EXHIBIT 10.20
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 June __, 2010)
NO: BW-____
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 June __, 2005 (the "ORIGINAL ISSUANCE DATE") and before 5:00 p.m.,
Eastern Time, on June __, 2010 (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 principal 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 an initial exercise price
per share of $0.60 (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 10% junior convertible promissory notes
in an aggregate principal amount up to $2,500,000 (the "NOTES"), with the right
to sell Notes for up to an additional aggregate principal amount of $500,000 to
cover over-subscriptions, if any, as described in greater detail in the
Company's Confidential Information Memorandum, dated as of May __, 2005, as
amended or supplemented from time to time (the "MEMORANDUM"). In the Offering,
the Company sold
its securities to "accredited investors" pursuant to Subscription Agreements
(the "SUBSCRIPTION AGREEMENTS").
1. 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, at 000 Xxxxx Xxxxxxxx Xxxxxx,
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 preceding paragraph of this Warrant
(without giving effect to any further adjustment herein), 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 on the date of exercise of one full share of Common Stock.
"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 traded on the Nasdaq SmallCap Market
("NSCM"), the average of the closing prices as reported on the NSCM 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 on the NSCM; or if applicable, the Nasdaq National Market
("NNM"), or if not then included for quotation on the NNM or NSCM, the average
of the highest reported bid and lowest reported asked prices as reported by the
OTC Bulletin Board or the National Quotations 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.
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
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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 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 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. ANTI-DILUTION PROVISIONS.
A. ADJUSTMENT FOR DIVIDENDS IN OTHER STOCK AND PROPERTY
RECLASSIFICATIONS. In case at any time or from time to time
the holders of the Common Stock (or any shares of stock or
other securities at the time receivable upon the exercise of
this Warrant) shall have received, or, on or after the record
date fixed for the determination of eligible shareholders,
shall have become entitled to receive, without payment
therefor,
(1) other or additional stock or other securities or
property (other than cash) by way of dividend,
(2) any cash or other property paid or payable out of any
source other than retained earnings (determined in
accordance with generally accepted accounting
principles), or
(3) other or additional stock or other securities or
property (including cash) by way of stock-split,
spin-off, reclassification, combination of shares or
similar corporate rearrangement (other than (x)
additional shares of Common Stock or any other stock
or securities into which such Common Stock shall have
been changed, (y) any other stock or securities
convertible into or exchangeable for such Common
Stock or such other stock or securities or (z) any
stock purchase rights, issued as a stock dividend or
stock-split, adjustments in respect of which shall be
covered by the terms of SECTION 4.C, SECTION 4.D OR
SECTION 4.E, then and in each such case, Holder, upon
the exercise hereof as provided in SECTION 1, shall
be entitled
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to receive the amount of stock and other securities
and property (including cash in the cases referred to
in clauses (2) and (3) above) which such Holder would
hold on the date of such exercise if on the Original
Issuance Date Holder had been the holder of record of
the number of shares of Common Stock called for on
the face of this Warrant, as adjusted in accordance
with the first paragraph of this Warrant, and had
thereafter, during the period from the Original
Issuance Date to and including the date of such
exercise, retained such shares and/or all other or
additional stock and other securities and property
(including cash in the cases referred to in clause
(2) and (3) above) receivable by it as aforesaid
during such period, giving effect to all adjustments
called for during such period by SECTION 4.A and
SECTION 4.B.
B. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION AND MERGER. In
case of any reorganization of the Company (or any other
corporation the stock or other securities of which are at the
time receivable on the exercise of this Warrant) after the
Original Issuance Date, or in case, after such date, the
Company (or any such other corporation) shall consolidate with
or merge into another corporation or entity or convey all or
substantially all its assets to another corporation or entity,
then and in each such case Holder, upon the exercise hereof as
provided in SECTION 1 at any time after the consummation of
such reorganization, consolidation, merger or conveyance,
shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise of this
Warrant prior to such consummation, the stock or other
securities or property to which such Holder would have been
entitled upon such consummation if Holder had exercised this
Warrant immediately prior thereto, all subject to further
adjustment as provided in SECTIONS 4.A, SECTION 4.B, SECTION
4.C, SECTION 4.D and SECTION 4.E; in each such case, the terms
of this Warrant shall be applicable to the shares of stock or
other securities or property receivable upon the exercise of
this Warrant after such consummation.
C. SALE OF SHARES BELOW PURCHASE PRICE.
(1) Subject to the exceptions set forth in SECTION
4.C(5), if the Company issues or sells, or is deemed
by the express provisions of this SECTION 4.C 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 as provided
in SECTION 4.D and other than upon a subdivision or
combination of shares of Common Stock as provided in
SECTION 4.E, for an Effective Price (as hereinafter
defined) less than the then existing Purchase Price,
then and in each such case:
(A) the then existing Purchase Price shall be
reduced, as of the opening of business on
the date of such issue or sale, as follows:
the Purchase Price shall be reduced to a
price determined by multiplying that
Purchase Price by a fraction (i) the
numerator of which shall be (a) the number
of shares of Common Stock outstanding at the
close of business on the day next preceding
the date of such issue or sale, plus (b) the
number of shares of Common Stock which the
aggregate consideration received (or by the
express provisions hereof deemed to have
been received) by the Company for the total
number of Additional Shares of Common Stock
so issued would purchase at the Effective
Price, plus (c) the number of shares of
Common Stock for which all Warrants, and all
other options and warrants outstanding as of
the Original Issuance Date that are
exercisable for shares of Common Stock are
exercisable at the Purchase Price in effect
at the close of business on the date next
preceding the date of such issue or sale,
plus (d) the number of shares of Common
Stock underlying all Other Securities (as
hereinafter defined) at the close of
business on the date next preceding the date
of such issue or
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sale, and (ii) the denominator of which
shall be (a) the number of shares of Common
Stock outstanding at the close of business
on the date of such issue or sale after
giving effect to such issue of Additional
Shares of Common Stock, plus (b) the number
of shares of Common Stock for which all
Warrants and all other options and warrants
outstanding on the Original Issuance Date
that are exercisable for shares of Common
Stock are exercisable at the Purchase Price
in effect at the close of business on the
date next preceding the date of such issue
or sale, plus (c) the number of shares of
Common Stock underlying the Other Securities
at the close of business on the date next
preceding the date of such issue or sale;
and
(2) For the purpose of making any adjustment required
under this SECTION 4.C, 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 this
SECTION 4.C, if the Company issues or sells any
rights 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 Purchase Price then
in effect, then the Company shall be deemed to have
issued at the time of the issuance of such rights or
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 or options or Convertible
Securities, plus, in the case of such rights or
options, the minimum amounts of consideration, if
any, payable to the Company upon the exercise of such
rights 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, 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 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,
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 or options or rights of conversion or exchange
of such Convertible Securities, and such Additional
Shares of Common
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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 or options, whether or not exercised,
plus the 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 this
SECTION 4.C, if the Company issues or sells, or is
deemed by the express provisions of this subsection
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 Purchase 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 or options, plus the
minimum amounts of consideration, if any, payable to
the Company upon the exercise of such rights or
options and 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 or options, shall be
made as a result of the actual issuance of the
Convertible Securities upon the exercise of such
rights 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 or options or the rights of
conversion or exchange of Convertible Securities
shall apply MUTATIS MUTANDIS to the rights, 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
exercise of the Warrants, (ii) shares of Common Stock
issuable upon exercise of warrants and options to
purchase Common Stock issued and outstanding as of
the Original Issuance Date, (iii) shares of Common
Stock issued to non-affiliated third parties in
connection with any bona fide mergers, acquisitions,
business combinations, strategic ventures and product
and intellectual property acquisitions, (iv) shares
of Common Stock or options issued to employees,
officers, directors, consultants, vendors or agents
of the Company (except that, if to consultants,
vendors or agents, only up to a maximum of 1,000,000
shares of Common Stock in any 12 month period)
pursuant to any stock or option plan duly adopted by
a majority of the non-employee members of the Board
of Directors of the Company or a majority of the
members of a committee of non-employee directors
established for such purpose, and in either case also
approved by the Company's stockholders, (v) shares of
Common Stock issued as dividends and/or interest
payments in lieu of cash payments, and (vi) shares of
Common Stock issued in connection with public
offerings of the Company's securities and private
placements conducted through a placement agent. The
"EFFECTIVE PRICE" of Additional Shares of Common
Stock shall
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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.C, into the aggregate
consideration received, or deemed to have been
received, by the Company for such issue under this
SECTION 4.C, for such Additional Shares of Common
Stock. "OTHER SECURITIES" with respect to an issue or
sale of Additional Shares of Common Stock shall mean
Convertible Securities; "THE NUMBER OF SHARES OF
COMMON STOCK UNDERLYING OTHER SECURITIES" on a
particular date shall mean the number of shares of
Common Stock issuable upon the exercise, conversion
or exchange, as the case may be, of such Other
Securities at the close of business on such date.
(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 subscription 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 Fair
Market Value or the then Purchase Price shall be
deemed to be an issuance of such Convertible Security
and the issuance of all such options, warrants or
subscription rights, and the provisions of SECTIONS
4.C.(3), (4) AND (5) shall apply thereto MUTATIS
MUTANDIS.
(7) In case any shares of stock or other securities,
other than Common Stock, shall at the time be
receivable upon the exercise of this Warrant, and in
case any additional shares of such stock or any
additional such securities (or any stock or other
securities convertible into or exchangeable for any
such stock or securities) shall be issued or sold for
a consideration per share such as to dilute the
purchase rights evidenced by this Warrant, then and
in each such case the Purchase Price shall forthwith
be adjusted, substantially in the manner provided for
above in this SECTION 4.C, so as to protect the
Holder of this Warrant against the effect of such
dilution.
(8) In case the Company shall take a record of the
holders of shares of its stock of any class for the
purpose of entitling them (a) to receive a dividend
or a distribution payable in Common Stock or in
Convertible Securities, or (b) to subscribe for,
purchase or otherwise acquire Common Stock or
Convertible Securities, then such record date shall
be deemed to be the date of the issue or sale of the
Additional Shares of Common Stock issued or sold or
deemed to have been issued or sold upon the
declaration of such dividend or the making of such
other distribution, or the date of the granting of
such rights of subscription, purchase or other
acquisition, as the case may be.
(9) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or
decrease of at least one cent ($0.01) in such price;
PROVIDED, HOWEVER, that any adjustments which by
reason of this SECTION 4 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
shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
D. ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the
Company at any time or from time to time makes, or fixes a
record date for the determination of holders of
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Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock,
then and in each such event:
(1) 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 (A) 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 (B) 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
as the case may be, 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.D as of
the time of actual payment of such dividends or
distributions; and
(2) the number of shares of Common Stock theretofore
receivable upon the exercise of this Warrant shall be
increased, 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, in inverse proportion
to the decrease in the Purchase Price.
E. STOCK SPLIT AND REVERSE STOCK SPLIT. If the Company at any
time or from time to time effects a stock split or subdivision
of the outstanding Common Stock, the Purchase 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 Purchase 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 4.E shall become effective at the close of
business on the date the stock split, subdivision, reverse
stock split or combination becomes effective.
F. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to
this SECTION 4, 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)
Purchase 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.
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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 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 shares of Common Stock purchased in the Offering and the
Warrant Shares issuable upon exercise of this Warrant 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.
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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.
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 Warrant shall be governed by and construed
solely in accordance with the internal laws of the State of New York
with respect to contracts made and to be fully performed therein,
without regard to the conflicts of laws principles thereof. By the
Company's execution hereof and the Holder's acceptance of this Warrant,
the parties hereby expressly and irrevocably (i) agree that any suit or
proceeding arising under this Warrant or the consummation of the
transactions contemplated hereby, shall be brought solely in a federal
or state court located in the County of Xxxx, State of Illinois, (ii)
submit to the IN PERSONAM jurisdiction of the federal and state courts
located in the County of Xxxx, State of Illinois 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 the County of Xxxx, State of Illinois,
and (iii) 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, the party prevailing therein shall be
entitled to payment from the other party hereto of its reasonable
counsel fees and disbursements.
Dated: , 2005
--------------------
PATRON SYSTEMS, INC.
By:
-----------------------------------------
Name:
Title:
10
EXHIBIT A
SUBSCRIPTION FORM
(To be executed 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
Patron 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.
Dated:
------------------------------
--------------------------------------------
(Signature of Registered Owner
--------------------------------------------
(Street Address)
--------------------------------------------
(City / State / Zip Code)
11
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:
------------------------------
--------------------------------------------
(Signature)
--------------------------------------------
(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 June 6, 2005, by and
between Patron Systems, Inc. and the Holder.
Dated:
------------------------------
--------------------------------------------
(Signature)
12
