EXHIBIT 4.3
THIS WARRANT AND THE SHARES OBTAINABLE UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS (COLLECTIVELY, THE "ACTS"), AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER ALL APPLICABLE ACTS OR UNLESS AN OPINION OF COUNSEL IS
DELIVERED TO THE ISSUER IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER TO THE EFFECT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE
UNDER ALL APPLICABLE ACTS.
No. [ ] [ ], 2003
STRONGHOLD TECHNOLOGIES, INC.
Securities Purchase Warrant
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THIS CERTIFIES THAT, for value received, [ ], or its registered assigns
(the "Holder"), is entitled to subscribe for and purchase from Stronghold
Technologies, Inc., a Nevada corporation (the "Company"), at any time prior to
or upon [ ], 2013, the Shares at the Exercise Price (each as defined in Section
1 below).
In connection with this warrant (the "Warrant"), the Company has issued
a Promissory Note, dated as of [ ], 2003 (the "Note"), to the Holder.
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the Note.
This Warrant is subject to the following terms and conditions:
1. Shares; Exercise Price.
(a) As used herein, the term "Shares" means [ ] ([ ]) shares of the Company's
Common Stock, par value $0.0001 per share (the "Common Stock"). As used herein,
the term "Exercise Price" means $[ ]. The number of Shares issuable under this
Section 1(a) and the Exercise Price are subject to adjustment from time to time
pursuant to Section 6 hereof. The Common Stock referenced above may be referred
to herein as the "Warrant Securities".
2. Method of Exercise; Payment.
(a) Cash Exercise. The purchase rights represented by this Warrant may be
exercised by the Holder, in whole or in part, at any time, or from time to time,
by the surrender of this Warrant (together with a duly executed notice of
exercise (the "Notice of Exercise") in the form attached hereto as Exhibit A) at
the address of the Company's principal corporate offices set forth in Section 7
hereof, and by payment to the Company of an amount equal to the Exercise Price
multiplied by the number of the Shares being purchased, which amount may be
paid, at the election of the Holder, by (i) wire transfer or check payable to
the order of the Company, (ii) cancellation by the Holder of indebtedness or
other obligations of the Company to the Holder or (iii) any combination of (i)
and (ii). The Person in whose name any certificate representing the Shares
issuable upon any exercise of this Warrant shall be deemed to have become the
holder of record of, and shall be treated for all purposes as the record holder
of, the Shares represented thereby (and such Shares shall be deemed to have been
issued) immediately prior to the close of business on the date or dates upon
which such surrender and payment are made. As used herein, the term "Person"
means any individual or any corporation, partnership, trust, limited liability
company or other entity or organization of any kind.
(b) Stock Certificates. In the event of any exercise of the rights represented
by this Warrant, as promptly as practicable on or after the date of exercise and
in any event within ten days thereafter, the Company at its expense shall issue
and deliver to the Holder entitled to receive the same a certificate or
certificates representing the number of Shares issued upon such exercise. In the
event that this Warrant is exercised in part, as promptly as practicable on or
after the date of exercise and in any event within ten days thereafter, the
Company at its sole expense will execute and deliver a new Warrant exercisable
for the number of Shares for which this Warrant may then be exercised, which new
warrant shall in all respects be identical to this Warrant.
(c) Taxes. The issuance of the Shares upon the exercise of this Warrant, and the
delivery of certificates or other instruments representing such Shares, shall be
made without charge to the Holder for any tax or other charge of whatever nature
in respect of such issuance and the Company shall bear any such taxes in respect
of such issuance.
3. Stock Fully Paid; Reservation of Shares. All of the Shares 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. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized and reserved for issuance a sufficient number of shares of its Common
Stock to provide for the full exercise of the rights represented by this
Warrant. The Company hereby agrees that the 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 proper certificates for
Shares upon the full or each partial exercise of this Warrant and shares of
Common Stock issuable upon any conversion of all or any portion of such Shares.
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4. Registration Rights.
(a) Incidental Registration. Whenever the Company proposes to file a
Registration Statement covering shares of Common Stock at any time and from time
to time, it will, prior to such filing, give written notice to the Holder of its
intention to do so. Upon the written request of the Holder given within 20 days
after the Holder's receipt of such notice (which request shall state the
intended method of disposition of such shares purchased pursuant to this
Warrant), the Company shall use its best efforts to cause all shares purchased
pursuant to this Warrant, which the Company has been requested by such Holder to
register, to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of such Holder. Such "piggy-back"
registration rights as described in this Section 4(a) shall have the same terms
and conditions as set forth in Section 4(g), Section 6, and Section 7 of that
certain Registration Rights Agreement, dated May 16, 2002, by and among the
Company and Stanford Venture Capital Holdings, Inc.
(b) Demand Registration. In the event that no Registration Statement for which
Holder's Shares are eligible to be included (and are in fact included) is filed
on or prior to [ ], 2004, the Holder may thereafter, on one occasion, require
the Company to effect the registration of the Shares issued or issuable
hereunder on Form SB-2 or Form S-3 (or any successor form thereto), provided
that the Company is eligible to use such form for such registration, pursuant to
the provisions of this Section 4(b). If the Holder of the Shares issued and
issuable hereunder shall give notice to the Company to the effect that such
Holder desires to transfer the Shares issued and issuable hereunder pursuant to
a public distribution (within the meaning of the Securities Act), then the
Company shall, reasonably and promptly after receipt of such (but in any event
within 45 days after receipt of such notice), file a registration statement on
the specified form pursuant to the Securities Act and cause such Shares to be
registered under the Securities Act and qualified under the securities or blue
sky laws of any state reasonably requested by a prospective seller, to the end
that such Shares may be sold by the Holder under the Securities Act and pursuant
to the securities or blue sky laws of the jurisdictions requested, as promptly
as is reasonably practicable thereafter and the Company will use its
commercially reasonable best efforts to cause any such registration to become
effective and to keep the prospectus included therein current until the
distribution shall have been completed (but in any case not to exceed 90 days
after the effective date of such registration statement); provided that such
holders shall furnish the Company with such appropriate information in
connection therewith as the Company may reasonably request in writing.
Notwithstanding the foregoing, the Company shall not be required to effect any
registration hereunder (i) for less than 50,000 Shares (subject to appropriate
adjustment in the case of stock dividends, stock splits, recapitalizations and
the like) unless the registration covers all of the remaining Shares purchased
or purchasable by the Holder hereunder or (ii) if the Holder has not exercised
purchase rights under this Warrant in respect of such Shares. The managing
underwriters, if any, for any offering made pursuant to this Section 4(b) shall
be selected by the Company, subject to the consent of the Holder, which consent
shall not be unreasonably withheld. Such "demand" registration rights as
described in this Section 4(b) shall have the same terms and conditions as set
forth in Section 6 and Section 7 of that certain Registration Rights Agreement,
dated May 16, 2002, by and among the Company and Stanford Venture Capital
Holdings, Inc.
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5. Fair Market Value. The Company and the Holder, having adverse interests as a
result of arm's length bargaining, agree that:
(a) Neither the Holder nor any of its affiliates has rendered any services to
the Company in connection with this Warrant;
(b) The Warrant is not being issued as compensation;
(c) The aggregate fair market value of the Notes, if issued apart from the
Warrants, is $[ ] and the aggregate fair market value of the Warrants, if issued
apart from the Notes, is $[ ]; and
(d) All tax returns and other information of each party relative to this Warrant
and the Note shall consistently reflect the matters agreed to in (a) through (c)
above.
6. Adjustments of Exercise Price and Number and Type of Shares.
(a) Merger, Consolidation, Share Exchange, Reorganization, Etc. If all or any
portion of this Warrant shall be exercised subsequent to any (i) merger,
consolidation, recapitalization, exchange of shares, or reorganization of the
Company, (ii) sale or transfer of all or substantially all of the assets of the
Company or (iii) other similar event occurring after the date hereof, as a
result of which shares of the Common Stock shall be changed into the same or a
different number of shares of the same or another class or classes of securities
of the Company or another entity, then lawful provision shall be made by the
Company so that the Holder exercising this Warrant shall receive, for the
aggregate Exercise Price upon such exercise, the aggregated number and class of
shares which such Holder would have received if this Warrant had been exercised
immediately prior to such merger, consolidation, recapitalization, exchange of
shares, reorganization, sale, or other similar event.
(b) Adjustment Certificate. Whenever the number or type of Shares purchasable
hereunder shall be adjusted pursuant to Section 6(a), the Company shall promptly
issue a certificate to the Holder setting forth, in reasonable detail, the event
requiring the adjustment, the amount of adjustment, the method by which such
adjustment was calculated, including the facts upon which such adjustment was
based, and the number and type of Shares purchasable hereunder after giving
effect to each adjustment.
(c) Specific Notices. In case:
(i) 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 this
Warrant) for the purpose of entitling them to receive any dividend or other
distribution, 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
(ii) 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 entity, or any conveyance of all or substantially all of
the assets or the Company to another entity or individual; or
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(iii) of any voluntary dissolution, liquidation, or winding-up of the
Company; or
(iv) of any redemption or conversion of all outstanding shares of the
Common Stock;
then, and in each such case, the Company will notify the Holder of, as
the case may be, (1) the date on which a record is to be taken for the purpose
of such dividend, distribution, or right and the amount and character of such
dividend, distribution or right, or (2) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation,
winding-up, redemption or conversion is 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 this Warrant) 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. For any such notification required
above, the Company shall provide to Holder written notice at least 20 days prior
to the date specified therein.
7. Notices.
(a) All notices, requests, consents, and other communications under this Warrant
shall be in writing and shall be deemed delivered (i) three business days after
being sent by registered or certified mail, return receipt requested, postage
prepaid or (ii) one business day after being sent via a reputable nationwide
overnight courier service guaranteeing next business day delivery, in each case
to the intended recipient as set forth below:
If to the Company, at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx Xxxxxxx,
Xxx Xxxxxx 00000, Attention: President, or at such other address as may have
been furnished in writing by the Company to the Holder, with a copy to Xxxx and
Xxxx LLP, 000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxxxx
X. Xxxx, Esq.; or
If to the Holder, [ ], or at such other address as may be
furnished in writing by the Holder to the Company.
(b) Either party may give any notice, request, consent or other communication
under this Warrant using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Either party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other party notice in the manner set forth in this
Section.
8. Transfers, etc
(a) This Warrant and the Warrant Securities shall not be sold or transferred
unless either (i) they first shall have been registered under the Act, or (ii)
the Company first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to the Company, to the effect that such sale or transfer
is exempt from the registration requirements of the Act. Notwithstanding the
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foregoing, no registration or opinion of counsel shall be required for (i) a
transfer by a Holder which is an entity to a wholly owned subsidiary of such
entity, a transfer by a Holder which is a partnership to a partner of such
partnership or a retired partner of such partnership or to the estate of any
such partner or retired partner, or a transfer by a Holder which is a limited
liability company to a member of such limited liability company or a retired
member or to the estate of any such member or retired member.
(b) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL SUCH SECURITIES ARE REGISTERED UNDER
SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS
OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED."
The foregoing legend shall be removed from the certificates
representing any Warrant Shares, at the request of the holder thereof, at such
time as they become eligible for resale pursuant to Rule 144(k) under the Act.
(c) The Company will maintain a register containing the name and address of
the Holder of this Warrant. The Holder may change its address as shown on the
warrant register by written notice to the Company requesting such change.
(d) Subject to the provisions of Section 7 hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, upon surrender of this
Warrant with a properly executed assignment (in the form of Exhibit B hereto) at
the principal office of the Company (or, if another office or agency has been
designated by the Company for such purpose, then at such other office or
agency).
9. Removal of Legend. Upon request of a holder of a certificate with the legends
required by Section 8 hereof, the Company shall issue to such holder a new
certificate therefor free of any transfer legend, if, with such request, the
Company shall have received an opinion of counsel satisfactory to the Company in
form and substance to the effect that any transfer by such holder of the shares
evidenced by such certificate will not violate the Securities Act and any
applicable state securities laws.
10. Fractional Shares. No fractional Shares will be issued in connection with
any exercise hereunder. Instead, the Company shall pay to such Holder an amount
in cash equal to any fractional share to which such Holder would be entitled,
multiplied by the Fair Market Value of a Share, as quoted on the Nasdaq Stock
Market or in the Over-the-Counter Market Summary.
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11. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Holder as follows:
(a) This Warrant has been duly authorized and executed by the Company and
is a valid and binding obligation of the Company enforceable in accordance with
its terms; and
(b) The execution and delivery of this Warrant are not, and the issuance of
the Shares upon exercise of this Warrant in accordance with the terms hereof
will not be, inconsistent with the Company's Certificate of Incorporation, as
then in effect, and its Bylaws, as then in effect.
12. Representations and Warranties by the Holder. The Holder represents and
warrants to the Company as follows:
(a) This Warrant is being acquired for its own account, for investment and
not with a view to, or for resale in connection with, any distribution thereof
within the meaning of the Securities Act. Upon exercise of this Warrant, the
Holder shall, if so requested by the Company, confirm in writing, in a form
reasonably satisfactory to the Company, that the Shares issuable upon exercise
of this Warrant are being acquired for investment and not with a view toward
distribution or resale that would violate the Securities Act.
(b) The Holder understands that the Warrant and the Shares have not been
registered under the Securities Act by reason of their issuance in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act pursuant to Section 4(2) thereof, and that they must be held by
the Holder indefinitely, and that the Holder must therefore bear the economic
risk of such investment indefinitely, unless a subsequent disposition thereof is
registered under the Securities Act or is exempted from such registration.
(c) The Holder has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the purchase of
this Warrant and the Shares purchasable pursuant to the terms of this Warrant
and of protecting its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the purchase of the
Shares pursuant to the terms of this Warrant.
(e) The Holder is an "accredited investor" within the meaning of Rule 501
of Regulation D under the Securities Act.
13. Rights of Stockholders. Subject to Section 6 hereof, no Holder, as such,
shall be entitled to vote or receive dividends or be deemed the holder of the
Shares or any other securities of the Company that may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issuance of
stock, reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until this Warrant shall have been
exercised and the Shares purchasable upon the exercise hereof shall have become
issuable, as provided herein.
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14. Expiration of Warrant. This Warrant shall expire and shall no longer be
exercisable as of 5:00 p.m., Eastern Time, on [ ], 2013.
15. Miscellaneous.
(a) This Warrant shall be governed by and construed for all purposes under and
in accordance with the laws of the State of New Jersey without regard to
principles of conflicts of law.
(b) The headings in this Warrant are for purposes of reference only, and shall
not limit or otherwise affect any of the terms hereof.
(c) The representations, warranties, covenants and conditions of the respective
parties contained herein or made pursuant to this Warrant shall survive the
execution and delivery of this Warrant.
(d) The terms of this Warrant shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company and of the Holder and of the
Shares issued or issuable upon the exercise hereof.
(e) This Warrant, the Note and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
(f) The Company shall not, by amendment of the Certificate of Incorporation or
Bylaws, or through any other means, directly or indirectly, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant and
shall at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder against impairment.
(g) Upon receipt of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant and, in the case of any such
loss, theft or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Company, at its
expense, will execute and deliver to the Holder, in lieu thereof, a new Warrant,
which new warrant shall have the same date and be identical in all other
respects to this Warrant.
(h) This Warrant and any provision hereof may be amended, waived or terminated
only by an instrument in writing signed by the Company and the Holder.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
STRONGHOLD TECHNOLOGIES, INC.
By
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Name: Xxxxxxxxxxx X. Xxxxx
Title: President and Chief Executive Officer
Exhibit A
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NOTICE OF EXERCISE
TO: Stronghold Technologies, Inc.
Attention: President
The undersigned hereby elects to purchase _______________ shares of
Common Stock of Stronghold Technologies, Inc. pursuant to the terms of this
Warrant, and tenders herewith payment of the purchase price of such shares in
full. (Initial here if the undersigned elects this alternative). _________
Please issue a certificate or certificates representing said securities
in the name of the undersigned or in such other name as is specified below:
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(Name)
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(Address)
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The undersigned hereby represents and warrants that the aforesaid
securities are being acquired for the account of the undersigned for investment
and not with a view to, or for resale, in connection with the distribution
thereof, and that the undersigned has no present intention of distributing or
reselling such shares and all representations and warranties of the undersigned
set forth in Section 12 of the attached Warrant are true and correct as of the
date hereof.
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(Signature and Date)
Exhibit B
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ASSIGNMENT FORM
In connection with that certain Promissory Note, dated as of
March __, 2003, issued by [ ] (the "Assignor") in favor of _____________________
(the "Assignee"), the Assignor hereby sells, assigns and transfers all of its
rights under the attached Warrant (No. ___) (the "Warrant"), with respect to the
number of shares of Common Stock of Stronghold Technologies, Inc. (the
"Company"), covered thereby and as set forth below, unto:
Name of Assignee Address No. of Shares
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Section 1 - Assignor
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This warrant assignment is in connection with a Promissory Note and a Securities
Purchase Warrant, both dated as of March __, 2003, by the Company in favor of
the Assignor.
The Assignor hereby makes the following representations and
warranties:
1. The Assignor acquired the Warrant from the Company on March __, 2003.
2. The Assignor purchased the Warrant for his sole account.
3. The sale of the Warrant will not be accompanied by the publication of
any advertisement.
4. The sale of the Warrant will not be effected through a broker-dealer in
a public offering.
5. In the sale of the Warrant, the Assignor is not acting on behalf of the
Company.
6. In the sale of the Warrant, the Assignor is not acting as an
underwriter or a dealer (as such terms are defined under the Securities
Act of 1933, as amended).
7. The Warrant is not being sold for the Company in connection with a
distribution.
8. The Warrant is not being sold in connection with the participation in a
distribution by the Company.
Section 2 - Assignee
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The Assignee hereby makes the same representations and warranties as those made
by the Assignor in Section 12 of the Warrant and in addition, makes the
following representations and warranties:
1. The Assignee acquired the Warrant from the Assignor on March __, 2003.
2. The Warrant was not acquired by the Assignee with the intent to
distribute the Warrant.
3. The Assignee is purchasing the Warrant for his sole account.
4. The purchase of the Warrant will not be accompanied by the publication
of any advertisement.
5. The purchase of the Warrant will not be effected through a
broker-dealer in a public offering.
6. In the purchase of the Warrant, the Assignee is not acting on behalf of
the Company.
7. In the purchase of the Warrant, the Assignee is not acting as an
underwriter or a dealer (as such terms are defined under the Securities
Act of 1933, as amended).
8. The Warrant is not being acquired for the Company in connection with a
distribution.
9. The Warrant is not being acquired in connection with the participation
in a distribution by the Company.
Section 3 - Company
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The Company (i) hereby consents to this assignment of the
Warrant and (ii) waives its right to an opinion of legal counsel in accordance
with Section 8 of the Warrant.
In witness whereof, the undersigned parties hereto have
executed this Agreement as of the ___ day of March, 2003.
ASSIGNOR
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[ ]
ASSIGNEE
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COMPANY
STRONGHOLD TECHNOLOGIES, INC.
By:_________________________________
Name: ______________________________
Title: ______________________________
