NEITHER THIS WARRANT NOR THE SECURITIES FOR WHICH IT IS EXERCISABLE HAVE BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES
UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE SECURITIES ACT. ANY SUCH
TRANSFER MAY ALSO BE SUBJECT TO COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS
AND THE LAWS OF OTHER APPLICABLE JURISDICTIONS.
LASER ENERGETICS, INC.
Form of
Lead Investor Warrant for the Purchase of Shares of
Common Stock
No. LI-1 November 28, 2005
FOR VALUE RECEIVED, LASER ENERGETICS, INC., an Oklahoma corporation
(the "Company"), hereby certifies that Dr. ▇▇▇▇▇ ▇▇▇▇▇ or its registered assigns
(the "Holder") is entitled to purchase from the Company, subject to the
provisions of this Warrant (the "Warrant"), at any time on or after the date
hereof (the "Initial Exercise Date"), and prior to 12:01 A.M., New York City
time, on August 5, 2008 (the "Termination Date"), 1,000,000 fully paid and
non-assessable shares of the Class A Common Stock, $.001 par value per share
(the "Common Stock"), of the Company, at an exercise price of $0.10 per share of
Common Stock for an aggregate exercise price of One Hundred Thousand Dollars
($100,000.00) (the aggregate purchase price payable for the Warrant Shares
hereunder is hereinafter sometimes referred to as the "Aggregate Exercise
Price"). The number of shares of Common Stock to be received upon exercise of
this Warrant and the price to be paid for each share of Common Stock are subject
to possible adjustment from time to time as hereinafter set forth. The shares of
Common Stock or other securities or property deliverable upon such exercise as
adjusted from time to time is hereinafter sometimes referred to as the "Warrant
Shares." The exercise price of a share of Common Stock in effect at any time and
as adjusted from time to time is hereinafter sometimes referred to as the "Per
Share Exercise Price." The Per Share Exercise Price is subject to adjustment as
hereinafter provided; in the event of any such adjustment, the number of Warrant
Shares shall also be adjusted, by dividing the Aggregate Exercise Price by the
Per Share Exercise Price in effect immediately after such adjustment. The
Aggregate Exercise Price is not subject to adjustment except to the extent of
any partial exercise of this Warrant. This Warrant may constitute one in a
series of warrants (the "Lead Investor Warrants") which includes this Warrant
and any other Lead Investor Warrant for the Purchase of Shares of Common Stock
of the Company, of like tenor hereto.
1. Exercise of Warrant.
(a) This Warrant may be exercised in whole or in part, at any time
by its holder commencing on the Initial Exercise Date and prior to the
Termination Date:
(i) by presentation and surrender of this Warrant, together
with the duly executed subscription form attached at the end hereof, at
the address set forth in Subsection 8(a) hereof, together with payment, by
certified or official bank check or wire transfer payable to the order of
the Company, of the Aggregate Exercise Price or the proportionate part
thereof if exercised in part; or
(ii) by presentation and surrender of this Warrant, together
with the duly executed cashless exercise form attached at the end hereof
(a "Cashless Exercise") at the address set forth in Subsection 8(a)
hereof. The exchange of Common Stock for the Warrant shall take place on
the date specified in the Cashless Exercise Form or, if later, the date
the Cashless Exercise Form is surrendered to the Company (the "Exchange
Date"). Such presentation and surrender shall be deemed a waiver of the
Holder's obligation to pay the Aggregate Exercise Price, or the
proportionate part thereof if this Warrant is exercised in part. In the
event of a Cashless Exercise, this Warrant shall represent the right to
subscribe for and to acquire the number of shares of Common Stock equal to
(x) the number of shares of Common Stock specified by the Holder in its
Cashless Exercise Form (the "Total Number") (such number not to exceed the
maximum number of shares of Common Stock subject to this Warrant, as may
be adjusted from time to time) less (y) the number of shares of Common
Stock equal to the quotient obtained by dividing (A) the product of the
Total Number and the existing Per Share Exercise Price by (B) the fair
market value per share of Common Stock at such time, as determined by the
Board of Directors of the Company in good faith (the "Per Share FMV"). No
Cashless Exercise shall be effected unless the Per Share FMV is greater
than the Per Share Exercise Price as of the Exchange Date.
(b) If this Warrant is exercised in part only, the Company shall,
upon presentation of this Warrant upon such exercise, execute and deliver (along
with the certificate for the Warrant Shares purchased) a new Warrant evidencing
the rights of the Holder hereof to purchase the balance of the Warrant Shares
purchasable hereunder upon the same terms and conditions as herein set forth.
Upon proper exercise of this Warrant, the Company promptly shall deliver
certificates for the Warrant Shares to the Holder duly legended as authorized by
the subscription form. No fractional shares or scrip representing fractional
shares shall be issued upon exercise of this Warrant; provided that the Company
shall pay to the Holder of the Warrant cash in lieu of such fractional shares.
(c) The certificates representing the Warrant Shares shall bear the
following legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
SECURITIES UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE SECURITIES
ACT. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO COMPLIANCE WITH
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APPLICABLE STATE SECURITIES LAWS AND THE LAWS OF OTHER APPLICABLE
JURISDICTIONS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 12 OF THE LEAD INVESTOR
WARRANT THAT WAS EXCERCISED FOR THE PURCHASE OF SUCH SECURITIES, COPIES OF
WHICH ARE AVAILABLE FROM LASER ENERGETICS, INC.
2. Reservation of Warrant Shares; Fully Paid Shares; Taxes. The
Company hereby represents that it has, and until expiration of this Warrant
agrees that it shall, reserve for issuance or delivery upon exercise of this
Warrant, such number of shares of the Common Stock as shall be required for
issuance and/or delivery upon exercise of this Warrant in full, and agrees that
all Warrant Shares so issued and/or delivered will be validly issued, fully paid
and non-assessable, and further agrees to pay all taxes (other than income
taxes) and charges that may be imposed upon such issuance and/or delivery. The
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of Common Stock (or
other securities or assets) in a name other than that in which the Warrants so
exercised were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Company the amount of
such tax or has established, to the satisfaction of the Company, that such tax
has been paid.
3. Protection Against Dilution.
(a) In case the Company shall hereafter (i) pay a dividend or make a
distribution on its capital stock in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares
or (iv) issue by reclassification of its Common Stock any shares of capital
stock of the Company (each of (i) through (iv) an "Action"), the Per Share
Exercise Price shall be adjusted to be equal to a fraction, the numerator of
which shall be the Aggregate Exercise Price and the denominator of which shall
be the number of shares of Common Stock or other capital stock of the Company
that the Holder would have held (solely as a result of the exercise of this
Warrant and the operation of such Action) immediately following such Action if
this Warrant had been exercised immediately prior to such Action. An adjustment
made pursuant to this Subsection 3(b) shall become effective immediately after
the record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification.
(b) In the event of any capital reorganization or reclassification
not otherwise covered in this Section 3, or any consolidation or merger to which
the Company is a party other than a merger or consolidation in which the Company
is the continuing corporation, or in case of any sale or conveyance to another
entity of the property of the Company as an entirety or substantially as an
entirety, or in the case of any statutory exchange of securities with another
corporation (including any exchange effected in connection with a merger of a
third corporation into the Company), the Holder of this Warrant shall have the
right thereafter to receive on the exercise of this Warrant the kind and amount
of securities, cash or other property which the Holder would have owned or have
been entitled to receive immediately after such reorganization,
reclassification, consolidation, merger, statutory exchange, sale or conveyance
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had this Warrant been exercised immediately prior to the effective date of such
reorganization, reclassification, consolidation, merger, statutory exchange,
sale or conveyance and in any such case, if necessary, appropriate adjustment
shall be made in the application of the provisions set forth in this Section 3
with respect to the rights and interests thereafter of the Holder of this
Warrant to the end that the provisions set forth in this Section 3 shall
thereafter correspondingly be made applicable, as nearly as may reasonably be,
in relation to any shares of stock or other securities or property thereafter
deliverable on the exercise of this Warrant. The above provisions of this
Subsection 3(b) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, statutory exchanges, sales or
conveyances.
(c) Whenever the Per Share Exercise Price payable upon exercise of
this Warrant is adjusted pursuant to this Section 3, the number of shares of
Common Stock underlying this Warrant shall simultaneously be adjusted to equal
the number obtained by dividing the Aggregate Exercise Price (as the same shall
be reduced to the extent of any partial exercise of this Warrant) by the
adjusted Per Share Exercise Price.
(d) If, as a result of an adjustment made pursuant to this Section
3, the Holder shall become entitled to receive, upon exercise of the Warrant,
shares of two or more classes of capital stock or shares of Common Stock and
other capital stock of the Company, the Board of Directors (whose determination
shall be conclusive) shall determine the allocation of the adjusted Per Share
Exercise Price between or among shares or such classes of capital stock or
shares of Common Stock and other capital stock.
4. Limited Transferability. This Warrant may not be sold,
transferred, assigned or hypothecated by the Holder except in compliance with
the provisions of the Act and the applicable state securities "blue sky" laws,
and is so transferable only upon the books of the Company which it shall cause
to be maintained for such purpose. The Company may treat the registered Holder
of this Warrant as he or it appears on the Company's books at any time as the
Holder for all purposes.
5. Loss, etc., of Warrant. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant, and
of indemnity reasonably satisfactory to the Company (which may include a bond),
if lost, stolen or destroyed, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute and deliver to the Holder a new
Warrant of like date, tenor and denomination.
6. Investment Intent.
(a) The Holder represents, by accepting this Warrant, that it
understands that this Warrant and any securities obtainable upon exercise of
this Warrant have not been registered for sale under Federal or state securities
laws and are being offered and sold to the Holder pursuant to one or more
exemptions from the registration requirements of such securities laws. The
Holder is an "accredited investor" within the meaning of Regulation D under the
Securities Act of 1933, as amended (the "Act"). In the absence of an effective
registration of such securities or an exemption therefrom, any certificates for
such securities shall bear the legend set forth on the first page hereof. The
Holder understands that it must bear the economic risk of its investment in this
Warrant and any securities obtainable upon exercise of this Warrant for an
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indefinite period of time, as this Warrant and such securities have not been
registered under Federal or state securities laws and therefore cannot be sold
unless subsequently registered under such laws, unless as exemption from such
registration is available.
(b) The Holder, by its acceptance of its Warrant, represents to the
Company that it is acquiring this Warrant and will acquire any securities
obtainable upon exercise of this Warrant for its own account for investment and
not with a view to, or for sale in connection with, any distribution thereof in
violation of the Act. The Holder agrees that this Warrant and any such
securities will not be sold or otherwise transferred unless (i) a registration
statement with respect to such transfer is effective under the Act and any
applicable state securities laws or (ii) such sale or transfer is made pursuant
to one or more exemptions from the Act.
7. Status of Holder. This Warrant does not confer upon the Holder
any right to vote or to consent to or receive notice as a stockholder of the
Company, as such, in respect of any matters whatsoever, or any other rights or
liabilities as a stockholder, prior to the exercise hereof.
8. Notices. No notice or other communication under this Warrant
shall be effective unless, but any notice or other communication shall be
effective and shall be deemed to have been given if, the same is in writing and
is mailed by first-class mail, postage prepaid, addressed to:
(a) the Company c/o ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, Attention: President, or such other address as the
Company has designated by notice to the Holder; or
(b) the Holder at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
or such other address as the Holder has designated by notice to the
Company.
9. Headings. The headings of this Warrant have been inserted as a
matter of convenience and shall not affect the construction hereof.
10. Applicable Law. This Warrant shall be governed by and construed
in accordance with the law of the State of New York without giving effect to
principles of conflicts of law thereof.
11. Amendments. This Warrant may be amended only by mutual written
agreement of the Company and the holder or holders holding Lead Investor
Warrants exercisable for a majority of the shares of Common Stock issuable upon
exercise of all then-outstanding Lead Investor Warrants (the "Majority
Holders"), and the Company may take any action herein prohibited or omit to take
any action herein required to be performed by it, and any breach of any
covenant, agreement, warranty or representation may be waived, only if the
Company has obtained the written consent or waiver of the Majority Holders.
12. Lock-up. (a) The holder or holders of Common Stock issued or
issuable upon exercise of this Warrant hereby agrees that for a period
commencing on the date of this Warrant and expiring on the date that all amounts
owed to Cornell Capital Partners, LP (the "Investor"), or any successors or
assigns, under the Secured Convertible Debentures issued to the
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Investor pursuant to the Amended and Restated Securities Purchase Agreement
between the Company and the Investor to be dated on or about November 30, 2005
have been paid (the "Lock-up Period"), he, she or it will not, directly or
indirectly, without the prior written consent of the Investor, issue, offer,
agree or offer to sell, sell, grant an option for the purchase or sale of,
transfer, pledge, assign, hypothecate, distribute or otherwise encumber or
dispose of any of the Common Stock issued or issuable upon exercise of this
Warrant.
(b) General Lock-up. If the Company shall effect a primary or a
secondary public offering of its securities or if at any time, the Company shall
register its shares of Common Stock under the Securities Act for sale to the
public, the holder or holders of Common Stock issued or issuable upon exercise
of this Warrant shall not sell publicly, make any short sale of, grant any
option for the purchase of, or otherwise dispose publicly of, any shares of
Common Stock without the prior written consent of the Company during the period
beginning ten (10) days prior to the effectiveness of the registration statement
pursuant to which such public offering shall be made and ending on the date 180
days after the effective date of such registration statement. By acceptance of
this Warrant, or the shares of Common Stock issued or issuable upon exercise
hereof, the holder hereof or thereof agrees to be bound by the terms of this
Section 12.
(c) Special IPO Lock-up. In connection with the initial public
offering (the "IPO") of Common Stock pursuant to a registration statement filed
with the Securities and Exchange Commission, for such period as requested by the
lead underwriter for such IPO, the Holder:
(i) agrees not to (x) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or establish or
increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder or otherwise transfer or dispose of, directly or
indirectly, any Warrants or Warrant Shares or (y) enter into any swap or
other arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any Warrants or Warrant
Shares, or publicly announce an intention to effect any such transaction
(regardless of whether any of the transactions described in clause (x) or
(y) is to be settled by the delivery of Common Stock, other securities, in
cash or otherwise), without the prior written consent of the lead
underwriter for the IPO;
(ii) authorizes the Company to cause the transfer agent to
decline to transfer and/or to note stop transfer restrictions on the
transfer books and records of the Company with respect to any Warrants or
Warrant Shares for which the Holder is the record holder and, in the case
of any such Warrants or Warrant Shares for which the Holder is the
beneficial but not the record holder, agrees to cause the record holder to
authorize the Company to cause the transfer agent to decline to transfer
and/or to note stop transfer restrictions on such books and records with
respect to such Warrants or Warrant Shares.
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[Signature page follows immediately]
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IN WITNESS WHEREOF, the undersigned, acting for and on behalf of the
Company, has executed this Warrant as of the date first written above.
LASER ENERGETICS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: PRESIDENT & CEO
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SUBSCRIPTION
The undersigned, ____________________________, pursuant to the
provisions of the foregoing Warrant, hereby elects to exercise the within
Warrant to the extent of purchasing _____________________ shares of Class A
Common Stock thereunder and hereby makes payment of $_______________ by
certified or official bank check in payment of the exercise price therefor.
Dated:_______________ Signature:__________________________
Address:____________________________
CASHLESS EXERCISE
The undersigned, ____________________________, pursuant to the
provisions of the foregoing Warrant, hereby elects to exchange the within
Warrant for up to ______________ shares of Class A Common Stock of Laser
Energetics, Inc. pursuant to the cashless exercise provisions of the Warrant.
The undersigned hereby confirms the representations, warranties and covenants
made by it in the Warrant.
Dated:_______________ Signature:__________________________
Address:____________________________
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ASSIGNMENT
FOR VALUE RECEIVED _______________________________________ hereby
sells, assigns and transfers unto _____________________________________ the
foregoing Warrant and all rights evidenced thereby, and does irrevocably
constitute and appoint _____________________________, attorney, to transfer said
Warrant on the books of Laser Energetics, Inc.
Dated:_______________ Signature:__________________________
Address:____________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby assigns and
transfers unto _________________________ the right to purchase __________ shares
of the Class A Common Stock, $.001 par value per share, of Laser Energetics,
Inc. covered by the foregoing Warrant, and a proportionate part of said Warrant
and the rights evidenced thereby, and does irrevocably constitute and appoint
__________________________, attorney, to transfer that part of said Warrant on
the books of Laser Energetics, Inc.
Dated:_______________ Signature:__________________________
Address:____________________________
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