Warrant to be performed or observed by the Company and
all of the obligations and liabilities hereunder, subject to such
modification as shall be necessary to provide for adjustments which shall
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be as nearly equivalent as practicable to the adjustments provided for in
this Section 2. The foregoing provisions shall similarly apply to
successive mergers, consolidations or sales of assets.
3.6 Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price, the number of Shares shall be adjusted, to the nearest
whole share, to the product obtained by multiplying the number of Shares,
purchasable immediately prior to such adjustment by a fraction, the
numerator of which shall be the Exercise Price immediately prior to such
adjustment and the denominator of which shall be the Exercise Price
immediately thereafter.
3.7 No Impairment. The Company shall not, by amendment of
its articles of incorporation or through a 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 under this
Warrant by the Company, but shall at all times in good faith assist in
carrying out all of the provisions of this Warrant and in taking all such
action as may be reasonably necessary or appropriate to protect ▇▇▇▇▇▇'s
rights hereunder against impairment. If the Company takes any action
affecting its Common Stock other than as described above that adversely
affects Holder's rights under this Warrant, the Exercise Price shall be
adjusted downward and the number of Shares issuable upon exercise of this
Warrant shall be adjusted upward in such a manner that the aggregate
Exercise Price of this Warrant is unchanged.
3.8 Fractional Shares. No fractional Shares shall be
issuable upon the exercise of this Warrant, and the number of Shares to be
issued shall be rounded down to the nearest whole Share.
3.9 Certificate as to Adjustments. Upon any adjustment of
the Exercise Price, the Company, at its expense, shall compute such
adjustment and furnish Holder with a certificate of its Chief Financial
Officer setting forth such adjustment and the facts upon which such
adjustment is based. The Company shall, upon written request, furnish
Holder a certificate setting forth the Exercise Price in effect upon the
date thereof and the series of adjustments leading to such Exercise Price.
3.10 No Rights of Shareholders. This Warrant does not entitle
Holder to any voting rights or any other rights as a shareholder of the
Company prior to the exercise of ▇▇▇▇▇▇'s right to purchase Shares as
provided herein.
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ARTICLE 4
REPRESENTATIONS AND COVENANTS OF THE COMPANY
4.1 Representations and Warranties. The Company hereby
represents and warrants to Holder that all Shares which may be issued upon
the exercise of the purchase right represented by this Warrant, shall, upon
issuance, be duly authorized, validly issued, fully paid and nonasessable,
and free of any liens and encumbrances.
4.2 Notice of Certain Events. If the Company proposes at any
time (a) to declare any dividend or distribution upon its Common Stock,
whether in cash, property, stock, or other securities and whether or not a
regular cash dividend; (b) to offer for subscription pro rata to the
holders of any class or series of its stock any additional shares of stock
of any class or series or other rights; (c) to effect any reclassification
or recapitalization of Common Stock; (d) to merge or consolidate with or
into any other corporation, or sell, lease, license, or convey all or
substantially all of its assets, or to liquidate, dissolve or wind up; or
(e) offer holders of registration rights the opportunity to participate in
an underwritten public offering of the Company's securities for cash, then,
in connection with each such event, the Company shall give Holder (1) at
least 20 days prior written notice of the date on which a record will be
taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of Common Stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the
matters referred to in (c) and (d) above; (2) in the case of the matters
referred to in (c) and (d) above at least 20 days prior written notice of
the date when the same will take place (and specifying the date on which
the holders of Common Stock will be entitled to exchange their Common Stock
for securities or other property deliverable upon the occurrence of such
event); and (3) in the case of the matter referred to in (e) above, the
same notice as is given to the holders of such registration rights.
4.3 Information Rights. So long as Holder holds this Warrant
and/or any of the Shares, the Company shall deliver to Holder (a) promptly
after mailing, copies of all notices or other written communications to the
shareholders of the Company, (b) within ninety (90) days of their
availability, the annual audited financial statements of the Company
certified by independent public accountants of recognized standing, and
(c) within forty-five (45) days after the end of each fiscal quarter or
each fiscal year, the Company's quarterly, unaudited financial statements.
4.4 Reservation of Warrant Shares. The Company has reserved
and will keep available, out of the authorized and unissued shares of
Common Stock, the full number of shares sufficient to provide for the
exercise of the rights of purchase represented by this Warrant.
4.5 Registration Rights. If Holder exercises this Warrant and
purchases some or all of the Shares, Holder shall have the Registration
Rights set forth in that certain Registration Rights Agreement executed
concurrently therewith.
ARTICLE 5
REPRESENTATIONS AND COVENANTS OF THE HOLDER
5.1 Private Issue. Holder understands (i) that the Shares
issuable upon exercise of ▇▇▇▇▇▇'s rights contained in the Warrant are not
registered under the Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by the Warrant will be
exempt from the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on
Holder's representations set forth in this Article 5.
5.2 Financial Risk. Holder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits
and risks of its investment and has the ability to bear the economic risks
of its investment.
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5.3 Risk of No Registration. Holder understands that if the
Company does not register with the Securities and Exchange Commission
pursuant to Section 12 of the Act, or file reports pursuant to Section
15(d), of the Securities Exchange Act of 1934 (the "1934 Act"), or if a
registration statement covering the securities under the Act is not in
effect when it desires to sell (i) the right to purchase Shares pursuant to
the Warrant, or (ii) the Shares issuable upon exercise of the right to
purchase, it may be required to hold such securities for an indefinite
period.
5.4 Accredited Investor. Holder is an "accredited investor,"
as such term is defined in Regulation D promulgated pursuant to the Act.
ARTICLE 6
MISCELLANEOUS
6.1 Term. This Warrant is exercisable, in whole or in part,
at any time and from time to time on or after the Conversion Date and on or
before the Expiration Date set forth above.
6.2 Compliance with Securities Laws on Transfer. This
Warrant may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the
transferor and the transferee (including, without limitation, the delivery
of investment representation letters and legal opinions reasonably
satisfactory to the Company, as reasonably requested by the Company). The
Company shall not require Holder to provide an opinion of counsel if the
transfer is to an affiliate of Holder.
6.3 Transfer Procedure. Holder shall have the right without
the consent of the Company to transfer or assign in whole or in part this
Warrant and the Shares issuable upon exercise of this Warrant. ▇▇▇▇▇▇
agrees that unless there is in effect a registration statement under the
Act covering the proposed transfer of all or part of this Warrant, prior to
any such proposed transfer the Holder shall give written notice thereof to
the Company (a "Transfer Notice"). Each Transfer Notice shall describe the
manner and circumstances of the proposed transfer in reasonable detail and,
if the company so requests, shall be accompanied by an opinion of legal
counsel, in a form reasonably satisfactory to the Company, to the effect
that the proposed transfer may be effected without registration under the
Act; provided that the Company will not require opinions of counsel for
transactions involving transfers to affiliates or pursuant to Rule 144
promulgated by the Securities and Exchange Commission under the act, except
in unusual circumstances.
6.4 Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be delivered
personally, or sent by telecopier machine or by a nationally recognized
overnight courier service, and shall be deemed given when so delivered
personally, or by telecopier machine or overnight courier service as
follows:
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if to the Company, to:
Ultradata Systems, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
if to the Holder, to:
Golden Gate Investors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or at such other address as the Company shall have furnished to the Holder.
Each such notice or other communication shall for all purposes of this
agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or
five days after the same has been deposited in a regularly maintained
receptacle for the deposit of the United States mail, addressed and mailed
as aforesaid.
6.5 Counterparts. This agreement may be executed in any
number of counterparts, each of which shall be enforceable against the
parties actually executing such counterparts, and all of which together
shall constitute one instrument. Facsimile execution shall be deemed
originals.
6.6 Waiver. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought.
6.7 Attorneys Fees. In the event of any dispute between the
parties concerning the terms and provisions of this Warrant, the party
prevailing in such dispute shall be entitled to collect from the other
party all costs incurred in such dispute, including reasonable attorneys
fees.
6.8 Governing Law; Jurisdiction. This Warrant shall be
governed by and construed in accordance with the laws of the State of
California, without giving effect to its principles regarding conflicts of
law. Each of the parties hereto consents to the jurisdiction of the federal
courts whose districts encompass any part of the City of San Diego or the
state courts of the State of California sitting in the City of San Diego in
connection with any dispute arising under this Warrant and hereby waives,
to the maximum extent permitted by law, any objection including any
objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.
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6.9 Remedies. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Holder, by
vitiating the intent and purpose of the transactions hereby. Accordingly,
the Company acknowledges that the remedy at law for a breach of its
obligations under this Warrant will be inadequate and agrees, in the event
of a breach or threatened breach by the Company of the provisions of this
Warrant, that the Holder shall be entitled, in addition to all other
available remedies at law or in equity, and in addition to the penalties
assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Warrant and to enforce specifically the terms
and provisions hereof, without the necessity of showing economic loss and
without any bond or other security being required.
IN WITNESS WHEREOF, the parties hereto have duly caused this Warrant
to Purchase Common Stock to be executed and delivered on the date first
above written.
Ultradata Systems, Incorporated Golden Gate Investors, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
Title: Chief Executive Officer Title: Investment Portfolio Manager
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APPENDIX 1
WARRANT NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase _____ shares of the
Common Stock of Ultradata Systems, Incorporated pursuant to the terms of
the Warrant to Purchase Common Stock issued by Ultradata Systems,
Incorporated on February ___, 2005.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name as is specified
below:
_____________________
_____________________
_____________________
(Name and Address)
3. The undersigned makes the representations and covenants set
forth in Article 5 of the Warrant to Purchase Common Stock.
________________________________
(Signature)
___________________________
(Date)