Contract
Exhibit
10.3
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.
CLASS
A WARRANT TO PURCHASE
________
SHARES
OF
COMMON STOCK
(SUBJECT
TO ADJUSTMENT)
| Warrant No.: A - 1 | December 16, 2009 |
This
certifies that for value received, _____________ or its
registered assigns (the “Holder”),
is entitled, subject to the terms set forth below, at any time from and after
the date hereof (the “Original Issuance
Date”) and before 5:00 p.m., Eastern Time, on December 7, 2014 (the
“Expiration
Date”)), to purchase from Decisionpoint Systems, Inc., a
Delaware corporation (the “Company”),
____________ shares (subject to
adjustment as described herein), of common stock, par value $0.001 per share, of
the Company (the “Common
Stock”), upon surrender hereof, at the office of the Company referred to
below, with a duly executed exercise notice (the “Exercise
Notice”) 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 an initial exercise price
per share of $___ (the
“Exercise
Price”). The Exercise Price is subject to adjustment as provided below,
and the term “Common
Stock” shall include, unless the context otherwise requires, all 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 is one of a series of substantially identical (collectively the “Warrants”)
Warrants issued pursuant to that certain Securities Purchase Agreement dated the
date hereof (the “SPA”)
by and among the Company, the Holder and the other signatories to the
SPA.
1. Definitions. In
addition to the terms defined elsewhere in this Warrant, capitalized terms that
are not otherwise defined herein have the meanings given to such terms in the
SPA.
2. Exercise.
A. Method of
Exercise. 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 principal office of the Company (or such other office of the Company as
it may designate by notice in writing to the Holder at the address of the Holder
appearing on the books of the Company), with the Exercise Notice 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 preceding paragraph of this Warrant multiplied (b) by the Exercise
Price then in effect. Payment of the Exercise Price must 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.
B. Issuance of
Shares. This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise (the “Exercise
Date”) 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 the Exercise
Date. Within three (3) business days after the Exercise 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 Exercise Date of one full share of Common Stock.
So long
as a registration statement under the Securities Act of 1933, as amended (the
“Securities
Act”), providing for the resale of the shares issuable upon exercise of
this Warrant is then in effect, the Company shall use best efforts to ensure the
issuance and delivery of the shares to the Depository Trust Company (“DTC”)
account on the Holder’s behalf via the Deposit Withdrawal at Custodian System
(“DWAC”)
within a reasonable time, not exceeding three (3) trading days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
holder of the shares so purchased as of the date of such
exercise. Notwithstanding the foregoing to the contrary, the Company
or its transfer agent shall only be obligated to issue and deliver the shares to
the DTC on a holder’s behalf via DWAC if such exercise is in connection with a
sale and the Company and its transfer agent are participating in DTC through the
DWAC system.
2
C. Cashless
Exercise. In lieu of exercising this Warrant for cash, the
Holder may elect to satisfy the Exercise Price by exchanging this 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”):
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X
=
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Y(A-B)
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A
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Where
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X
=
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the
number of shares of Common Stock to be issued to the Holder in accordance
with the terms of this Warrant.
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Y
=
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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).
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A
=
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the
Fair Market Value of one share of the Common Stock (at the date of such
calculation).
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B
=
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the
Exercise Price per share of Common Stock (as adjusted to the date of such
calculation).
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“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 five (5)
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 quoted on the OTC Bulletin Board, the
average of the closing prices as reported by the OTC Bulletin Board during the
five (5) 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 by the OTC Bulletin Board; 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.
D. Limitation on
Exercise. Notwithstanding any provisions herein to the
contrary, 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 Securities Exchange Act of 1934, as amended (the “Exchange
Act”), does not exceed 4.9% (the “Maximum
Percentage”) 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. This restriction may not be
waived.
3
E. Exercise
Disputes. In the case of any dispute with respect to the
number of shares of Common Stock to be issued upon exercise of this Warrant, the
Company shall promptly issue such number of shares of Common Stock that is not
disputed and shall submit the disputed determinations or arithmetic calculations
to the Holder via fax (or, it the Holder has not provided the Company with a fax
number, by overnight courier) within five (5) business days of receipt of the
Holder’s Exercise Notice. If the Holder and the Company are unable to
agree as to the determination of the Exercise Price within five (5) business
days of such disputed determination or arithmetic calculation being submitted to
the Holder, then the Company shall in accordance with this Section, submit via
facsimile the disputed determination to its independent auditor. The
Company shall cause its independent auditor to perform the determinations or
calculations and notify the Company and the Holder of the results promptly, in
writing and in sufficient detail to give the Holder and the Company a clear
understanding of the issue. The determination by the Company’s
independent auditor shall be binding upon all parties absent manifest
error. The Company shall then on the next Business Day instruct its
transfer agent to issue certificate(s) representing the appropriate number of
shares of Common Stock in accordance with the independent auditor’s
determination and this Section. The prevailing party shall be
entitled to reimbursement of all fees and expenses of such determination and
calculation.
3. Shares Fully Paid; Payment
of Taxes. All shares of Common Stock issued upon the exercise of this
Warrant, in accordance with the terms of this 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.
4. 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
office referred to above by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant at the Company’s office referred to above
together with: (i) a completed and executed form of assignment, a form of which
is attached hereto as Exhibit B,
(ii) payment of any necessary transfer tax or other governmental charge imposed
upon such transfer and (iii) an opinion of counsel reasonably acceptable to the
Company stating that such transfer is exempt from the registration requirements
of the Securities Act. Upon any partial transfer of this Warrant, the Company
will issue and deliver to Holder a new Warrant or Warrants with respect to the
portion of this Warrant not so transferred. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant
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
5. Certain
Adjustments. The Exercise 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 stock split or subdivision of the
outstanding Common Stock, the Exercise Price then in effect immediately before
that stock split or subdivision shall be proportionately decreased and the
number of shares of Common Stock theretofore receivable upon the exercise of
this Warrant shall be proportionately increased. If the Company at any time or
from time to time effects a reverse stock split or combines the outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price then
in effect immediately before that reverse stock split or combination shall be
proportionately increased and the number of shares of Common Stock theretofore
receivable upon the exercise of this Warrant shall be proportionately decreased.
Each adjustment under this Section
5.A shall become effective at the close of business on the date the stock
split, subdivision, reverse stock split 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 Exercise 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 Exercise 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 Exercise Price shall be
recomputed accordingly as of the close of business on such record date and
thereafter the Exercise Price shall be adjusted pursuant to this Section 5B
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 Holder of this Warrant shall receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Company which the Holder would have received had
this Warrant been exercised on the date of such event and had Holder thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by the Holder as aforesaid during such
period, subject to all other adjustments called for during such period under
this Section
5 with respect to the rights of the Holder of this Warrant.
5
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 this Warrant 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
5), then and in any such event the Holder of this Warrant shall have the
right thereafter upon exercise of this Warrant to receive the kind and amount of
stock and other securities and property receivable by holders of Common Stock
upon such recapitalization, reclassification or other change, that the Holder
would have received if this Warrant had been exercised immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein.
E. Adjustment for
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
5) 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 Holder of this
Warrant shall thereafter be entitled to receive upon exercise of this Warrant
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 conversion 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
5 with respect to the rights of the Holder of this Warrant after the
reorganization, merger, consolidation or sale to the end that the provisions of
this Section
5 (including adjustment of the Exercise Price then in effect and the
number of shares to be received upon exercise of this Warrant) shall be
applicable after that event and be as nearly equivalent as may be
practicable.
F. No Adjustments in Certain
Circumstances. No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least five
($0.05) cents in such price; provided, however, that any
adjustments which by reason of this Section 5F
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 5
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
G. Certificate as to
Adjustments. Upon the occurrence of each adjustment or readjustment of
the Exercise Price pursuant to this Section
5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of a
Warrant a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon the written request at any time of any holder of a Warrant,
furnish or cause to be furnished to such holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) Exercise Price at the
time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon the
exercise of the Warrant.
6
6. 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
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.
7. 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.
8. 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 Common Stock issuable upon the
exercise of the rights represented by this Warrant will, upon issuance and
receipt of the Exercise 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.
9. Registration
Rights. All shares of Common Stock issuable upon exercise of
this Warrant shall have the registration rights set forth in the Registration
Rights Agreement by and between the Holder and the Company, which rights are
expressly incorporated and made a part of this Warrant.
10. 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.
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11. 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
Holder.
12. Headings. The
headings in this Warrant are for purposes of convenience in reference only, and
shall not be deemed to constitute a part hereof.
13. Governing Law, Etc.
This Warrant shall be governed by and construed solely and 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 expressly and
irrevocably agree that any suit or proceeding arising directly and/or indirectly
pursuant to, arising out of or under this Warrant, 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 expressly 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 expressly and irrevocably waive any claim
that any such jurisdiction 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 (including, but not
limited to, any motions made), the party prevailing therein shall be entitled to
payment from the other party hereto of its reasonable counsel fees and
disbursements. The Company and Holder hereby waive all rights to a trial by
jury.
14. Automatic Conversion upon
Expiration. In the event that, upon the Expiration Date, the
Fair Market Value of one share of Common Stock (or other security issuable upon
the exercise hereof) as determined in accordance with this Warrant above is
greater than the Exercise Price in effect on such date, then this Warrant shall
automatically be deemed on and as of such date to be exercised pursuant to a Net
Issue Exercise Election as to all shares (or such other securities) for which
this Warrant shall not previously have been exercised or converted, and the
Company shall promptly deliver a certificate representing the shares (or such
other securities) issued upon such exercise to the Holder.
[Signature
page to follow]
8
IN WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed by its authorized officer as
of the date first indicated above.
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By:
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Name:
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Title:
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Warrant
Signature Page
EXHIBIT
A
SUBSCRIPTION
FORM
(To be
executed by the Holder only upon exercise of Warrant)
The
undersigned registered owner of this Warrant irrevocably exercises this Warrant
and purchases _______ of the number of shares of Common Stock of DecisionPoint
Systems, Inc., purchasable with this Warrant, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant.
The
Holder shall make payment of the Exercise Price as follows (check
one):
______
“Cash Exercise” pursuant to Section 2.A of the Warrant
______
“Net Issue Exercise Election” pursuant to Section 2.C of the
Warrant
Notwithstanding
anything to the contrary contained herein, this Exercise Notice shall constitute
a representation by the Holder that, after giving effect to the exercise
provided for in this Exercise Notice, the Holder (together with its affiliates)
will not have beneficial ownership (together with the beneficial ownership of
such Person’s affiliates) of a number of shares of Common Stock which exceeds
the Maximum Percentage of the total outstanding shares of Common Stock as
determined pursuant to the provisions of Section 2.D of the
Warrant.
The
Holder represents to the Company that, as of the date of exercise:
i.
the shares of Common Stock being purchased pursuant to this Exercise Notice are
being acquired solely for the Holder’s own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or resale;
and
ii. the
Holder is an “accredited investor” as such term is defined in Rule 501(a)(1) of
Regulation D promulgated by the Securities and Exchange Commission under the
Securities Act.
If the
Holder cannot make the representations required above, because they are
factually incorrect, it shall be a condition to the exercise of the Warrant that
the Company receive such other representations as the Company considers
necessary, acting reasonably, to assure the Company that the issuance of
securities upon exercise of this Warrant shall not violate any United States or
other applicable securities laws.
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Dated:
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Name
of Holder:
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(Print)
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By:
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Name:
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Title:
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(Signature
must conform in all respects to name of holder as specified on the face of
the Warrant)
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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:
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Name
of Assignee
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Address
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Number
of Shares
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and does
hereby irrevocably constitute and appoint __________________________ Attorney to
make such transfer on the books of Decisionpoint Systems, Inc., maintained for
the purpose, with full power of substitution in the premises.
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Dated:
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(Signature)
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(Witness)
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The undersigned Assignee of the Warrant
hereby makes to Decisionpoint 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.
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Dated:
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(Signature)
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