REMOTE KNOWLEDGE, INC. SUBSCRIPTION AGREEMENT May 22, 2006
Exhibit 10.4
REMOTE KNOWLEDGE, INC.
May 22, 2006
REMOTE KNOWLEDGE, INC.
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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Ladies and Gentlemen:
1. The Offering. The undersigned (the “Subscriber”) understands that REMOTE
KNOWLEDGE, INC., Delaware corporation (the “Company”), is offering up to 2,000
shares of its Series B Convertible Preferred Stock (“Series B Preferred Stock”) along with warrants
to purchase up to 8,000,000 shares of common stock (collectively, the “Securities”) to a
limited number of qualified investors, each of whom will qualify as an “accredited investor”.
2. Acquisition of Securities. In connection with the offer of the Securities hereby,
the Company has duly authorized the issuance to the Subscriber of the Securities listed on the
signature page of this Agreement pursuant to the terms and conditions of this Agreement. The
Preferred Stock will have the rights, preferences, privileges, restrictions and voting power set
forth in the Company’s Certificate of Designation and Preferences for the Series B Convertible
Preferred Stock as set forth in the attached Exhibit A and the Warrants will be issued pursuant to
the terms and conditions of the form of Warrant as set forth in the attached Exhibit B. The
Securities will be subject to the Registration Rights Agreement set forth in the attached Exhibit
C.
2.1 Procedure Issuance of Securities. Execution of this Subscription
Agreement will obligate the Subscriber to purchase the total number of Securities set forth
on the signature page. Subject to the terms and conditions of this Agreement, the Company
agrees to issue to all of the Subscribers 2,000 shares of the Preferred Stock,
along with Warrants to purchase 8,000,000 shares of common stock until February 28,
2011, at a purchase price of $0.75 per share (collectively, the “Securities”) for a total
purchase price of $2,000,000.
2.2 Closing. The closing of the purchase and sale of the Securities will take
place at the offices of the Company or at any other location as may be agreed by the
parties hereto (the “Closing”). The Closing will take place when the Company has received
subscriptions for 2,000 shares of Series B Preferred Stock and funds of
$2,000,000. At the Closing, the Company will deliver to the Purchasers
certificates representing the Securities including up to 2,000 shares of the Series
B Preferred Stock and Warrants to purchase 8,000,000 shares of common stock at a
purchase price of $0.75.
3. Subscription by Subscriber. Subscriber hereby agrees that the Subscriber will
purchase from the Company the total number of Securities of the Company at the Closing as set forth
on the signature page hereof and has tendered a check or has authorized a wire transfer to the
Company in the amount of the required portion of the purchase price.
4. Acceptance of Subscription. The Subscriber acknowledges that a subscription
hereunder shall be irrevocable until accepted or rejected by the Company. The acceptance by the
Company of the
subscription shall be evidenced by the execution of this Agreement by the Company and the
acceptance and deposit of checks or wire transfers tendered for payment of the Securities.
5. Subscriber’s Representations and Warranties. In connection with this subscription,
the Subscriber hereby represents, warrants, covenants and acknowledges to the Company as follows:
5.1 Purchase for Investment. The Subscriber is acquiring the Securities for
investment for the Subscriber’s own account, not as a nominee or agent, and not with the
view to, or for resale or any distribution thereof. The Subscriber understands that the
Securities to be purchased have not been, and will not be, registered under the Securities
Act of 1933, as amended (the “Securities Act”), or any state securities laws by reason of
specific exemptions from the registration provisions of the Securities Act, and any
applicable state securities laws, the availability of which depend upon, among other
things, the bona fide nature of the investment intent and the accuracy of the Subscriber’s
representations as expressed herein.
5.2 Investor Qualifications. The Subscriber has substantial experience in
evaluating and investing in private placement transactions of securities in companies
similar to the Company, so that the Subscriber is capable of evaluating the risks and
merits of the investment in Securities of the Company, and the Subscriber has the capacity,
both by experience and by financial capacity, to protect the personal interests of the
Subscriber in the negotiations concerning the terms and conditions of the Securities.
5.3 Accredited Investor. The Subscriber is an accredited investor as defined
in Rule 501 of Regulation D promulgated under the Securities Act.
5.4 Sophisticated Investor. By reason of the business and financial
experience of the Subscriber, together with the experience of any advisors retained, the
Subscriber has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective
investment, and is able to bear the economic risk of such investment and, at the present
time, is able to afford a complete loss of such investment. Subscriber hereby represents
that it has received the Offering Information of the Company (as defined below). The
Subscriber has had the opportunity to ask questions of, and receive answers from, the
Company concerning the terms and conditions of the offering of the Securities, to discuss
the Company’s business, management and financial affairs with its management, and to obtain
from the Company any additional information about the Company the Subscriber may have
desired. The Subscriber is satisfied with the answers so received and the additional
information so obtained.
5.5 Other Subscribers. The Subscriber is not relying upon any statements or
instruments made or issued by any other Subscriber or any other person, firm or entity,
other than the Company, in making the decision to invest in the Securities.
5.6 Restricted Securities. The Subscriber understands that the Securities are
restricted securities within the meaning of the Securities Act, and that, as a result, the
Subscriber must hold the Securities indefinitely, unless subsequently registered under (or
exempt from registration under) the Securities Act, and applicable state securities laws
and regulations. The Subscriber is familiar with, or has been advised by counsel
regarding, the applicable limitations upon the resale and transfer of the Securities.
5.7 Company’s Reliance. The Subscriber acknowledges that the Company is and
will be relying upon the truth and accuracy of the foregoing representations and warranties
in offering and selling the Securities without first registering them under the Securities
Act and applicable state securities laws, and that, but for such representations, this
subscription would not be accepted. The Subscriber authorizes the Company, in its sole
discretion, to place a restrictive legend in substantially the following form, with such
amendments as may be required by any state securities laws, on the certificates and any
other documents evidencing the Securities:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, BUT
HAVE BEEN ACQUIRED FOR THE PRIVATE INVESTMENT OF THE HOLDER
HEREOF. THEY MAY NOT BE OFFERED OR SOLD, AND NO TRANSFER OF THEM
MAY BE MADE, UNLESS (1) THEY ARE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMEMDED, AND APPLICABLE STATE SECURITIES LAWS, OR
(2) THERE IS AVAILABLE AN EXEMPTION FROM SUCH LAWS FOR SUCH OFFER,
SALE OR TRANSFER.
Company reserves the right to place any additional legends required by state or Federal law.
6. Company’s Representations and Warranties. The Company has delivered in connection
with this Subscription Agreement information about the Company (“Offering Information”), including
a copy of the Form 10-KSB of the Company for the year ended December 31, 2005, a copy of the Form
10-QSB for the quarter ended March 31, 2006 and an offering term sheet. The Company hereby
incorporates by reference herein the Offering Information and represents that the Offering
Information supplied by the Company for delivery to the Subscriber does not contain any untrue
statement of a material fact and does not omit to state a material fact necessary to make the
statements contained therein not misleading.
7. Registration Rights Agreement. By the execution of the execution page included in
this Subscription Agreement, the Subscriber agrees to enter into the Registration Rights Agreement
with the Company included with the Offering Information.
8. Indemnity. The Subscriber agrees to indemnify and hold harmless the Company and
the officers and directors thereof against any damages, loss, expense or cost, including, without
limitation, reasonable attorneys’ fees, sustained as a result of the breach of any of the
representations made by that Subscriber herein.
9. Successors and Assigns. The terms and conditions of this Agreement will insure to
the benefit of and be binding upon the respective successors and assigns of the parties (including
the transferees of the Securities).
10. Notices. All notices and other communications provided for or permitted hereunder
will be in writing and will be deemed to have been duly given if delivered personally or sent by
telecopy, registered or certified mail (return receipt requested), postage prepaid, nationally
recognized receipted delivery service, or courier, if to the Subscriber, at the address set forth
on the signature page hereto, and if the Company, at the address on the first page. Notices sent
by mail will be effective three (3) business days after being mailed; notices sent by telecopy
will be effective when receipt is acknowledged, and notices sent by receipted delivery service will
be effective on the next business day after delivery to the delivery service. Notices may be
changed by written notice pursuant to this provision.
11. Further Assurances. Each party agrees to use commercially reasonable efforts to
take, or cause to be taken all actions and to do, or cause to be done all things that may be
necessary or appropriate to consummate and to make effective the transactions contemplated by this
Agreement, including, without limitation, the execution and delivery of such other certificates,
agreements, instruments and documents, the provision of all such information as may be necessary or
appropriate as aforesaid and the making of such governmental filings as may be necessary.
12. Final Agreement. This Agreement and the attachment hereto constitute the final
agreement between the parties concerning the matters referred to herein, and supersede all prior
agreements and understandings.
13. Counterparts. Two or more duplicate originals of this Agreement may be signed by
the parties, each of which shall be an original, but all of which together shall constitute one and
the same instrument.
14. Governing Law. The validity, meaning and effect of this Agreement shall be
determined in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the undersigned Subscriber has executed this Agreement as of the dates set
forth on the signature page hereof.
[Signature Pages Follow]
SUBSCRIPTION SIGNATURE PAGE
| Total of Shares of Series B Preferred Stock Subscribed for | 100 | |||||
| Total Purchase Price | $100,000 | |||||
| Total number of Warrants | 400,000 | |||||
| Date: July 10, 2006 |
| Signature(s) of Subscriber: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Printed Name of Subscriber(s): OSA Pension & Trust ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
| Address: | ||||||
| Telephone Number: | ||||||||
| Home: | ||||||||
| Office: | ||||||||
| Social Security Number: | ||||||
ACCEPTED: July 10, 2006
REMOTE KNOWLEDGE, INC.
By:
|
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
| ▇▇▇▇▇ ▇. ▇▇▇▇▇, President |
SIGNATURE PAGE
REGISTRATION RIGHTS AGREEMENT
The undersigned Subscriber hereby agrees to enter into and be bound by the Registration Rights
Agreement dated May 22, 2006 with REMOTE KNOWLEDGE, INC., a Delaware corporation.
| /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Signature | ||
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
| Printed Name | ||
| July 10, 2006 | ||
| Date |
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE (COLLECTIVELY, THE “ACTS”). NEITHER THIS WARRANT NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT HERETO UNDER ALL OF THE APPLICABLE ACTS, OR AN
OPINION OF COUNSEL SATISFACTORY TO REMOTE KNOWLEDGE, INC. TO THE EFFECT THAT SUCH REGISTRATIONS ARE
NOT REQUIRED.
WARRANT
to Purchase Common Stock of
REMOTE KNOWLEDGE, INC.
Expiring on February 28, 2011
THIS IS TO CERTIFY THAT, for value received, OSA PENSION & TRUST ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or
its permitted assignees (the “Holder”), is entitled to purchase from REMOTE KNOWLEDGE,
INC., a Delaware corporation (the “Company”), at the place where the Warrant Office
designated pursuant to Section 2.1 is located, at a purchase price per share of $0.75
(“Exercise Price”), of 400,000 duly authorized, validly issued, fully paid and
nonassessable shares of common stock, par value $.001 per share, of the Company ( the “Common
Stock”), and is entitled also to exercise the other appurtenant rights, powers and privileges
hereinafter set forth. The number of shares of the Common Stock purchasable hereunder and the
Exercise Price are subject to adjustment in accordance with Article III hereof. This
Warrant shall expire at 5:00 p.m., C.S.T., on February 28, 2011.
Certain initially capitalized terms used in this Warrant are defined in Article IV.
ARTICLE I
Exercise of Warrant
1.1 Method of Exercise. This Warrant may be exercised in whole or in part from time to
time until February 28, 2011, at which time this Warrant shall expire and be of no further force or
effect. To exercise this Warrant, Holder shall deliver to the Company, at the Warrant Office
designated in Section 2.1, (a) a written notice in the form of the Subscription Notice
attached as an exhibit hereto (the “Notice”), stating therein the election of such Holder
to exercise this Warrant in the manner provided in the Notice, (b) payment in full of the Exercise
Price (in the manner described below) for all Warrant Shares to be purchased hereunder, and (c)
this Warrant. This Warrant shall be deemed to be exercised on the date of receipt by the Company
of the Notice, accompanied by payment for the Warrant shares to be purchased and surrender of this
Warrant, as aforesaid, and such date is referred to herein as the “Exercise Date.” Upon
such exercise, the Company shall issue and deliver to such Holder a certificate for the full number
of the Warrant Shares purchased by such Holder hereunder and pursuant to the Notice, against the
receipt by the Company of the total Exercise Price payable hereunder for all such Warrant Shares,
in cash or by certified or cashier’s check. The Person in whose name the certificate(s) for Common
Stock is to be issued shall be deemed to have become a holder of record of such Common Stock on the
Exercise Date.
1.2 Net Exercise. Notwithstanding any provisions herein to the contrary, if the Common
Stock is registered under the Securities Exchange Act of 1934, as amended (the “Exchange
Act” and the Current Market Price of one share of Common Stock is greater than the Exercise
Price (at the date of exercise), in lieu of exercising this Warrant by payment of cash, the Holder
may elect to receive the Warrant Shares equal to the value (as determined below) of this Warrant
(or portion thereof being canceled) by surrender of this Warrant at the Warrant Office together
with the properly endorsed Notice in which event the company will issue the Holder (or its
designee) a number of shares of Common Stock computed as follows:
X = Y (A-B)
A
A
Where:
|
X = the number of shares of Common Stock to be issued to the Holder. | |
| Y = the number of Warrant Shares being surrendered under the Warrant and pursuant to the Notice (whether a full or partial exercise thereof). | ||
| A = the Current Market Price of one share of Common Stock (at the date of exercise). | ||
| B = Exercise Price (as adjusted to the date of exercise) |
1.3 Fractional Shares. In lieu of any fractional shares of Common Stock which would
otherwise be issuable upon exercise of this Warrant, the Company shall in lieu thereof pay to the
Person entitled thereto an amount in cash equal to the Current Market Price of such fraction of a
share.
ARTICLE II
Warrant Office; Transfer
2.1 Warrant Office. The Company shall maintain an office for certain purposes
specified herein (the “Warrant Office”), which office shall initially be the Company’s
office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and may subsequently be such other
office of the Company or of any transfer agent of the Common Stock in the continental United States
of which written notice has previously been given to the Holder. The Company shall maintain, at
the Warrant Office, a register for the Warrant in which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well as the name and address
of each permitted assignee of the rights of the registered owner hereof.
2.2 Ownership of Warrant. The Company may deem and treat the person in whose name this
Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or
writing hereon made by anyone other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant for registration of transfer as
provided in this Article II.
2.3 Transfer of Warrants. The Company agrees to maintain at the Warrant Office books
for the registration and transfer of this Warrant. This Warrant may be freely transferred, in
whole or in part, by the Holder pursuant to the form of Assignment attached as an exhibit hereto,
so long as any such transfer is in compliance with the Acts and any other applicable law. The
Company, from time to time, shall register the transfer of this Warrant in such books upon
surrender of this Warrant at the Warrant Office, properly endorsed or accompanied by appropriate
instruments of transfer and written instructions for transfer satisfactory to the Company. Upon
any such transfer, a new Warrant shall be issued to the transferee, and the surrendered Warrant
shall be canceled by the Company. The Holder of this Warrant shall pay all taxes and all other
expenses and charges payable in connection with the transfer of Warrants pursuant to this
Section 2.3.
2.4 Registration Rights. The Company agrees to register on behalf of Holder the
issuance or resale of all of the Warrant Shares by Holder or any of its affiliates pursuant to the
terms and conditions of the Registration Rights Agreement entered into between the Holder and the
Company of even date herewith concerning the Warrant Shares.
2.5 Acknowledgment of Rights. The Company will, at the time of the exercise of this
Warrant in accordance with the terms hereof, upon the request of the Holder, acknowledge in writing
its continuing obligation to afford to such Holder any rights (including, without limitation, any
right to registration of the Warrant Shares) to which such Holder shall continue to be entitled
after such exercise in accordance with the provisions of this Warrant, provided that if the Holder
shall fail to make any such request, such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.
2.6 Expenses of Delivery of Warrants. Except as provided in Section 2.3
above, the Company shall pay all reasonable expenses, taxes (other than transfer taxes) and other
charges payable in connection with the preparation, issuance and delivery of Warrants and related
Warrant Shares hereunder.
2.7 Compliance with Securities Laws. The Holder understands and agrees that the
following restrictions and limitations shall be applicable to all Warrant Shares and resales or
other transfers thereof pursuant to the Securities Act:
(a) The Holder agrees that the Warrant Shares shall not be sold or otherwise transferred
unless the Warrant Shares are registered under the Securities Act and state securities laws or are
exempt therefrom.
(b) A legend in substantially the following form has been or will be placed on the
certificate(s) evidencing the Warrant Shares:
“The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or the securities laws of any state (collectively, the
“Acts”). Neither the shares nor any interest therein may be offered, sold, transferred,
pledged, or otherwise disposed of in the absence of an effective registration statement
with respect to the shares under all of the applicable Acts, or an opinion of counsel
satisfactory to Remote Knowledge, Inc. to the effect that such registrations are not
required.”
(c) Stop transfer instructions have been or will be imposed with respect to the Warrant Shares
so as to restrict resale or other transfer thereof, subject to this Section 2.7.
ARTICLE III
Anti-Dilution Provisions
3.1 Adjustment of Exercise Price and Number of Warrant Shares. The Exercise Price
shall be subject to adjustment from time to time as hereinafter provided in this Article
III. Upon each adjustment of the Exercise Price, except pursuant to Sections 3.1(a)(iii),
(iv) and (v), the Holder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares of the Common Stock (calculated to the nearest
whole share pursuant to Section 1.3) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of the Common Stock purchasable
pursuant hereto immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.
(a) Exercise Price Adjustments. The Exercise Price shall be subject to adjustment
from time to time as follows:
(i) Adjustment for Stock Splits and Combinations. If the Company shall at any
time or from time to time after the date hereof (the “Original Issue Date”) effect
a subdivision of the outstanding Common Stock, the Exercise Price in effect immediately
before such subdivision shall be proportionately decreased. Conversely, if the Company
shall at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in
effect immediately before such combination shall be proportionately increased. Any
adjustment under this Section 3.1(a)(i) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(ii) Adjustment for Common Stock Dividends and Distributions. If the Company
at any time or from time to time after the Original Issue Date makes, or fixes a record
date for the determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, in each such event the
Exercise Price that is then in effect shall be decreased as of the time of such issuance
or, in the event such record date is fixed, as of the close of business on such record
date, by multiplying the Exercise Price then in
effect by a fraction (i) the numerator of which is the total number of shares of Common
Stock issued and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (ii) the denominator of which is the total number of
shares of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares of Common
Stock issuable in payment of such dividend or distribution; provided, however, that if such
record date is fixed and such dividend is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Exercise Price shall be recomputed accordingly
as of the close of business on such record date, and thereafter the Exercise Price shall be
adjusted pursuant to this Section 3.1(a)(ii), to reflect the actual payment of such
dividend or distribution.
(iii) Adjustment for Reclassification, Exchange and Substitution. If at any
time or from time to time after the Original Issue Date, the Common Stock is changed into
the same or a different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than an Acquisition, Asset Transfer,
subdivision or combination of shares, stock dividend, reorganization, merger,
consolidation, or sale of assets provided for elsewhere in this Section 3.1(a)), in
any such event the Holder shall have the right thereafter to convert such stock into the
kind and amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other change by holders of the maximum number of
shares of Common Stock into which such shares of Common Stock could have been converted
immediately prior to such recapitalization, reclassification or change, all subject to
further adjustment as provided herein or with respect to such other securities or property
by the terms thereof.
(iv) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time after the Original Issue Date, there is a capital reorganization
of the Common Stock (other than a recapitalization or subdivision, combination,
reclassification, exchange, or substitution of shares provided for elsewhere in this
Section 3.1(a), as a part of such capital reorganization, provision shall be made
so that the Holder shall thereafter be entitled to receive upon exercise hereof the number
of shares of stock or other securities or property of the Company to which a holder of the
number of shares of Common Stock deliverable upon exercise immediately prior to such event
would have been entitled as a result of such capital reorganization, subject to adjustment
in respect of such stock or securities by the terms thereof. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
3.1(a) with respect to the rights of the Holder after the capital reorganization to the
end that the provisions of this Section 3.1(a) (including adjustment of the
Exercise Price then in effect and the number of shares issuable upon exercise) shall be
applicable after that event and be as nearly equivalent as practicable.
(v) Rounding of Calculations; Minimum Adjustment. All calculations under this
Section 3.1(a) and under the definition of Current Market Price shall be made to
the nearest cent or to the nearest whole share (as provided in Section 1.2), as the
case may be. Any provision of this Section 3.1 to the contrary notwithstanding, no
adjustment in the Exercise Price shall be made if the amount of such adjustment would be
less than one percent, but any such amount shall be carried forward and an adjustment with
respect thereto shall be made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried forward, shall
aggregate one percent or more.
(b) Adjustment by Board of Directors. If any event occurs as to which, in the opinion
of the Board of Directors, the provisions of this Section 3.1 are not strictly applicable
or if strictly applicable would not fairly protect the rights of the Holder in accordance with the
essential intent and principles of such provisions, then the Board of Directors shall make an
adjustment in the application of such provisions, in accordance with such essential intent and
principles, so as to protect such rights as aforesaid, but in no event shall any adjustment have
the effect of increasing the Exercise Price as otherwise determined pursuant to any of the
provisions of this Section 3.1, except in the case of a combination of
shares of a type contemplated in Section 3.1(a)(i), and then in no event to an amount
larger than the Exercise Price as adjusted pursuant to Section 3.1(a)(i).
(c) Statement Regarding Adjustments. Whenever the Exercise Price shall be adjusted as
provided in Section 3.1(a), and upon each change in the number of shares of the Common
Stock issuable upon exercise of this Warrant, the Company shall forthwith file, at the office of
any transfer agent for this Warrant and at the principal office of the Company, a statement showing
in detail the facts requiring such adjustment and the Exercise Price and new number of shares
issuable that shall be in effect after such adjustment, and the Company shall also cause a copy of
such statement to be given to the Holder. Each such statement shall be signed by the Company’s
chief financial or accounting officer. Where appropriate, such copy may be given in advance and
may be included as part of a notice required to be mailed under the provisions of Section
3.1(d).
(d) Notice to Holders. In the event the Company shall propose to take any action of
the type described in clause (i) through (v) of Section 3.1(a), the Company shall give
notice to the Holder, in the manner set forth in Section 6.6, which notice shall specify
the record date, if any, with respect to any such action and the approximate date on which such
action is to take place. Such notice shall also set forth such facts with respect thereto as shall
be reasonably necessary to indicate the effect of such action (to the extent such effect may be
known at the date of such notice) on the Exercise Price and the number, kind or class of shares or
other securities or property which shall be deliverable upon exercise of this Warrant. In the case
of any action which would require the fixing of a record date, such notice shall be given at least
ten days prior to the date so fixed, and in case of all other action, such notice shall be given at
least 15 days prior to the taking of such proposed action. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of any such action.
(e) Treasury Stock. For the purposes of this Section 3.1, the sale or other
disposition of any Common Stock of the Company theretofore held in its treasury shall be deemed to
be an issuance thereof.
3.2 Costs. The Holder shall pay all documentary, stamp, transfer or other
transactional taxes attributable to the issuance or delivery of shares of Common Stock of the
Company upon exercise of this Warrant. Additionally, the Company shall not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance or delivery of any
certificate for such shares. The Holder shall reimburse the Company for any such taxes assessed
against the Company.
3.3 Reservations of Shares. The Company shall reserve at all times so long as this
Warrant remains outstanding, free from preemptive rights, out of its treasury Common Stock or its
authorized but unissued shares of Common Stock, or both, solely for the purpose of effecting the
exercise of this Warrant, sufficient shares of Common Stock to provide for the exercise hereof.
3.4 Valid Issuance. All shares of Common Stock which may be issued upon exercise of
this Warrant will upon issuance by the Company be duly and validly issued, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof
attributable to any act or omission by the Company, and the Company shall take no action which will
cause a contrary result (including, without limitation, any action which would cause the Exercise
Price to be less than the par value, if any, of the Common Stock).
ARTICLE IV
Terms Defined
As used in this Warrant, unless the context otherwise requires, the following terms have the
respective meanings set forth below or in the Section indicated:
“Acquisition” shall mean any consolidation or merger of the Company with or into any
other corporation or other entity or Person, or any other corporate reorganization, in which the
stockholders of the Company immediately prior to such consolidation, merger or reorganization, own
less than 50% of the
Company’s voting power immediately after such consolidation, merger or reorganization, or any
transaction or series of related transactions to which the Company is a party in which in excess of
fifty percent (50%) of the Company’s voting power is transferred.
“Asset Transfer” shall mean a sale, lease or other disposition of all or substantially
all of the assets of the Company.
“Board of Directors” shall mean the Board of Directors of the Company.
“Common Stock” shall mean the Company’s authorized common stock, par value $.001 per
share.
“Company” shall mean Remote Knowledge, Inc., a Delaware corporation, and any other
Person assuming or required to assume the obligations undertaken in connection with this Warrant.
“Current Market Price” shall mean, as of any date, 5% of the sum of the average, for
each of the 20 consecutive Trading Days immediately prior to such date, of either: (i) the high and
low sales prices of the Common Stock on such Trading Day as reported on the composite tape for the
principal national securities exchange on which the Common Stock may then be listed, or (ii) if the
Common Stock shall not be so listed on any such Trading Day, the high and low sales prices of
Common Stock in the over-the-counter market as reported by the Nasdaq Stock Market or (iii) if
there be no such representative prices reported by the Nasdaq Stock Market, the lowest bid and
highest asked prices at the end of such Trading Day in the over-the-counter market or “pink sheets”
as reported by the OTC Electronic Bulletin Board or National Quotation Bureau, Inc., or any
successor organization.
“Outstanding,” when used with reference to Common Stock at any date, shall mean all
issued shares of Common Stock (including, but without duplication, shares deemed issued pursuant to
Article III) at such date, except shares then held in the treasury of the Company.
“Person” shall mean any individual, corporation, partnership, trust, organization,
association or other entity.
“Securities Act” shall mean the Securities Act of 1933 and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.
The term “Trading Day,” for purposes of determining Current Market Price, shall mean a
day on which an amount greater than zero can be calculated with respect to the Common Stock under
any one or more of the foregoing categories (i), (ii), and (iii), and the “end” thereof, for the
purposes of category (iii), shall mean the exact time at which trading shall end on the New York
Stock Exchange. If the Current Market Price cannot be determined under any of the foregoing
methods, Current Market Price shall mean the fair value per share of Common Stock on such date as
determined by the Board of Directors in good faith, irrespective of any accounting treatment.
“Warrant” shall mean this Warrant and any successor or replacement Warrant delivered
in accordance with Section 2.3 or Section 6.8.
“Warrant Office” is defined in Section 2.1.
“Warrant Shares” shall mean the shares of Common Stock purchased or purchasable by the
Holder upon exercise of this Warrant pursuant to Article I hereof.
ARTICLE V
Covenant of the Company
The Company covenants and agrees that this Warrant shall be binding upon any corporation
succeeding to the Company by merger, consolidation, or acquisition of all or substantially all of
the Company’s assets.
ARTICLE VI
Miscellaneous
6.1 Entire Agreement. This Warrant contains the entire agreement between the Holder
and the Company with respect to the Warrant Shares that it can purchase upon exercise hereof and
the related transactions and supersedes all prior arrangements or understanding with respect
thereto.
6.2 Governing Law. This Warrant shall be governed by and construed in accordance with
the internal laws of the State of Delaware, without regard to its conflict of law provisions.
6.3 Waiver and Amendment. Any term or provision of this Warrant may be waived at any
time by the party which is entitled to the benefits thereof, and any term or provision of this
Warrant may be amended or supplemented at any time by agreement of the Holder and the Company,
except that any waiver of any term or condition, or any amendment or supplementation, of this
Warrant must be in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way affect, limit or waive a party’s rights hereunder
at any time to enforce strict compliance thereafter with every term or condition of this Warrant.
6.4 Illegality. In the event that any one or more of the provisions contained in this
Warrant shall be determined to be invalid, illegal or unenforceable in any respect for any reason,
the validity, legality and enforceability of any such provision in any other respect and the
remaining provisions of this Warrant shall not, at the election of the party for whom the benefit
of the provision exists, be in any way impaired.
6.5 Copy of Warrant. A copy of this Warrant shall be filed among the records of the
Company.
6.6 Notice. Any notice or other document required or permitted to be given or
delivered to the Holder shall be delivered at, or sent by certified or registered mail to such
Holder at, the last address shown on the books of the Company maintained at the Warrant Office for
the registration of this Warrant or at any more recent address of which the Holder shall have
notified the Company in writing. Any notice or other document required or permitted to be given or
delivered to the Company, other than such notice or documents required to be delivered to the
Warrant Office, shall be delivered at, or sent by certified or registered mail to, the office of
the Company or any other address within the continental United States of America as shall have been
furnished by the Company to the Holder.
6.7 Limitation of Liability; Not Stockholders. No provision of this Warrant shall be
construed as conferring upon the Holder the right to vote, consent, receive dividends or receive
notices other than as herein expressly provided in respect of meetings of stockholders for the
election of directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the Holder to purchase
shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of such Holder for the purchase price of any shares of Common
Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
6.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of this Warrant, and in
the case of any such loss, theft or destruction upon delivery of a bond of indemnity in such form
and amount as shall be reasonably satisfactory to the Company, or in the event of such mutilation
upon surrender and cancellation of this Warrant, the Company will make and deliver a new Warrant of
like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant; provided, however, that the original recipient of this Warrant
shall not be required to provide any such bond of indemnity and may in lieu thereof provide his
agreement of indemnity. Any Warrant issued under the provisions of this Section 6.8 in
lieu of any Warrant alleged to be
lost, destroyed or stolen, or in lieu of any mutilated Warrant,
shall constitute an original contractual obligation on the part of the Company. This Warrant shall
be promptly canceled by the Company upon the surrender hereof in connection with any exchange or
replacement. The Holder shall pay all taxes (including securities transfer taxes) and all other
expenses and charges payable in connection with the preparation, execution and delivery of Warrants
pursuant to this Section 6.8.
6.9 Headings. The Article and Section and other headings herein are for convenience
only and are not a part of this Warrant and shall not affect the interpretation thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name.
Dated: August 15, 2006
| REMOTE KNOWLEDGE, INC. |
||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Title: | President & CEO | |||
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to exercise purchase
rights represented by said Warrant for, and to purchase thereunder shares of the Common
Stock covered by said Warrant and herewith makes payment in full therefor pursuant to Section
1.1 of such Warrant, and requests (a) that certificates for such shares (and any securities or
other property issuable upon such exercise) be issued in the name of, and delivered to,
, and (b) if such shares shall not include all of the
shares issuable as provided in said Warrant, that a new Warrant of like tenor and date for the
balance of the shares issuable thereunder be delivered to the undersigned.
The undersigned represents that (1) the aforesaid shares of Common Stock are being acquired
for the account of the undersigned for investment not with view to, or for resale in connection
with, the distribution thereof and that the undersigned has no present intention of distributing or
reselling such shares; (2) the undersigned is aware of the Company’s business affairs and financial
condition and has acquired sufficient information about the Company to reach an informed and
knowledgeable decision regarding its investment in the Company; (3) the undersigned is experienced
in making investments of this type and has such knowledge and background in financial and business
matters that the undersigned is capable of evaluating the merits and risks of this investment and
protecting the undersigned’s own interests; (4) the undersigned understands that the shares of
Common Stock issuable upon exercise of this Warrant have not been registered under the Securities
Act of 1933, as amended (the “Securities Act”), by reason of a specific exemption from the
registration provisions of the Securities Act, which exemption depends upon, among other things,
the bona fide nature of the investment intent as expressed herein, and, because such securities
have not been registered under the Securities Act, they must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from such registration is
available; (5) the undersigned is aware that the aforesaid shares of Common Stock may not be sold
pursuant to Rule 144 adopted under the Securities Act unless certain conditions are met and until
the undersigned has held the shares for the number of years prescribed by Rule 144, that among the
conditions for use of the Rule is the availability of current information to the public about the
Company, and the Company has not made such information available and has no present plans to do so;
and (6) the undersigned agrees not to make any disposition of all or any part of the aforesaid
shares of Common Stock unless and until there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made in accordance with
said registration statement, or the undersigned has provided the Company with an opinion of counsel
satisfactory to the Company, stating that such registration is not required.
Dated: , 20___
ASSIGNMENT
For value received, (“Assignor”), hereby sells, assigns and
transfers unto right, title and interest therein, and does hereby irrevocably constitute and
appoint attorney to transfer said Warrant on the books of the Company, with
full power of substitution.
Dated: , 200__