EXHIBIT 4.05
FORM OF
INITIAL WARRANT AND ADDITIONAL WARRANT
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY OTHER SECURITIES LAWS
AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE
REGISTRATION STATEMENT COVERING SUCH SECURITIES UNDER THE
ACT AND ANY OTHER APPLICABLE SECURITIES LAWS, OR (2) AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
WARP TECHNOLOGY HOLDINGS, INC.
WARRANT TO PURCHASE [ ] SHARES OF
COMMON STOCK, PAR VALUE $0.00001 PER SHARE
[___________], ▇▇▇▇ ▇▇▇▇▇▇▇ No. [ ]
For value received, WARP TECHNOLOGY HOLDINGS, INC., a Nevada corporation
(the "CORPORATION"), hereby certifies that [__________________________], or its
registered transferees, successors or assigns (each person or entity holding all
or part of this Warrant being referred to as a "HOLDER"), is the registered
holder of warrants (the "WARRANTS") to subscribe for and purchase [INSERT NUMBER
OF SHARES IN WORDS (######) ] shares (as adjusted pursuant to Section 3 hereof,
the "WARRANT SHARES") of the fully paid and nonassessable common stock, par
value $0.00001 per share (the "COMMON STOCK"), of the Corporation, at a purchase
price per share initially equal to ONE DOLLAR AND TWENTY FIVE CENTS ($1.25) (the
"WARRANT PRICE") on or before, 5:00 P.M., Eastern Time, on [JANUARY _____, 2010]
(the "EXPIRATION DATE"), subject to the provisions and upon the terms and
conditions hereinafter set forth; provided, however, that in the event that any
portion of this Warrant is unexercised as of the Expiration Date, the terms of
Section 1(b) below shall apply. As used in this Warrant, the term "BUSINESS DAY"
means any day other than a Saturday or Sunday on which commercial banks located
in New York, New York are open for the general transaction of business. This
Warrant has been issued pursuant to a certain Senior Note and Warrant Purchase
Agreement, dated as of January [ ], 2005, by and among the Corporation and the
Purchasers signatory thereto (the "PURCHASE AGREEMENT"). All capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Purchase Agreement.
1. Exercise.
(a) Method of Exercise; Payment; Issuance of New Warrant.
(i) Subject to the provisions hereof, the Holder may exercise
this Warrant, in whole or in part and from time to time, by the surrender
of this Warrant (with the Notice of Exercise attached hereto as APPENDIX A
duly executed) at the principal office of the Corporation, or such other
office or agency of the Corporation as it may reasonably designate by
written notice to the Holder, during normal business hours on any Business
Day, and the payment by the Holder by cash, certified check payable to the
Corporation or wire transfer of immediately available funds to an account
designated to the exercising Holder by the Corporation of an amount equal
to the then applicable Warrant Price multiplied by the number of Warrant
Shares then being purchased, or in the event of a cashless exercise
pursuant to Section 1(c) below, with the Net Issue Election Notice
attached hereto as APPENDIX B duly executed and completed. On the date on
which the Holder shall have satisfied in full the Holder's obligations set
forth herein regarding an exercise of this Warrant (provided such date is
prior to the Expiration Date), the Holder (or such other person or persons
as directed by the Holder, subject to compliance with applicable
securities laws) shall be treated for all purposes as the holder of record
of such Warrant Shares as of the close of business on such date.
(ii) In the event of any exercise of the rights represented by
this Warrant, certificates for the whole number of shares of Common Stock
so purchased shall be delivered to the Holder (or such other person or
persons as directed by the Holder, subject to compliance with applicable
securities laws) as promptly as is reasonably practicable (but not later
than three (3) Business Days) after such exercise at the Corporation's
expense, and, unless this Warrant has been fully exercised, a new Warrant
representing the whole number of Warrant Shares, if any, with respect to
which this Warrant shall not then have been exercised shall also be issued
to the Holder as soon as reasonably practicable thereafter (but not later
than three (3) Business Days) after such exercise.
(b) Automatic Exercise. If any portion of this Warrant remains
unexercised as of the Expiration Date and the Fair Market Value of one share of
Common Stock as of the Expiration Date is greater than the applicable Warrant
Price as of the Expiration Date, then this Warrant shall be deemed to have been
exercised automatically immediately prior to the close of business on the
Expiration Date (or, in the event that the Expiration Date is not a Business
Day, the immediately preceding Business Day) (the "AUTOMATIC EXERCISE DATE") in
the manner provided in Section 1(c) below, and the Holder (or such other person
or persons as directed by the Holder, subject to compliance with applicable
securities laws) shall be treated for all purposes as the holder of record of
such Warrant Shares as of the close of business on such Automatic Exercise Date.
This Warrant shall be deemed to be surrendered to the Corporation on the
Automatic Exercise Date by virtue of this Section 1(b) without any action by the
Holder. As promptly as is reasonably practicable on or after the Automatic
Exercise Date, but in no event prior to the date on which this Warrant is
surrendered to the Corporation at the principal office of the Corporation, or
such other office or agency of the Corporation as it may reasonably designate by
written notice to the Holder, during normal business hours on any Business Day,
the
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Corporation at its expense shall issue and deliver to the Holder (or such other
person or persons as directed by the Holder, subject to compliance with
applicable securities laws) a certificate or certificates for the number of
Warrant Shares issuable upon such exercise, in accordance with Section 1(c).
(c) Cashless Right to Convert Warrant into Common Stock.
Notwithstanding any provision herein to the contrary, if as of the date of
exercise of all or a part of this Warrant, the Fair Market Value for one share
of Common Stock is greater than the Warrant Price, then in lieu of exercising
this Warrant for cash, the Holder may elect to receive, without the payment by
the Holder of the Warrant Price, Warrant Shares equal to the value of this
Warrant or any portion hereof by the surrender of this Warrant (or such portion
of this Warrant being so exercised) together with the Net Issue Election Notice
annexed hereto as APPENDIX B duly executed and completed, at the office of the
Corporation, or such other office or agency of the Corporation as it may
reasonably designate by written notice to the Holder, during normal business
hours on any Business Day. Thereupon, the Corporation shall issue to the Holder
such number of fully paid, validly issued and nonassessable Warrant Shares, as
is computed using the following formula:
X=Y(A-B)
------
A
where
X = the number of shares of Common Stock to be issued to the
Holder (or such other person or persons as directed by the Holder, subject to
compliance with all applicable laws) upon such exercise of the rights under this
Section 1(c)
Y = the total number of shares of Common Stock covered by this
Warrant which the Holder has surrendered for cashless exercise
A = the "Fair Market Value" of one share of Common Stock on
the date that the Holder delivers the Net Issue Election Notice to the
Corporation as provided herein
B = the Warrant Price in effect under this Warrant on the date
that the Holder delivers the Net Issue Election Notice to the Corporation as
provided herein
The "FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the
"VALUATION DATE") shall mean the following:
(i) if the Common Stock is then listed on a national
securities exchange, the average closing sale price of one share of Common
Stock on such exchange over the ten (10) trading days ending on the last
trading day prior to the Valuation Date; provided that if such stock has
not traded in the ten (10) consecutive trading days prior to the Valuation
Date, the Fair Market Value shall be the average closing price of one
share of Common Stock in the most recent ten (10) trading days during
which the Common Stock has traded prior to the Valuation Date;
(ii) if the Common Stock is then included in The Nasdaq Stock
Market, Inc. ("NASDAQ"), the average closing sale price of one share of
Common Stock
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on Nasdaq over the ten (10) trading days ending on the last trading day
prior to the Valuation Date or, if no closing sale price is available for
any of such ten (10) trading days, the closing sale price for such day
shall be determined as the average of the high bid and the low ask price
quoted on Nasdaq as of the end of such trading day; provided that if the
Common Stock has not traded in the ten (10) consecutive trading days prior
to the Valuation Date, the Fair Market Value shall be the average closing
price of one share of Common Stock in the most recent ten (10) trading
days during which the Common Stock has traded prior to the Valuation Date;
(iii) If the Common Stock is then included in the
Over-the-Counter Bulletin Board, the average closing sale price of one
share of Common Stock on the Over-the-Counter Bulletin Board over the ten
(10) trading days ending on the last trading day prior to the Valuation
Date or, if no closing sale price is available for any of such ten (10)
trading days, the closing sale price for such day shall be determined as
the average of the high bid and the low ask price quoted on the
Over-the-Counter Bulletin Board as of the end of such trading day;
provided that if the Common Stock has not traded in the ten (10)
consecutive trading days prior to the Valuation Date, the Fair Market
Value shall be the average closing price of one share of Common Stock in
the most recent ten (10) trading days during which the Common Stock has
traded prior to the Valuation Date;
(iv) if the Common Stock is then included in the "pink
sheets", the average closing sale price of one share of Common Stock on
the "pink sheets" over the ten (10) trading days ending on the last
trading day prior to the Valuation Date or, if no closing sale price is
available for any of such ten (10) trading days, the closing sale price
for such day shall be determined as the average of the high bid and the
low ask price quoted on the "pink sheets" as of the end of such trading
day; provided that if the Common Stock has not traded in the ten (10)
consecutive trading days prior to the Valuation Date, the Fair Market
Value shall be the average closing price of one share of Common Stock in
the most recent ten (10) trading days during which the Common Stock has
traded prior to the Valuation Date; or (v) if the Common Stock is not then
listed on a national securities exchange or quoted on Nasdaq or the
Over-the-Counter Bulletin Board or the "pink sheets", the Fair Market
Value of one share of Common Stock as of the Valuation Date shall be
determined in good faith by the Board of Directors of the Corporation (the
"BOARD").
2. Reservation of Shares; Stock Fully Paid; Listing. Upon the
effectiveness of the Amendment, the Corporation shall keep reserved a sufficient
number of shares of the authorized and unissued shares of Common Stock to
provide for the exercise of the rights of purchase represented by this Warrant
in compliance with its terms. All Warrant Shares issued upon exercise of this
Warrant shall be, at the time of delivery of the certificates for such Warrant
Shares upon payment in full of the Warrant Price therefor in accordance with the
terms of this Warrant (or proper exercise of the cashless exercise rights
contained in Section 1(c) hereof), duly authorized, validly issued, fully paid
and non-assessable shares of Common Stock of the Corporation. The Corporation
shall during all times prior to the Expiration Date when the shares
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of Common Stock issuable upon the exercise of this Warrant are authorized for
listing or quotation on any national securities exchange, Nasdaq (or the
Over-the-Counter Bulletin Board or the "pink sheets", as the case may be), keep
the shares of Common Stock issuable upon the exercise of this Warrant authorized
for listing or quotation on such national securities exchange, Nasdaq (or the
Over-the-Counter Bulletin Board or the "pink sheets", as the case may be).
3. Adjustments and Distributions.
3.1 If the Corporation shall, while this Warrant is outstanding, issue or
sell shares of its Common Stock or "Common Stock Equivalents" (as defined below)
without consideration or at a price per share or "Net Consideration Per Share"
(as defined below) less than the Warrant Price in effect immediately prior to
such issuance or sale, then in each such case the Warrant Price then in effect
at such time, except as hereinafter provided, shall be lowered so as to be equal
to the Net Consideration Per Share.
(a) Common Stock Equivalents.
(i) General. For the purposes of this Warrant, the issuance
of any warrants, options, subscription or purchase
rights with respect to shares of Common Stock and the
issuance of any securities (including, without
limitation, securities evidencing indebtedness)
convertible into or exchangeable for shares of Common
Stock and the issuance of any warrants, options,
subscription or purchase rights with respect to such
convertible or exchangeable securities (collectively,
"Common Stock Equivalents"), shall be deemed an issuance
of Common Stock. Any obligation, agreement or
undertaking to issue Common Stock Equivalents at any
time in the future shall be deemed to be an issuance at
the time such obligation, agreement or undertaking is
made or arises. No adjustment of the Warrant Price shall
be made under this Warrant upon the issuance of any
shares of Common Stock which are issued pursuant to the
exercise, conversion or exchange of any Common Stock
Equivalents.
(ii) Adjustments for Adjustment, Cancellation or Expiration
of Common Stock Equivalents. Should the Net
Consideration Per Share of any such Common Stock
Equivalents be decreased from time to time other than as
a result of the application of anti-dilution provisions
substantially similar to the provisions of this Warrant,
then, upon the effectiveness of each such change, the
Warrant Price will be that which would have been
obtained (1) had the adjustments made upon the issuance
of such Common Stock Equivalents been made upon the
basis of the new Net Consideration Per Share of such
securities, and (2) had the adjustments made to the
Warrant Price since the date of issuance of such Common
Stock Equivalents been made to such Warrant Price as
adjusted pursuant to clause (1) above. Any adjustment of
the Warrant Price which relates to any Common Stock
Equivalent shall be disregarded if, as, and when such
Common Stock Equivalent expires or is canceled without
being exercised, or is
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repurchased by the Corporation at a price per share at
or less than the original purchase price, so that the
Warrant Price effective immediately upon such
cancellation or expiration shall be equal to the Warrant
Price that would have been in effect (1) had the expired
or canceled Common Stock Equivalent not been issued, and
(2) had the adjustments made to the Warrant Price since
the date of issuance of such Common Stock Equivalents
been made to the Warrant Price which would have been in
effect had the expired or canceled Common Stock
Equivalent not been issued.
(b) Net Consideration Per Share. For purposes of this Warrant, the
"Net Consideration Per Share" which shall be receivable by the Corporation for
any Common Stock issued upon the exercise or conversion of any Common Stock
Equivalents shall be determined as follows:
(i) The "Net Consideration Per Share" shall mean the amount
equal to the total amount of consideration, if any,
received by the Corporation for the issuance of such
Common Stock Equivalents, plus the minimum amount of
consideration, if any, payable to the Corporation upon
exercise, or conversion or exchange thereof, divided by
the maximum aggregate number of shares of Common Stock
(without regard to any provision contained therein
providing for a subsequent adjustment to such number)
that would be issued if all such Common Stock
Equivalents were exercised, exchanged or converted.
(ii) The "Net Consideration Per Share" which shall be
receivable by the Corporation shall be determined in
each instance as of the date of issuance of Common Stock
Equivalents without giving effect to any possible future
upward price adjustments or rate adjustments which may
be applicable with respect to such Common Stock
Equivalents.
(c) Stock Dividends for Holders of Capital Stock Other Than Common
Stock. In the event that the Corporation shall make or issue (otherwise than to
holders of Common Stock), or shall fix a record date for the determination of
holders of any capital stock of the Corporation other than holders of Common
Stock entitled to receive, a dividend or other distribution payable in Common
Stock or securities of the Corporation convertible into or otherwise
exchangeable for shares of Common Stock of the Corporation, then such Common
Stock or other securities issued in payment of such dividend shall be deemed to
have been issued for their fair market value as is reasonably determined in good
faith by the Board of Directors of the Corporation.
(d) Consideration Other than Cash. For purposes of this Warrant, if
a part or all of the consideration received by the Corporation in connection
with the issuance of shares of Common Stock or the issuance of any of the
securities described in this Warrant consists of property other than cash, such
consideration shall be deemed to have a fair market value as is reasonably
determined in good faith by the Board of Directors of the Corporation.
(e) Exceptions to Anti-Dilution Adjustments. This Section 3.1 shall
not apply (A) under any of the circumstances which would constitute an
Extraordinary Common Stock
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Event (as described below) (such circumstances being accounted for pursuant to
Section 3.2 hereof), (B) to the issuance of Common Stock upon the conversion of
the Corporation's Series C Preferred Stock, Series B Preferred Stock or Series
B-2 Preferred Stock, (C) to the issuance of the Series C Preferred Stock and the
warrants issued in connection therewith or (D) upon the exercise of this Warrant
or any Initial Warrants or Additional Warrants or any warrants issued in
connection with the Series C Preferred Stock or other warrants or options to
purchase shares of Common Stock, or other securities convertible into shares of
Common Stock, outstanding prior to the original issue date of this Warrant.
Further, the adjustments described in this Section 3.1 shall not apply with
respect to the issuance or sale of shares of Common Stock, or the grant of
options exercisable therefor, issued or issuable after the original issue date
of this Warrant to:
(i) directors, officers, employees and consultants of the
Corporation or any subsidiary pursuant to any qualified
or non-qualified stock option plan or agreement, stock
purchase plan or agreement, stock restriction agreement,
employee stock ownership plan, consultant equity
compensation plan or arrangement approved by the Board
of Directors or an authorized committee thereof,
including any repurchase or stock restriction agreement,
or such other options, issuances, arrangements,
agreements or plans intended principally as a means of
providing compensation for employment or services and
approved by the Board of Directors;
(ii) capital stock, or options or warrants to purchase
capital stock, issued to financial institutions or
lessors in connection with commercial credit
arrangements, equipment financings, commercial property
lease transactions or similar transactions;
(iii) capital stock, or warrants or options to purchase
capital stock, issued in connection with bona fide
acquisitions, mergers or similar transactions, the terms
of which are approved by the Board of Directors of the
Corporation; and
(iv) capital stock issued or issuable to an entity as a
component of any business relationship with such entity
for the purpose of (A) joint venture, technology
licensing or development activities, (B) distribution,
supply or manufacture of the Corporation's products or
services or (C) any other arrangements involving
corporate partners that are primarily for purposes other
than raising capital, the terms of which business
relationship with such entity are approved by the Board
of Directors.
(f) No Fractional Adjustments. No adjustment of the Warrant Price
shall be made in an amount less than one cent per share, provided that any
adjustments which are not required to be made by reason of this sentence shall
be carried forward and shall be either taken into account in any subsequent
adjustment made prior to three years from the date of the event giving rise to
the adjustment being carried forward and prior to exercise, or shall be made at
the end of three years from the date of the event giving rise to the adjustment
being carried forward.
(g) No Increased Warrant Price. Notwithstanding any other provisions
of this Section 3, except to the limited extent provided for in Sections
3.1(a)(ii), no adjustment of the
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Warrant Price pursuant to this Section 3 shall have the effect of increasing the
Warrant Price above the Warrant Price in effect immediately prior to such
adjustment.
3.2 Adjustment Upon Extraordinary Common Stock Event. Upon the happening
of an Extraordinary Common Stock Event (as hereinafter defined), the Warrant
Price shall, simultaneously with the happening of such Extraordinary Common
Stock Event, be adjusted by multiplying such Warrant Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such Extraordinary Common Stock Event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the Warrant Price which, as so adjusted, shall be readjusted in
the same manner upon the happening of any successive Extraordinary Common Stock
Event or Events.
An "Extraordinary Common Stock Event" shall mean (i) the issue of
additional shares of Common Stock as a dividend or other distribution on
outstanding shares of Common Stock, (ii) a subdivision of outstanding shares of
Common Stock into a greater number of shares of Common Stock, or (iii) a
combination or reverse stock split of outstanding shares of Common Stock into a
smaller number of shares of the Common Stock.
3.3 Adjustment Upon Certain Dividends. In the event the Corporation shall
make or issue, or shall fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution with respect
to the Common Stock payable in (i) securities of the Corporation other than
shares of Common Stock, or (ii) other assets (excluding cash dividends or
distributions), then and in each such event provision shall be made so that the
Holder shall receive upon exercise of this Warrant in addition to the number of
shares of Common Stock receivable thereupon, the number of securities or such
other assets of the Corporation which they would have received had this Warrant
been exercised immediately prior to such event.
3.4 Adjustment Upon Capital Reorganization or Reclassification. If the
Common Stock shall be changed into the same or different number of shares of any
other class or classes of capital stock, whether by capital reorganization,
recapitalization, reclassification or otherwise (other than an Extraordinary
Common Stock Event provided for in Section 3.2, a dividend or other distribution
provided for in Section 3.3, or a merger or other transaction provided for in
Section 3.5), then and in each such event, the Holder shall have the right
thereafter to receive, upon exercise of this Warrant, in lieu of the number of
shares of Common Stock which the Holder would otherwise have been entitled to
receive, the kind and amount of shares of capital stock and other securities and
property receivable upon such reorganization, recapitalization, reclassification
or other change by the holders of the number of shares of Common Stock for which
this Warrant could have been exercised immediately prior to such reorganization,
recapitalization, reclassification or change, all subject to further adjustment
as provided herein.
3.5 Adjustment for Merger or Reorganization, etc.
(a) In case of any consolidation or merger of the Corporation with
or into another corporation or the sale of all or substantially all of the
assets of the Corporation to another corporation: if the surviving entity shall
consent in writing to the following provisions,
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then this Warrant shall thereafter be exercisable for the kind and amount of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock of the Corporation deliverable upon exercise of this
Warrant would have been entitled upon such consolidation, merger or sale; and,
in such case, appropriate adjustment (as determined in good faith by the Board
of Directors) shall be made in the application of the provisions in this Section
3 with respect to the rights and interest thereafter of the Holder of this
Warrant, to the end that the provisions set forth in this Section 3 (including
provisions with respect to changes in and other adjustments of the Warrant
Price) shall thereafter be applicable, as nearly as reasonably possible, in
relation to any shares of stock or other property thereafter deliverable upon
the exercise of this Warrant.
(b) The provision for such rights on each of this Warrant shall be a
condition precedent to the consummation by the Corporation of any such
transaction.
3.6 Certificate as to Adjustments; Notice by Corporation. In each case of
an adjustment or readjustment of the Warrant Price, the Corporation at its
expense will furnish the Holder with a certificate prepared by the Treasurer or
Chief Financial Officer of the Corporation, showing such adjustment or
readjustment, and stating in detail the facts upon which such adjustment or
readjustment is based.
3.7 Further Adjustments. In the event that, as a result of an adjustment
made pursuant to this Section 3, the Holder shall become entitled to receive any
shares of capital stock of the Corporation other than shares of Common Stock,
the number of such other shares so receivable upon exercise of this Warrant
shall be subject thereafter to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Warrant.
3.8 Adjustment of Number of Shares. Upon each adjustment in the Warrant
Price pursuant to this Section 3, the number of Warrant Shares purchasable
hereunder shall be adjusted, to the nearest whole share, to the product obtained
by multiplying the number of Warrant Shares purchasable immediately prior to
such adjustment by a fraction, (i) the numerator of which shall be the Warrant
Price immediately prior to such adjustment, and (ii) the denominator of which
shall be the Warrant Price immediately thereafter.
4. Transfer Taxes. The Corporation will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Corporation shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued, and in such case, the Corporation shall not be
required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Corporation the amount of
such tax or has established to the Corporation's reasonable satisfaction that
such tax has been paid.
5. Mutilated or Missing Warrants. In case this Warrant shall be mutilated,
lost, stolen, or destroyed, the Corporation shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or
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destroyed, a new Warrant of like tenor and for the purchase of a like number of
Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the
Corporation of such loss, theft or destruction of the Warrant, and with respect
to a lost, stolen or destroyed Warrant, reasonable and customary indemnity or
bond with respect thereto, if requested by the Corporation.
6. Fractional Shares. No fractional shares of Common Stock shall be issued
in connection with any exercise or cashless exercise hereunder, and in lieu of
any such fractional shares the Corporation shall make a cash payment therefor to
the Holder (or such other person or persons as directed by the Holder, subject
to compliance with all applicable laws) based on the Fair Market Value of a
share of Common Stock on the date of exercise or cashless exercise of this
Warrant.
7. Compliance with Securities Act and Legends. The Holder, by acceptance
hereof, agrees that it will not offer, sell or otherwise dispose of this
Warrant, or any shares of Common Stock to be issued upon exercise hereof except
under circumstances which will not result in a violation of the Securities Act
of 1933, as amended, or the rules and regulations promulgated thereunder, as
amended (the "1933 ACT"), or any state's securities laws. All shares of Common
Stock issued upon exercise of this Warrant (unless registered under the ▇▇▇▇
▇▇▇) shall be stamped or imprinted with a legend as follows:
THIS SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR ANY OTHER SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT
COVERING THESE SECURITIES UNDER THE ACT AND ANY OTHER
APPLICABLE SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
8. Rights as a Stockholder. Except as expressly provided in this Warrant,
no Holder, as such, shall be entitled to vote or receive dividends or be deemed
the holder of Common Stock or any other securities of the Corporation which may
at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder, as such, any
of the rights of a stockholder of the Corporation or any right to vote for the
election of the directors or upon any matter submitted to stockholders at any
meeting thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise, until this Warrant shall have been exercised
and the Warrant Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.
9. Modification and Waiver. This Warrant and any provision hereof shall
not be changed, waived, discharged or terminated except by an instrument in
writing signed by the Corporation and the then current Holder, and such change,
waiver, discharge or termination shall be binding on any future Holder,
provided, however, that no such changes shall be applicable to
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the other warrants issued pursuant to the Purchase Agreement unless the holders
thereof expressly agree thereto in writing.
10. Notices. Unless otherwise provided, any notice required or permitted
under this Warrant shall be given in accordance with the terms of the Purchase
Agreement.
11. Descriptive Headings. The descriptive headings contained in this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant.
12. Governing Law. The validity, interpretation and performance of this
Warrant shall be governed by, and construed in accordance with, the laws of the
State of New York applicable to contracts made and to be performed entirely
within such State, regardless of the law that might be applied under principles
of conflicts of law.
13. Acceptance. Receipt and execution of this Warrant by the Holder hereof
shall constitute acceptance of and agreement to the foregoing terms and
conditions.
14. Identity of Transfer Agent. The Transfer Agent for the Common Stock is
Pacific Stock Transfer Company. Upon the appointment of any subsequent transfer
agent for the Common Stock or other shares of the Corporation's capital stock
issuable upon the exercise of the rights of purchase represented by this
Warrant, the Corporation will mail to the Holder a statement setting forth the
name and address of such transfer agent.
15. No Impairment of Rights. The Corporation will not, by amendment of its
Certificate of Incorporation or through any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holder of this Warrant against material impairment.
16. Assignment. Subject to the terms hereof and compliance with applicable
federal and state securities laws, this Warrant may be transferred by the Holder
with respect to any or all of the Warrant Shares then purchasable hereunder.
Upon surrender of this Warrant to the Corporation, together with a properly
endorsed notice of transfer (an "ASSIGNMENT FORM"), for transfer of this Warrant
in its entirety by the Holder, the Corporation shall issue a new warrant of the
same denomination to the designated transferee. Upon surrender of this Warrant
to the Corporation, together with a properly endorsed Assignment Form, by the
Holder for transfer with respect to a portion of the Warrant Shares then
purchasable hereunder, the Corporation shall issue a new warrant to the
designated transferee, in such denomination as shall be requested by the Holder
hereof, and shall issue to such Holder a new warrant covering the number of
Warrant Shares in respect of which this Warrant shall not have been transferred.
In addition to, and not in limitation of, the foregoing, a Holder that is a
corporation, a partnership or a limited liability company, may distribute any
portion of this Warrant to its respective shareholders, partners or members.
Unless and until the provisions for assignment set forth herein have been fully
complied with, the Corporation may treat the last registered Holder as the
absolute owner of this Warrant for all purposes, notwithstanding any notice to
the contrary.
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17. Limitation on Exercise. Notwithstanding anything to the contrary
contained herein, the number of shares of Common Stock that may be acquired by
the Holder upon any exercise of this Warrant (or otherwise in respect hereof)
shall be limited to the extent necessary to insure that, following such exercise
(or other issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other Persons whose
beneficial ownership of Common Stock would be aggregated with the Holder's for
purposes of Section 13(d) of the Exchange Act, does not exceed 9.99% of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
Each delivery of an Exercise Notice hereunder will constitute a representation
by the Holder that it has evaluated the limitation set forth in this paragraph
and determined that issuance of the full number of Warrant Shares requested in
such Exercise Notice is permitted under this paragraph. This provision shall not
restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a merger or other
business combination or reclassification involving the Corporation as
contemplated in Section 3 of this Warrant. By written notice to the Corporation,
the Holder may waive the provisions of this Section but any such waiver will not
be effective until the 61st day after such notice is delivered to the
Corporation.
[Remainder of Page Left Intentionally Blank]
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IN WITNESS WHEREOF, the Corporation and the Holder have caused this
Warrant to be executed on their behalf by one of their officers thereunto duly
authorized.
WARP TECHNOLOGY HOLDINGS, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
[Signature Page -- Warrant]
APPENDIX A
NOTICE OF EXERCISE
To: WARP TECHNOLOGY HOLDINGS, INC.
1. The undersigned hereby irrevocably elects to purchase [_____] shares of
Common Stock of WARP TECHNOLOGY HOLDINGS, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full, by [cash, certified check/wire transfer, or surrender of the
originally executed Warrant] [SELECT THE APPLICABLE METHOD OF PAYMENT].
2. Please issue a certificate or certificates representing said shares in the
name of the undersigned or in such other name or names as are specified below:
________________________________
________________________________
(Name)
________________________________
(Address)
_______________________ (Signature)
__________________(Date)
3. Please issue a new Warrant of equivalent form and tenor for the unexercised
portion of the attached Warrant in the name of the undersigned or in such other
name as is specified below:
________________________________
Date: __________________________
(Warrantholder) ________________
Name: (Print) __________________
By:_____________________________
▇-▇
▇▇▇▇▇▇▇▇ ▇
NET ISSUE ELECTION NOTICE
To: WARP TECHNOLOGY HOLDINGS, INC.
Date:[_________________________]
The undersigned hereby elects under Section 1(c) of this Warrant to
surrender the right to purchase [____________] shares of Common Stock pursuant
to this Warrant and hereby requests the issuance of [_____________] shares of
Common Stock. The certificate(s) for the shares issuable upon such net issue
election shall be issued in the name of the undersigned or as otherwise
indicated below.
_______________________________________
Signature
_______________________________________
Name for Registration
_______________________________________
Mailing Address
B-1
