Warrant Number: [ ] Warrant Shares: [ ] Initial Exercise Date: [ ], 2007
Exhibit 4.2
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
WARRANT
VERSO TECHNOLOGIES, INC.
Warrant Number: [ ] |
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Warrant Shares: [ ]
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Initial Exercise Date: [ ], 2007 |
THIS
WARRANT (the “Warrant”) certifies that, for value received, ___ (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on
or prior to the close of business on the five (5) year anniversary of the Initial Exercise Date
(the “Termination Date”) but not thereafter, to subscribe for and purchase from Verso Technologies,
Inc., a Minnesota corporation (“PURCHASER”), up to
___ shares (the “Warrant Shares”) of common
stock, par value $.01 per share, of PURCHASER (the “PURCHASER Common Stock”). The purchase price
of one share of PURCHASER Common Stock under this Warrant shall be equal to the Exercise Price, as
defined in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Agreement and Plan of Merger dated as of
April 4, 2007, by and among PURCHASER, SN Acquisition Corporation, Sentito Networks, Inc. and the
Stockholders’ Agent (the “Merger Agreement”). In addition, the following terms shall have the
meanings set forth below:
“Trading Day” means a day on which the PURCHASER Common Stock is traded on a Trading Market.
“Trading Market” means the following markets or exchanges on which the PURCHASER Common Stock
is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange or the OTC Bulletin Board.
“VWAP” means, for any date, the price determined by the first of the following clauses that
applies: (a) if the PURCHASER Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the PURCHASER Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the PURCHASER Common Stock is then listed or quoted for
trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time)
to 4:02 p.m. (New York City time); (b) if the OTC Bulletin Board is not a Trading Market, the
volume weighted average price of the PURCHASER Common Stock for such date (or the nearest preceding
date) on the OTC Bulletin Board; (c) if the PURCHASER Common Stock is not then quoted for trading
on the OTC Bulletin Board and if prices for the PURCHASER Common Stock are then reported in the
“Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the PURCHASER Common Stock
so reported; or (d) in all other cases, the fair market value of a share of PURCHASER Common Stock
as determined by an independent appraiser selected in good faith by the PURCHASER and reasonably
acceptable to the PURCHASER, the fees and expenses of which shall be paid by the PURCHASER.
Section 2. Exercise.
(a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant
may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on
or before the Termination Date by delivery to PURCHASER of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto (or such other office or agency of PURCHASER as it may
designate by notice in writing to the registered Holder at the address of such Holder appearing on
the books of PURCHASER); and, within three (3) Trading Days of the date said Notice of Exercise is
delivered to PURCHASER, PURCHASER shall have received payment of the aggregate Exercise Price of
the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank.
Notwithstanding anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to PURCHASER until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to PURCHASER for cancellation within three (3) Trading Days of the date the
final Notice of Exercise is delivered to PURCHASER. Partial exercises of this Warrant resulting in
purchases of a portion of the total number of Warrant Shares available hereunder shall have the
effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount
equal to the applicable number of Warrant Shares purchased. The Holder and PURCHASER shall
maintain records showing the number of Warrant Shares purchased and the date of such purchases.
PURCHASER shall deliver any objection to any Notice of Exercise Form within two (2) business days
of receipt of such notice. In the event of any dispute or discrepancy, the records of PURCHASER
shall be controlling and determinative in the absence of manifest error. The Holder and any
assignee, by acceptance of this Warrant, acknowledge and agree that,
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by reason of the provisions of this paragraph, following the purchase of a portion of the
Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any
given time may be less than the amount stated on the face hereof.
(b) Exercise Price. The exercise price per share of the PURCHASER Common Stock under
this Warrant shall be $1.25, subject to adjustment hereunder (the “Exercise Price”).
(c) Cashless Exercise. If at any time after one year from the date of issuance of
this Warrant there is no effective registration statement registering, or no current prospectus
available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be
exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to
receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:
(A) = the VWAP on the Trading Day immediately preceding the date of
such election;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means of a cash
exercise rather than a cashless exercise.
(d) Exercise Limitations. PURCHASER shall not effect any exercise of this Warrant,
and a Holder shall not have the right to exercise any portion of this Warrant, to the extent that
after giving effect to such issuance after exercise as set forth on the applicable Notice of
Exercise, such Holder (together with such Holder’s Affiliates, and any other person or entity
acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of PURCHASER Common Stock beneficially owned by such
Holder and its Affiliates shall include the number of shares of PURCHASER Common Stock issuable
upon exercise of this Warrant with respect to which such determination is being made, but shall
exclude the number of shares of PURCHASER Common Stock which would be issuable upon (i) exercise
of the remaining, nonexercised portion of this Warrant beneficially owned by such Holder or any of
its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any
other securities of PURCHASER subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by such Holder or any of its affiliates. Except as
set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall
be calculated in accordance with Section 13(d) of the 1934 Act and the rules and regulations
promulgated thereunder, it being acknowledged by the Holder that PURCHASER is not representing to
such Holder that such calculation is in compliance with Section 13(d) of the 1934 Act and such
Holder is solely responsible for any schedules required to be filed in accordance therewith. To
the extent that the limitation contained in this Section 2(d) applies, the determination of whether
this Warrant is exercisable (in relation to other securities owned by such Holder together with any
Affiliates) and of which a portion of this Warrant is exercisable
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shall be in the sole discretion of a Holder, and the submission of a Notice of Exercise shall
be deemed to be each Holder’s determination of whether this Warrant is exercisable (in relation to
other securities owned by such Holder together with any Affiliates) and of which portion of this
Warrant is exercisable, in each case subject to such aggregate percentage limitation, and PURCHASER
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be determined in accordance with
Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder. For purposes
of this Section 2(d), in determining the number of outstanding shares of PURCHASER Common Stock, a
Holder may rely on the number of outstanding shares of PURCHASER Common Stock as reflected in (A)
PURCHASER’s most recent Form 10-Q or Form 10-K, as the case may be, (B) a more recent public
announcement by PURCHASER or (z) any other notice by PURCHASER or PURCHASER’s transfer agent
setting forth the number of shares of PURCHASER Common Stock outstanding. Upon the written or oral
request of a Holder, PURCHASER shall within two (2) business days confirm orally and in writing to
such Holder the number of shares of PURCHASER Common Stock then outstanding. In any case, the
number of outstanding shares of PURCHASER Common Stock shall be determined after giving effect to
the conversion or exercise of securities of PURCHASER, including this Warrant, by such Holder or
its Affiliates since the date as of which such number of outstanding shares of PURCHASER Common
Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares
of PURCHASER Common Stock outstanding immediately after giving effect to the issuance of shares of
PURCHASER Common Stock issuable upon exercise of this Warrant. The Beneficial Ownership Limitation
provisions of this Section 2(d) may be waived (the “Initial Waiver”) by such Holder, at the
election of such Holder, upon not less than 61 days’ prior notice to PURCHASER to change the
Beneficial Ownership Limitation to 9.99% of the number of shares of PURCHASER Common Stock
outstanding immediately after giving effect to the issuance of shares of PURCHASER Common Stock
upon exercise of this Warrant, and the provisions of this Section 2(d) shall continue to apply.
Furthermore, after the Initial Waiver, the Beneficial Ownership Limitation of this Section 2(d) may
be further waived by such Holder, at the election of such Holder, upon not less than 61 days’ prior
notice to PURCHASER of such subsequent waiver, and the provisions of this Section 2(d) shall cease
to apply. The provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended Beneficial
Ownership Limitation or waiver thereof contained herein or to make changes or supplements necessary
or desirable to properly give effect to such limitation or waiver. The limitations contained in
this paragraph shall apply to a successor holder of this Warrant.
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(e) Mechanics of Exercise.
(i) Authorization of Warrant Shares. PURCHASER covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges created by PURCHASER in
respect of the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).
(ii) Delivery of Certificates Upon Exercise. Certificates for shares purchased
hereunder shall be transmitted by the transfer agent of PURCHASER to the Holder by
crediting the account of the Holder’s prime broker with the Depository Trust Company through its
Deposit Withdrawal Agent Commission system if PURCHASER is a participant in such system, and
otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise
within three (3) Trading Days from the delivery to PURCHASER of the Notice of Exercise Form,
surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth
above the (“Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on
the date the Exercise Price is received by PURCHASER. The Warrant Shares shall be deemed to have
been issued, and Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to PURCHASER of the Exercise Price (or by cashless exercise, if permitted) and
all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vi) prior to the
issuance of such shares, have been paid.
(iii) Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, PURCHASER shall, at the request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
(iv) Rescission Rights. If PURCHASER fails to cause its transfer agent to transmit to
the Holder a certificate or certificates representing the Warrant Shares pursuant to Section
2(e)(ii) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such
exercise.
(v) No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share
which Holder would otherwise be entitled to purchase upon such exercise, PURCHASER shall at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such
fraction multiplied by the Exercise Price or round up to the next whole share.
(vi) Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall
be made without charge to the Holder for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses shall be paid by
PURCHASER, and such certificates shall be issued in the name of the Holder or in such
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name or names as may be directed by the Holder; provided, however, that in the event
certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this
Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto
duly executed by the Holder; and PURCHASER may require, as a condition thereto, the payment of a
sum sufficient to reimburse it for any transfer tax incidental thereto.
(vii) Closing of Books. PURCHASER will not close its stockholder books or records in
any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
Section 3. Certain Adjustments.
(a) Stock Dividends and Splits. If PURCHASER, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise make a distribution or distributions on shares
of PURCHASER Common Stock or any other equity or equity equivalent securities payable in shares of
PURCHASER Common Stock (which, for avoidance of doubt, shall not include any shares of PURCHASER
Common Stock issued by PURCHASER upon exercise of this Warrant), (ii) subdivides outstanding shares
of PURCHASER Common Stock into a larger number of shares, (iii) combines (including by way of
reverse stock split) outstanding shares of PURCHASER Common Stock into a smaller number of shares,
or (iv) issues by reclassification of shares of PURCHASER Common Stock any shares of capital stock
of PURCHASER, then in each case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of PURCHASER Common Stock (excluding treasury shares, if
any) outstanding immediately before such event and of which the denominator shall be the number of
shares of PURCHASER Common Stock outstanding immediately after such event and the number of shares
issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made
pursuant to this Section 3(a) shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision, combination or
reclassification.
(b) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i)
PURCHASER effects any merger or consolidation of PURCHASER with or into another Person, (ii)
PURCHASER effects any sale of all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by PURCHASER or another Person) is
completed pursuant to which holders of PURCHASER Common Stock are permitted to tender or exchange
their shares for other securities, cash or property, or (iv) PURCHASER effects any reclassification
of PURCHASER Common Stock or any compulsory share exchange pursuant to which PURCHASER Common Stock
is effectively converted into or exchanged for other securities, cash or property (each
“Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, the number of shares of
PURCHASER capital stock of the successor or acquiring corporation or of PURCHASER, if it is the
surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable
as a result of such merger, consolidation or disposition of assets by a Holder of the
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number of shares of PURCHASER Common Stock for which this Warrant is exercisable immediately
prior to such event. For purposes of any such exercise, the determination of the Exercise Price
shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of PURCHASER Common Stock in such
Fundamental Transaction, and PURCHASER shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of PURCHASER Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration it receives upon any exercise of this
Warrant following such Fundamental Transaction. To the extent necessary to effectuate the
foregoing provisions, any successor to PURCHASER or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and
evidencing the Holder’s right to exercise such warrant into Alternate Consideration. The terms of
any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring
any such successor or surviving entity to comply with the provisions of this Section 3(b) and
insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction.
(c) Calculations. All calculations under this Section 3 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the
number of shares of PURCHASER Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of PURCHASER Common Stock (excluding treasury shares, if
any) issued and outstanding.
(d) Voluntary Adjustment By PURCHASER. PURCHASER may at any time during the term of
this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of PURCHASER.
(e) Notice to Holder.
(i) Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 3, PURCHASER shall promptly mail to the Holder a notice setting forth
the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring
such adjustment.
(ii) Notice to Allow Exercise by ▇▇▇▇▇▇. If (A) PURCHASER shall declare a dividend (or
any other distribution in whatever form) on the PURCHASER Common Stock; (B) PURCHASER shall declare
a special nonrecurring cash dividend on or a redemption of the PURCHASER Common Stock; (C)
PURCHASER shall authorize the granting to all holders of PURCHASER Common Stock rights or warrants
to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of PURCHASER shall be required in connection with any reclassification
of PURCHASER Common Stock, any consolidation or merger to which PURCHASER is a party, any sale or
transfer of all or substantially all of the assets of PURCHASER, of any compulsory share exchange
whereby PURCHASER Common Stock is converted into other securities, cash or property; (E) PURCHASER
shall authorize the voluntary or involuntary dissolution, liquidation
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or winding up of the affairs of PURCHASER; then, in each case, PURCHASER shall cause to be
mailed to the Holder at its last address as it shall appear upon the Warrant Register (as
hereinafter defined) of PURCHASER, at least ten (10) calendar days prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a
record is not to be taken, the date as of which the holders of PURCHASER Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of which it is expected that
holders of PURCHASER Common Stock of record shall be entitled to exchange their shares of PURCHASER
Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such
notice or any defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice. The Holder is entitled to exercise this
Warrant during the ten (10)-day period commencing on the date of such notice to the effective date
of the event triggering such notice.
Section 4. Transfer of Warrant.
(a) Transferability. Subject to compliance with any applicable securities laws and
the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder (including,
without limitation, any registration rights) are transferable, in whole or in part, upon surrender
of this Warrant at the principal office of PURCHASER or its designated agent, together with a
written assignment of this Warrant substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and, if required, such payment, PURCHASER shall
execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for
the purchase of Warrant Shares without having a new Warrant issued.
(b) New Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of PURCHASER, together with a written notice specifying
the names and denominations in which new Warrants are to be issued, signed by the Holder or its
agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be
involved in such division or combination, PURCHASER shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such
notice.
(c) Warrant Register. PURCHASER shall register this Warrant, upon records to be
maintained by PURCHASER for that purpose (the “Warrant Register”), in the name of the record Holder
hereof from time to time. PURCHASER may deem and treat the registered Holder of this Warrant as
the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
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(d) Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered
pursuant to an effective registration statement under the 1933 Act and under applicable state
securities or blue sky laws, PURCHASER may require, as a condition of allowing such transfer, that
(i) the Holder or transferee of this Warrant, as the case may be, furnish to PURCHASER a written
opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such transfer may be made without
registration under the 1933 Act and under applicable state securities or blue sky laws, and (ii)
the Holder or transferee execute and deliver to PURCHASER an investment representation letter in
form and substance acceptable to PURCHASER, and (iii) the transferee be an “accredited investor” as
defined in Rule 501(a) promulgated under the 1933 Act.
Section 5. Call Option.
(a) PURCHASER Right to Purchase. The Holder hereby grants to PURCHASER the right to
purchase this Warrant (in whole only and not in part) for cash (the “Call Option”) at a purchase
price equal to $0.001 per Warrant Share for which this Warrant is then exercisable (the “Call
Price”) on a date specified by PURCHASER in accordance with Section 5(b) (the “Call Date”);
provided, however, that the Call Option shall only be exercisable (i) if, at any time after the
Initial Exercise Date, the closing price of the PURCHASER Common Stock for ten (10) consecutive
trading days equals or exceeds 200% of the Exercise Price per share and (ii) if a registration
statement under the 1933 Act is effective on the Call Date that registers all the Warrant Shares
issuable upon the exercise of this Warrant (the “Registrable Stock”). PURCHASER agrees (i) to
prepare and file with the SEC such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such registration statement
effective for a period of not less than one hundred twenty (120) days from the Call Date (or such
lesser time as necessary to permit each seller of Registrable Stock to complete the distribution
described in such registration statement); and (ii) to comply with the provisions of the 1933 Act
with respect to the disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of distribution by the sellers thereof set
Forth in such registration statement.
(b) Notice to Holder. If PURCHASER elects to exercise its Call Option pursuant to
this Section 5, then at least twenty (20) Trading Days but not more than sixty (60) business days
before the Call Date, PURCHASER shall mail or cause to be mailed a redemption notice (the “Notice”)
by first-class mail to the Holder at the Holder’s address as it appears on the Warrant Register.
The Notice shall state: (i) the Call Date; (ii) the Call Price; (iii) the Exercise Price; (iv) that
this Warrant must be presented and surrendered to PURCHASER to collect the Call Price; (v) that
this Warrant may be exercised at any time before the close of business on the fifth
(5th) business day immediately preceding the Call Date (the “Exercise Termination
Date”); (vi) that, if the Holder wishes to exercise this Warrant, the Holder must satisfy the
requirements of Section 2 prior to the Exercise Termination Date; and (vii) that, unless PURCHASER
defaults in making the payment of the Call Price, the only remaining right of Holder after the
Exercise Termination Date shall be to receive payment of the Call Price upon presentation and
surrender of this Warrant to PURCHASER.
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(c) 4.3 Payment upon Surrender of Warrant. If PURCHASER elects to exercise its Call
Option pursuant to this Section 5, and the Holder does not exercise this Warrant prior to the
Exercise Termination Date, then PURCHASER shall pay the Call Price to the Holder in accordance with
the Notice upon presentation and surrender by the Holder of this Warrant to PURCHASER.
Section 6. Miscellaneous.
(a) No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder
to any voting rights or other rights as a shareholder of PURCHASER prior to the exercise hereof as
set forth in Section 2.
(b) Loss, Theft, Destruction or Mutilation of Warrant. PURCHASER covenants that upon
receipt by PURCHASER of evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the
case of the Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, PURCHASER will make and deliver a
new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such
Warrant or stock certificate.
(c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not be a business day,
then such action may be taken or such right may be exercised on the next succeeding business day.
(d) Authorized Shares.
PURCHASER covenants that during the period the Warrant is outstanding, it will reserve from
its authorized and unissued PURCHASER Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
PURCHASER further covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing stock certificates to execute and issue the
necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this
Warrant. PURCHASER will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any Trading Market upon which the PURCHASER Common Stock may
be listed or quoted for trading.
Except and to the extent as waived or consented to by the Holder, PURCHASER shall not by any
action, including, without limitation, amending its articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms 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 actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment. Without limiting the generality
of the foregoing, PURCHASER will (i) not increase the par value of any Warrant Shares above
-10-
the amount payable therefor upon such exercise immediately prior to such increase in par
value, (ii) take all such action as may be necessary or appropriate in order that PURCHASER may
validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this
Warrant, and (iii) use commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable PURCHASER to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares
for which this Warrant is exercisable or in the Exercise Price, PURCHASER shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
(e) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.
(f) Nonwaiver. No course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice
Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate
on the Termination Date.
(g) Notices. All notices or other communications required or permitted hereunder
shall be in writing and shall be mailed by express, registered or certified mail, postage prepaid,
return receipt requested, sent by telecopy (with confirmation of transmission received and followed
by the posting of a “hard copy” of the notice or communication by first-class U.S. mail), or by
courier service guaranteeing overnight delivery with charges prepaid, or otherwise delivered by
hand or by messenger, and shall be conclusively deemed to have been received by a party hereto and
to be effective on the day on which delivered or telecopied to such party at its address set forth
below (or at such other address as such party shall specify to the other parties hereto in
writing), or, if sent by registered or certified mail, on the third business day after the day on
which mailed, addressed to such party at such address.
In the case of the Holder, such notices and communications shall be addressed to its address
as shown on the Warrant Register, unless the Holder shall notify PURCHASER in writing that notices
and communications should be sent to a different address, in which case such notices and
communications shall be sent to the address specified by the Holder. In the case of PURCHASER,
such notices and communications shall be addressed as follows: Attention: Chief Financial
Officer, Verso Technologies, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(h) Limitation of Liability. No provision hereof, in the absence of any affirmative
action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase
price of any PURCHASER Common Stock or as a stockholder of PURCHASER, whether such liability is
asserted by PURCHASER or by creditors of PURCHASER.
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(i) Remedies. Holder, in addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific performance of its rights under
this Warrant. PURCHASER agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive and not to assert the defense in any action for specific performance that a remedy at law
would be adequate.
(j) Successors and Assigns. Subject to applicable securities laws, this Warrant and
the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the
successors of PURCHASER and the successors and permitted assigns of Holder. The provisions of this
Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and
shall be enforceable by any such Holder or holder of Warrant Shares.
(k) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of PURCHASER and the Holder.
(l) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Warrant.
(m) Headings. The headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this Warrant.
IN WITNESS WHEREOF, PURCHASER has caused this Warrant to be executed by its officer thereunto
duly authorized as of the date first above indicated.
| VERSO TECHNOLOGIES, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
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NOTICE OF EXERCISE
| TO: | VERSO TECHNOLOGIES, INC. (“PURCHASER”) |
(1) The undersigned hereby elects to purchase ___Warrant Shares of PURCHASER pursuant to
the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if any.
| (2) | Payment shall take the form of (check applicable box): | ||
| o in lawful money of the United States; or | |||
| o if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in Section 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c). |
(3) Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:
The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery
of a certificate to:
(4) Accredited Investor. The undersigned is an “accredited investor” as defined in
Regulation D promulgated under the Securities Act of 1933, as amended.
[SIGNATURE OF HOLDER]
Name of Entity: |
||
Signature of Authorized Signatory of Entity: |
||
Name of Authorized Signatory: |
||
Title of Authorized Signatory: |
||
Date: |
||
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [ ] all of or [ ] shares of the foregoing Warrant and all rights
evidenced thereby are hereby assigned
to whose address is
Dated: ,
| Holder’s Signature: | ||||||
| Holder’s Address: | ||||||
Signature
Guaranteed:
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.