EXHIBIT 10.2
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE AFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
PATRON SYSTEMS, INC.
WARRANT TO PURCHASE
____________ SHARES
OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
(Void after September __, 2011)
BW NO: ____
This certifies that for value, _______________________________, or
registered assigns (the "HOLDER"), is entitled, subject to the terms set forth
below, at any time from and after September __, 2006 (the "ORIGINAL ISSUANCE
DATE") and before 5:00 p.m., Eastern Time, on September __, 2011 (the
"EXPIRATION DATE"), to purchase from PATRON SYSTEMS, INC., a Delaware
corporation (the "COMPANY"), __________________________ (______) shares (subject
to adjustment as described herein), of common stock, par value $0.01 per share,
of the Company (the "COMMON STOCK"), upon surrender hereof, at the
administrative office of the Company referred to below, with a duly executed
subscription form in the form attached hereto as EXHIBIT A and simultaneous
payment therefor in lawful, immediately available money of the United States or
otherwise as hereinafter provided, at a per share exercise price of $___________
(the "PURCHASE PRICE").
The Purchase Price is subject to further adjustment as provided below,
and the term "COMMON STOCK" shall include, unless the context otherwise
requires, the stock and other securities and property at the time receivable
upon the exercise of this Warrant. The term "WARRANTS," as used herein, shall
mean this Warrant and any other Warrants delivered in substitution or exchange
therefor as provided herein.
This Warrant was issued in connection with the Company's private
placement offering (the "OFFERING") of units ("UNITS"), each Unit consisting of
(i) twenty (20) shares of the Company's Series B Convertible Preferred Stock
(the "PREFERRED STOCK") and (ii) a Warrant to purchase that number of shares of
Common Stock which is equal to 50% of the conversion shares underlying the
Preferred Stock, on a thirty (30) Unit ($3,000,000) minimum amount and a fifty
(50) Unit ($5,000,000) maximum amount basis, as described in greater detail in
the Company's Confidential Information Memorandum, dated August 29, 2006, as
amended or supplemented from time to time (the "MEMORANDUM"). Xxxxxxx & Company
(UK) Ltd. acted as placement agent for the Offering. In the Offering, the
Company sold the Units to "accredited investors" pursuant to Subscription
Agreements.
1. EXERCISE.
A. This Warrant may be exercised at any time or from
time to time from and after the Original Issuance Date and before 5:00 p.m.,
Eastern Time, on the Expiration Date, on any business day, for the full number
of shares of Common Stock called for hereby, by surrendering it at the
administrative office of the Company, at 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000, with the subscription form duly executed, together with
payment in an amount equal to (a) the number of shares of Common Stock called
for on the face of this Warrant, as adjusted in accordance with the terms of
this Warrant, multiplied (b) by the Purchase Price. Payment of the Purchase
Price shall be made by payment in immediately available funds. This Warrant may
be exercised for less than the full number of shares of Common Stock at the time
called for hereby, except that the number of shares of Common Stock receivable
upon the exercise of this Warrant as a whole, and the sum payable upon the
exercise of this Warrant as a whole, shall be proportionately reduced. Upon a
partial exercise of this Warrant in accordance with the terms hereof, this
Warrant shall be surrendered, and a new Warrant of the same tenor and for the
purchase of the number of such shares not purchased upon such exercise shall be
issued by the Company to Holder without any charge therefor. A Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
date of its surrender for exercise as provided above, and the person entitled to
receive the shares of Common Stock issuable upon such exercise shall be treated
for all purposes as the holder of such shares of record as of the close of
business on such date. Within two (2) business days after such date, the Company
shall issue and deliver to the person or persons entitled to receive the same a
certificate or certificates for the number of full shares of Common Stock
issuable upon such exercise, together with cash, in lieu of any fraction of a
share, equal to such fraction of the then Fair Market Value (as defined below)
on the date of exercise of one full share of Common Stock.
B. NET ISSUE EXERCISE. If the Fair Market Value of one
share of Common Stock is greater than the Purchase Price (at the date of
calculation set forth below), in lieu of exercising this Warrant for cash
pursuant to SECTION 1(A) above, the Holder may elect to satisfy the Purchase
Price by exchanging the Warrant for a number of shares of Common Stock computed
using the following formula (such election being referred to herein as a "NET
ISSUE EXERCISE ELECTION"):
X = Y(A-B)
------
A
Where X = the number of shares of Common Stock to be
issued to the Holder pursuant to this
SECTION 1.
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Y = the number of shares of Common Stock
purchasable under this Warrant or, if only a
portion of this Warrant is being exercised,
the portion of this Warrant being exercised
(at the date of such calculation).
A = the Fair Market Value of one share of Common
Stock (at the date of such calculation).
B = the Exercise Price per share of Common Stock
(as adjusted to the date of such
calculation).
In the event that the Holder makes a Net Issue Exercise Election pursuant to
this SECTION 1(B), the provisions of SECTION 1(A) regarding partial exercise and
delivery obligations of the Holder and the Company, shall be fully applicable
upon such election.
C. "FAIR MARKET VALUE" shall mean, as of any date: (i)
if shares of the Common Stock are listed on a national securities exchange, the
average of the closing prices as reported for composite transactions during the
twenty (20) consecutive trading days preceding the trading day immediately prior
to such date or, if no sale occurred on a trading day, then the mean between the
closing bid and asked prices on such exchange on such trading day; (ii) if
shares of the Common Stock are not so listed but are traded on the NASDAQ Global
Market ("NGM"), the average of the closing prices as reported on the NGM during
the twenty (20) consecutive trading days preceding the trading day immediately
prior to such date or, if no sale occurred on a trading day, then the mean
between the highest bid and lowest asked prices as of the close of business on
such trading day, as reported on the NGM; or if applicable, the Nasdaq Capital
Market ("NCM"), or if not then included for quotation on the NGM or the NCM, the
average of the highest reported bid and lowest reported asked prices as reported
by the OTC Bulletin Board of the National Quotation Bureau, as the case may be;
or (iii) if the shares of the Common Stock are not then publicly traded, the
fair market price of the Common Stock as determined in good faith by at least a
majority of the Board of Directors of the Company (the "BOARD").
2. SHARES FULLY PAID; PAYMENT OF TAXES. All shares of Common
Stock issued upon the exercise of a Warrant shall be validly issued, fully paid
and non-assessable, and the Company shall pay all taxes and other governmental
charges (other than income taxes to the holder) that may be imposed in respect
of the issue or delivery thereof.
3. TRANSFER AND EXCHANGE. This Warrant and all rights hereunder
are transferable, in whole or in part, on the books of the Company maintained
for such purpose at its principal office referred to above by Holder in person
or by duly authorized attorney, upon surrender of this Warrant together with a
completed and executed assignment form in the form attached as EXHIBIT B,
payment of any necessary transfer tax or other governmental charge imposed upon
such transfer and an opinion of counsel reasonably acceptable to the Company
stating that such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "1933 ACT"). Upon any partial transfer,
the Company will issue and deliver to Holder a new Warrant or Warrants with
respect to the shares of Common Stock not so transferred. Each taker and holder
of this Warrant, by taking or holding the same, consents and agrees that this
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Xxxxxxx when endorsed in blank shall be deemed negotiable and that when this
Warrant shall have been so endorsed, the holder hereof may be treated by the
Company and all other persons dealing with this Warrant as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented hereby, or to the transfer hereof on the books of the Company, any
notice to the contrary notwithstanding; but until such transfer on such books,
the Company may treat the registered Holder hereof as the owner for all
purposes.
This Warrant is exchangeable at such office for Warrants for
the same aggregate number of shares of Common Stock, each new Warrant to
represent the right to purchase such number of shares as the Holder shall
designate at the time of such exchange.
4. ANTI-DILUTION PROVISIONS. The Purchase Price in effect at any
time and the number and kind of securities issuable upon exercise of this
Warrant shall be subject to adjustment from time to time upon the happening of
certain events as follows:
A. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Company at any time or from time to time on or after the Original Issuance Date
effects a subdivision of the outstanding Common Stock, the Purchase Price then
in effect immediately before that subdivision shall be proportionately
decreased, and conversely, if the Company at any time or from time to time on or
after the Original Issuance Date combines the outstanding shares of Common Stock
into a smaller number of shares, the Purchase Price then in effect immediately
before the combination shall be proportionately increased. Any adjustment under
this SECTION 4(A) shall become effective at the close of business on the date
the subdivision or combination becomes effective.
B. ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS.
If the Company at any time or from time to time on or after the Original
Issuance Date makes or fixes a record date for the determination of holders of
Common Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Purchase
Price then in effect shall be decreased as of the time of such issuance or, in
the event such record date is fixed, as of the close of business on such record
date, by multiplying the Purchase Price then in effect by a fraction (1) the
numerator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date and (2) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such dividend or
distribution; PROVIDED, HOWEVER, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Purchase Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Purchase Price shall be
adjusted pursuant to this SECTION 4(B) as of the time of actual payment of such
dividends or distributions.
C. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In
the event the Company at any time or from time to time on or after the Original
Issuance Date makes, or fixes a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Company other than shares of Common Stock, then and in each
such event provision shall be made so that the Holders of Warrants shall receive
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upon exercise thereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Company which they would
have received had their Warrants been exercised to purchase Common Stock on the
date of such event and had they thereafter, during the period from the date of
such event to and including the exercise date, retained such securities
receivable by them as aforesaid during such period, subject to all other
adjustments called for during such period under this SECTION 4 with respect to
the rights of the Holders of the Warrants.
D. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND
SUBSTITUTION. In the event that at any time or from time to time on or after the
Original Issuance Date, the Common Stock issuable upon the exercise of the
Warrants is changed into the same or a different number of shares of any class
or classes of stock, whether by recapitalization, reclassification or otherwise
(other than a subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets, provided for elsewhere
in this SECTION 4), then and in any such event each Holder of Warrants shall
have the right thereafter to exercise such Warrants to purchase the kind and
amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other change, by holders of the maximum
number of shares of Common Stock for which such Warrants could have been
exercised immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein.
E. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF
ASSETS. If at any time or from time to time on or after the Original Issuance
Date there is a capital reorganization of the Common Stock (other than a
recapitalization, subdivision, combination, reclassification or exchange of
shares provided for elsewhere in this SECTION 4) or a merger or consolidation of
the Company with or into another corporation, or the sale of all or
substantially all of the Company's properties and assets to any other person,
then, as a part of such reorganization, merger, consolidation or sale, provision
shall be made so that the Holders of the Warrants shall thereafter be entitled
to receive upon exercise of the Warrants the number of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
deliverable upon exercise would have been entitled on such capital
reorganization, merger, consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this SECTION 4
with respect to the rights of the Holders of the Warrants after the
reorganization, merger, consolidation or sale to the end that the provisions of
this SECTION 4 (including adjustment of the Purchase Price then in effect and
the number of shares purchasable upon exercise of the Warrants) shall be
applicable after that event and be as nearly equivalent as may be practicable.
F. SALE OF SHARES BELOW CONVERSION PRICE:
(1) If at any time or from time to time
following the Original Issuance Date, the Company issues or sells, or is deemed
by the express provisions of this SECTION 4(F) to have issued or sold,
Additional Shares of Common Stock (as hereinafter defined), other than as a
dividend or other distribution on any class of stock and other than upon a
subdivision or combination of shares of Common Stock, in either case as provided
in SECTION 4(A) above, for an Effective Price (as hereinafter defined) less than
the then existing Conversion Price (as hereinafter defined), then and in each
such case the then existing Purchase Price shall be reduced, as of the opening
of business on the date of such issue or sale, to a price equal to one hundred
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percent (100%) of the Conversion Price as adjusted pursuant to Section 3(e) of
the Company's Certificate of Designation of Preferences, Rights and Limitations
of Series B Convertible Preferred Stock designating the rights, preferences and
privileges of the Preferred Stock ("CERTIFICATE OF DESIGNATION").
(2) For the purpose of making any adjustment
required under SECTION 4(F), the consideration received by the Company for any
issue or sale of securities shall (I) to the extent it consists of cash be
computed at the amount of cash received by the Company, (II) to the extent it
consists of property other than cash, be computed at the fair value of that
property as determined in good faith by the Board, (III) if Additional Shares of
Common Stock, Convertible Securities (as hereinafter defined) or rights or
options to purchase either Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities or other
assets of the Company for a consideration which covers both, be computed as the
portion of the consideration so received that may be reasonably determined in
good faith by the Board to be allocable to such Additional Shares of Common
Stock, Convertible Securities or rights or options, and (IV) be computed after
reduction for all expenses payable by the Company in connection with such issue
or sale.
(3) For the purpose of the adjustment required
under SECTION 4(F), if the Company issues or sells any rights, warrants or
options for the purchase of, or stock or other securities convertible into or
exchangeable for, Additional Shares of Common Stock (such convertible or
exchangeable stock or securities being hereinafter referred to as "CONVERTIBLE
SECURITIES") and if the Effective Price of such Additional Shares of Common
Stock is less than the Conversion Price then in effect, then in each case the
Company shall be deemed to have issued at the time of the issuance of such
rights, warrants, options or Convertible Securities the maximum number of
Additional Shares of Common Stock issuable upon exercise, conversion or exchange
thereof and to have received as consideration for the issuance of such shares an
amount equal to the total amount of the consideration, if any, received by the
Company for the issuance of such rights, warrants, options or Convertible
Securities, plus, in the case of such rights, warrants or options, the minimum
amounts of consideration, if any, payable to the Company upon the exercise of
such rights, warrants or options, plus, in the case of Convertible Securities,
the minimum amounts of consideration, if any, payable to the Company (other than
by cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion or exchange thereof. No further adjustment of
the Purchase Price, adjusted upon the issuance of such rights, warrants, options
or Convertible Securities, shall be made as a result of the actual issuance of
Additional Shares of Common Stock on the exercise of any such rights, warrants
or options or the conversion or exchange of any such Convertible Securities. If
any such rights or options or the conversion or exchange privilege represented
by any such Convertible Securities shall expire without having been exercised,
the Purchase Price adjusted upon the issuance of such rights, warrants, options
or Convertible Securities shall be readjusted to the Purchase Price which would
have been in effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares of Common
Stock, if any, actually issued or sold on the exercise of such rights, warrants,
or options or rights of conversion or exchange of such Convertible Securities,
and such Additional Shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of all
such rights, warrants, or options, whether or not exercised, plus the
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consideration received for issuing or selling the Convertible Securities
actually converted or exchanged, plus the consideration, if any, actually
received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion or
exchange of such Convertible Securities.
(4) For the purpose of the adjustment required
under SECTION 4(F), if the Company issues or sells, or is deemed by the express
provisions of this SECTION 4 to have issued or sold, any rights or options for
the purchase of Convertible Securities and if the Effective Price of the
Additional Shares of Common Stock underlying such Convertible Securities is less
than the Conversion Price then in effect, then in each such case the Company
shall be deemed to have issued at the time of the issuance of such rights or
options the maximum number of Additional Shares of Common Stock issuable upon
conversion or exchange of the total amount of Convertible Securities covered by
such rights or options and to have received as consideration for the issuance of
such Additional Shares of Common Stock an amount equal to the amount of
consideration, if any, received by the Company for the issuance of such rights,
warrants or options, plus the minimum amounts of consideration, if any, payable
to the Company upon the exercise of such rights, warrants or options, plus the
minimum amount of consideration, if any, payable to the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion or exchange of such Convertible Securities. No
further adjustment of the Purchase Price, adjusted upon the issuance of such
rights, warrants or options, shall be made as a result of the actual issuance of
the Convertible Securities upon the exercise of such rights, warrants or options
or upon the actual issuance of Additional Shares of Common Stock upon the
conversion or exchange of such Convertible Securities. The provisions of
paragraph (3) above for the readjustment of the Purchase Price upon the
expiration of rights, warrants or options or the rights of conversion or
exchange of Convertible Securities shall apply MUTATIS mutandis to the rights,
warrants options and Convertible Securities referred to in this paragraph (4).
(5) "ADDITIONAL SHARES OF COMMON STOCK" shall
mean all shares of Common Stock issued by the Company on or after the Original
Issuance Date, whether or not subsequently reacquired or retired by the Company,
other than (I) shares of Common Stock issuable upon conversion of the Preferred
Stock, (II) shares of Common Stock issuable upon exercise of the Warrants
("WARRANT SHARES"), (III) shares of Common Stock issuable upon exercise of
warrants, options and convertible securities outstanding as of the Original
Issuance Date (provided that the terms of such warrants, options and convertible
securities are not modified after the Original Issuance Date to adjust the
exercise price other than pursuant to anti-dilution provisions), (IV) shares of
Common Stock issued in connection with BONA FIDE acquisitions, mergers, joint
ventures and other similar transactions approved by the Board, (V) shares of
Common Stock issued pursuant to any event for which adjustment is made to the
Purchase Price under SECTION 4 hereof or to the exercise price under the
anti-dilution provisions of any warrants or convertible securities outstanding
as of the Original Issuance Date or the Agent Warrants, and (VI) options, awards
and shares of Common Stock or shares of Common Stock underlying options and
other awards issued to employees, officers, directors, consultants, vendors or
agents of the Company pursuant to the Company's 2006 Stock Incentive Plan. The
"EFFECTIVE PRICE" of Additional Shares of Common Stock shall mean the quotient
determined by dividing the total number of Additional Shares of Common Stock
issued or sold, or deemed to have been issued or sold by the Company under this
SECTION 4(F), into the aggregate consideration received, or deemed to have been
received, by the Company for such issue under this SECTION 4(F), for such
Additional Shares of Common Stock.
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(6) Other than a reduction pursuant to its
applicable anti-dilution provisions, any reduction in the conversion price of
any Convertible Security, whether outstanding on the Original Issuance Date or
thereafter, or the price of any option, warrant or right to purchase Common
Stock or any Convertible Security (whether such option, warrant or right is
outstanding on the Original Issuance Date or thereafter), to an Effective Price
less than the current Conversion Price, shall be deemed to be an issuance of
such Convertible Security and all such options, warrants or rights at such
Effective Price, and the provisions of SECTIONS 4(F)(3), (4) and (5) shall apply
thereto MUTATIS MUTANDIS.
(7) Any time an adjustment is made to the
Purchase Price pursuant to SECTION 4(F), a corresponding proportionate change
shall be made to the number of shares of Common Stock issuable upon exercise of
this Warrant.
(8) "CONVERSION PRICE" shall mean the conversion
price of the Preferred Stock, as determined and adjusted pursuant to the terms
of Section 3(e) of the Certificate of Designation, in effect immediately prior
to the Company's issuance or sale of Additional Shares of Common Stock.
G. NO ADJUSTMENTS IN CERTAIN CIRCUMSTANCES. No
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one ($0.01) cent in such price;
PROVIDED, HOWEVER, that any adjustments which by reason of this SECTION 4(G) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment required to be made hereunder. All calculations under this
SECTION 4(G) shall be made to the nearest cent or to the nearest one-hundredth
of a share, as the case may be.
5. NOTICES OF RECORD DATE. In case:
A. the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of the Warrants) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right, or
B. of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation, or
C. of any voluntary dissolution, liquidation or
winding-up of the Company, then, and in each such case, the Company will mail or
cause to be mailed to each holder of a Warrant at the time outstanding a notice
specifying, as the case may be, (a) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (b) the date on which
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is expected to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock (or
such stock or securities at the time receivable upon the exercise of the
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Warrants) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up, such notice shall be mailed at least ten
(10) days prior to the date therein specified.
6. LOSS OR MUTILATION. Upon receipt by the Company of evidence
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
7. RESERVATION OF COMMON STOCK. The Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of all outstanding Warrants. All of the shares of
Commons Stock issuable upon the exercise of the rights represented by this
Warrant will, upon issuance and receipt of the Purchase Price therefor, be fully
paid and nonassessable, and free from all preemptive rights, rights of first
refusal or first offer, taxes, liens and charges of whatever nature, with
respect to the issuance thereof.
8. REGISTRATION RIGHTS AGREEMENT. The Holder of this Warrant is
entitled to have the Warrant Shares registered for resale under the 1933 Act,
pursuant to and in accordance with the Registration Rights Agreement dated as of
the date hereof by and between the Holder and the Company.
9. NOTICES. All notices and other communications from the Company
to the Holder of this Warrant shall be mailed by first class, registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the Holder.
10. CHANGE; MODIFICATIONS; WAIVER. No terms of this Warrant may be
amended, waived or modified except by the express written consent of the Company
and the holders of not less than 50.1% of the then outstanding Warrants issued
in connection with the Offering.
11. HEADINGS. The headings in this Warrant are for purposes of
convenience in reference only, and shall not be deemed to constitute a part
hereof.
12. GOVERNING LAW, ETC. This Agreement shall be governed by and
construed exclusively in accordance with the internal laws of the State of New
York without regard to the conflicts of laws principles thereof. The parties
hereto hereby irrevocably agree that any suit or proceeding arising directly
and/or indirectly pursuant to or under this Agreement, shall be brought solely
and exclusively in a federal or state court located in the City, County and
State of New York. By its execution hereof, the parties hereby covenant and
irrevocably submit to the IN PERSONAM jurisdiction of the federal and state
courts located in the City, County and State of New York and agree that any
process in any such action may be served upon any of them personally, or by
certified mail or registered mail upon them or their agent, return receipt
requested, with the same full force and effect as if personally served upon them
in New York City. The parties hereto waive any claim that any such jurisdiction
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is not a convenient forum for any such suit or proceeding and any defense or
lack of IN PERSONAM jurisdiction with respect thereto. In the event of any such
action or proceeding, the party prevailing therein shall be entitled to payment
from the other party hereto of all of its reasonable legal fees and expenses.
Dated:
-------------------------------------
PATRON SYSTEMS, INC.
By:
-----------------------------------------
Name:
Title:
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EXHIBIT A
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):
|_| ________ shares of the Common Stock covered by such Warrant; or
|_| the maximum number of shares of Common Stock covered by such Warrant
pursuant to the net issue exercise procedure set forth in Section 1(B).
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):
|_| $__________ in lawful money of the United States; and/or
|_| the cancellation of such portion of the attached Warrant as is
exercisable for a total of _______ shares of Common Stock (using a Fair
Market Value of $_______ per share for purposes of this calculation);
and/or
|_| the cancellation of such number of shares of Common Stock as is
necessary, in accordance with the formula set forth in Section 1(B), to
exercise this Warrant with respect to the maximum number of shares of
Common Stock purchasable pursuant to the net issue exercise procedure
set forth in Section 1(B).
The undersigned requests that the certificates for such shares of
Common Stock be issued in the name of, and be delivered to,
__________________________, whose address is
_______________________________________.
Dated:
------------------------
--------------------------------------------
(Signature of Registered Owner
--------------------------------------------
(Street Address)
--------------------------------------------
(City / State / Zip Code)
EXHIBIT B
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:
NAME OF ASSIGNEE ADDRESS NUMBER OF SHARES
and does hereby irrevocably constitute and appoint __________________________
Attorney to make such transfer on the books of Patron Systems, Inc., maintained
for the purpose, with full power of substitution in the premises.
Dated:
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(Signature)
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(Witness)
The undersigned Assignee of the Warrant hereby makes to Patron Systems,
Inc., as of the date hereof, with respect to the Assignee, all of the
representations and warranties made by the Holder, and the undersigned Assignee
agrees to be bound by all the terms and conditions of the Warrant and the Patron
Systems, Inc. Registration Rights Agreement, dated as of ________ __, 2006, by
and between Patron Systems, Inc. and the Holder.
Dated:
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(Signature)
