NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AND NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD,
ENCUMBERED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENT, AND, IF AN EXEMPTION SHALL BE APPLICABLE,
THE HOLDER SHALL HAVE DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Void after 5:00 p.m. Eastern Standard Time, on ______, ____
WARRANT TO PURCHASE COMMON STOCK
OF
US PATRIOT, INC.
FOR VALUE RECEIVED,US Patriot, Inc. a South Carolina corporation (the
"Company"), hereby certifies that ______________, or his permitted
assigns, is entitled to purchase from the Company, at any time or
from time to time commencing on the date that is 90 days after the
Securities and Exchange Commission declares effective (the "Effective
Date") a registration statement registering the Warrant Shares (as
defined below), a total of __________________ fully paid and
nonassessable shares of the Common Stock, par value $.0001 per share,
of the Company for an aggregate purchase price of $0.40 per share.
(Hereinafter, (i) said Common Stock together with any other equity
securities which may be issued by the Company with respect thereto or
in substitution therefor, is referred to as the "Common Stock", (ii)
the shares of the Common Stock purchasable hereunder are referred to
as the "Warrant Shares", (iii) the aggregate purchase price payable
hereunder for the Warrant Shares is referred to as the "Aggregate
Warrant Price", (iv) the price payable hereunder for each of the
Warrant Shares is referred to as the "Exercise Price", (v) this
Warrant, and all warrants hereafter issued in exchange or
substitution for this Warrant are referred to as the "Warrant" and
(vi) the holder of this Warrant is referred to as the "Holder".) The
Exercise Price is subject to adjustment as hereinafter provided.
1. Exercise of Warrant.
-------------------
(a) Exercise. This Warrant may be exercised, in whole at any
time or in part from time to time, commencing on the date that is 90
days after the Securities and Exchange Commission declares effective
a registration statement registering the Warrant Shares and prior to
5:00 P.M., Eastern Standard Time on the date that is the three year
anniversary of the Effective Date (the "Warrant Termination Date") by
the Holder of this Warrant by the surrender of this Warrant (with the
subscription form at the end hereof duly executed) at the address set
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forth in Subsection 10(a) hereof, together with proper payment of the
Aggregate Warrant Price, or the proportionate part thereof if this
Warrant is exercised in part. Payment for Warrant Shares shall be
made by certified or official bank check payable to the order of the
Company. If this Warrant is exercised in part, the Holder is
entitled to receive a new Warrant covering the number of Warrant
Shares in respect of which this Warrant has not been exercised and
setting forth the proportionate part of the Aggregate Warrant Price
applicable to such Warrant Shares. Upon such surrender of this
Warrant, the Company will (a) issue a certificate or certificates in
the name of the Holder for the largest number of whole shares of the
Common Stock to which the Holder shall be entitled if this Warrant is
exercised in whole and (b) deliver the proportionate part thereof if
this Warrant is exercised in part, pursuant to the provisions of the
Warrant. In lieu of any fractional share of the Common Stock which
would otherwise be issuable in respect to the exercise of the
Warrant, the Company at its option (a) may pay in cash an amount
equal to the product of (i) the daily mean average of the Closing
Price of a share of Common Stock on the ten consecutive trading days
before the Conversion Date and (ii) such fraction of a share or (b)
may issue an additional share of Common Stock.
Upon exercise of the Warrant, the Company shall issue and
deliver to the Holder certificates for the Common Stock issuable upon
such exercise within ten business days after such exercise and the
person exercising shall be deemed to be the holder of record of the
Common Stock issuable upon such exercise.
No warrant granted herein shall be exercisable after 5:00 p.m.
Eastern Standard Time on the Warrant Termination Date.
(b) Net Issuance. Notwithstanding anything to the contrary
contained in Subsection
1(a) hereof, in the case of any exercise on or prior to the Warrant
Termination Date the Holder may elect to exercise this Warrant in
whole or in part by receiving shares of Common Stock equal to the net
issuance value (as determined below) of this Warrant, or any part
hereof, upon surrender of this Warrant at the principal office of the
Company together with notice of such election (with the form at the
end hereof duly executed), in which event the Company shall issue to
the Holder a number of shares of Common Stock computed using the
following formula:
X= Y (A-B)
-------
A
Where: X = the number of shares of Common Stock to be
issued to the Holder
Y = the number of shares of Common Stock as to which
this Warrant is to be exercised
A = the current fair market value of one share of
Common Stock calculated as of the last trading day
immediately preceding the exercise of this warrant
B = the Exercise Price
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(c) Certain Adjustments
-------------------
The Exercise Price and the number of Warrant Shares shall be
equitable adjusted from time to time to account for stock splits,
stock dividends, combinations, recapitalizations, reclassifications
and similar events.
As used herein, current fair market value of the Common Stock as
of a specified date shall mean with respect to each share of Common
Stock the average of the closing bid prices of the Common Stock on
the principal securities market on which the Common Stock may at the
time be traded over a period of five business days consisting of the
day as of which the current fair market value of a share of Common
Stock is being determined (or if such day is not a business day, the
business day next preceding such day) and the four consecutive
business days prior to such day. If on the date for which current
fair market value is to be determined the Common Stock is not
eligible for trading on any securities market, the current fair
market value of Common Stock shall be the highest price per share
which the Company could then obtain from a willing buyer (not a
current employee or director) for shares of Common Stock sold by the
Company, from authorized but unissued shares, as determined in good
faith by the Board of Directors of the Company, which determination
shall be conclusive, unless prior to such date the Company has become
subject to a merger, acquisition or other consolidation pursuant to
which the Company is not the surviving party, in which case the
current fair market value of the Common Stock shall be deemed to be
the value received by the holders of the Company's Common Stock for
each share thereof pursuant to the Company's acquisition.
2. Redemption. This Warrant may be redeemed at the option of
the Company, at a redemption price of $0.01 per Warrant Share at any
time, upon 30 days prior written notice to the Holder, if, for a
period of ten consecutive trading days, the average closing bid price
of our Common Stock equals or exceeds $0.60. On and after the date
fixed for redemption, the Holder shall have no rights with respect to
this Warrant except to receive the $0.01 per Warrant share upon
surrender of this Certificate.
3. Reservation of Warrant Shares. The Company agrees that,
prior to the expiration of this Warrant, the Company will at all
times have authorized and reserved, and will keep available, solely
for issuance or delivery upon the exercise of this Warrant, the
number of shares of the Common Stock as from time to time shall be
receivable upon the exercise of this Warrant.
4. Fully Paid Stock: Taxes. The Company agrees that the
shares of the Common Stock represented by each and every certificate
for Warrant Shares delivered on the exercise of this Warrant shall,
at the time of such delivery, be validly issued and outstanding,
fully paid and nonassessable, and not subject to preemptive rights,
and the Company will take all such actions as may be necessary to
assure that the par value or stated value, if any, per share of the
Common Stock is at all times equal to or less than the then Exercise
Price. The Company further covenants and agrees that it will pay,
when due and payable, any and all Federal and state stamp, original
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issue or similar taxes that may be payable in respect of the issue of
any Warrant Share or certificate therefor.
5. Transfer.
--------
(a) Securities Laws. Neither this Warrant nor the
Warrant Shares issuable upon the exercise hereof have been registered
under the Securities Act of 1933, as amended (the "Securities Act"),
or under any state securities laws and unless so registered may not
be transferred, sold, pledged, hypothecated or otherwise disposed of
unless an exemption from such registration is available. In the
event Holder desires to transfer this Warrant or any of the Warrant
Shares issued, the Holder must give the Company prior written notice
of such proposed transfer including the name and address of the
proposed transferee. Such transfer may be made only either (i) upon
publication by the Securities and Exchange Commission (the
"Commission") of a ruling, interpretation, opinion or "no action
letter" based upon facts presented to said Commission, or (ii) upon
receipt by the Company of an opinion of counsel to the Company in
either case to the effect that the proposed transfer will not violate
the provisions of the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or the rules and regulations
promulgated under either such act, or in the case of clause (ii)
above, to the effect that the Warrant or Warrant Shares to be sold or
transferred has been registered under the Securities Act and that
there is in effect a registration statement in which is included a
prospectus meeting the requirements of Subsection 10 (a) of the
Securities Act, which is being or will be delivered to the purchaser
or transferee at or prior to the time of delivery of the certificates
evidencing the Warrant or Warrant Stock to be sold or transferred.
(b) Conditions to Transfer. Prior to any such proposed
transfer, and as a condition thereto, if such transfer is not made
pursuant to an effective registration statement under the Securities
Act, the Holder will, if requested by the Company, deliver to the
Company (i) an investment covenant signed by the proposed transferee,
(ii) an agreement by such transferee to the impression of the
restrictive investment legend set forth herein on the certificate or
certificates representing the securities acquired by such transferee,
(iii) an agreement by such transferee that the Company may place a
"stop transfer order" with its transfer agent or registrar, and (iv)
an agreement by the transferee to indemnify the Company to the same
extent as set forth in the next succeeding paragraph.
(c) Indemnity. The Holder acknowledges that the Holder
understands the meaning and legal consequences of this Section 5, and
the Holder hereby agrees to indemnify and hold harmless the Company,
its representatives and each officer and director thereof from and
against any and all loss, damage or liability (including all
attorneys' fees and costs incurred in enforcing this indemnity
provision) due to or arising out of (a) the inaccuracy of any
representation or the breach of any warranty of the Holder contained
in, or any other breach of, this warrant, (b) any transfer of the
Warrant or any of the Warrant Shares in violation of the Securities
Act, the Exchange Act or the rules and regulations promulgated under
either of such acts, (c) any transfer of the Warrant or any of the
Warrant Shares not in accordance with this Warrant or (d) any untrue
statement or omission to state any material fact in connection with
the investment representations or with respect to the facts and
representations supplied by the Holder to counsel to the Company upon
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which its opinion as to a proposed transfer shall have been based.
(d) Transfer. Except as restricted hereby, this Warrant
and the Warrant Shares issued may be transferred by the Holder in
whole or in part at any time or from time to time. Upon surrender of
this Warrant to the Company or at the office of its stock transfer
agent, if any, with assignment documentation duly executed and funds
sufficient to pay any transfer tax, and upon compliance with the
foregoing provisions, the Company shall, without charge, execute and
deliver a new Warrant in the name of the assignee named in such
instrument of assignment, and this Warrant shall promptly be
canceled. Any assignment, transfer, pledge, hypothecation or other
disposition of this Warrant attempted contrary to the provisions of
this Warrant, or any levy of execution, attachment or other process
attempted upon the Warrant, shall be null and void and without
effect.
(e) Legend and Stop Transfer Orders. Unless the Warrant
Shares have been registered under the Securities Act, upon exercise
of any part of the Warrant and the issuance of any of the Warrant
Shares, the Company shall instruct its transfer agent to enter stop
transfer orders with respect to such shares, and all certificates
representing Warrant Shares shall bear on the face thereof
substantially the following legend, insofar as is consistent with
Massachusetts law:
"The shares of common stock represented by this certificate
have not been registered under the Securities Act of 1933,
as amended, and may not be sold, offered for sale, assigned,
transferred or otherwise disposed of unless registered pursuant
to the provisions of that Act or an opinion of counsel to the
Company is obtained stating that such disposition is in
compliance with an available exemption from such registration."
6. Loss, etc. of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and of an unsecured indemnity from the
Holder reasonably satisfactory to the Company, if lost, stolen or
destroyed, and upon surrender and cancellation of the Warrant, if
mutilated, the Company shall execute and deliver to the Holder a new
Warrant of like date, tenor and denomination.
7. Warrant Holder Not Shareholder. Except as otherwise
provided herein, this Warrant does not confer upon the Holder any
right to vote or to consent to or receive notice as a shareholder of
the Company, as such, in respect of any matters whatsoever, or any
other rights or liabilities as a shareholder, prior to the exercise
hereof.
8. Communication. No notice or other communication under
this Warrant shall be effective unless the same is in writing and is
mailed by certified mail, return receipt requested, addressed to:
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(a) the Company at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other address as the Company has designated in
writing to the Holder, with a copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇, PA ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or
(b) the Holder at ____________________________________,
or such other address as the Holder has designated in writing to the
Company.
Any notice given hereunder shall be effective upon the earlier
of (i) receipt, or (ii) a date three days from the date of posting.
9. Headings. The headings of this Warrant have been inserted
as a matter of convenience and shall not affect the construction
hereof.
10. Applicable Law. This Warrant shall be governed by and
construed in accordance with the law of the State of South Carolina
without giving effect to the principles of conflicts of law thereof.
IN WITNESS WHEREOF, US PATRIOT, INC. has caused this Warrant to
be signed by its President this __ day of _________, 2001
US PATRIOT, INC.
By:_____________________________
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SUBSCRIPTION
The undersigned, _______________________________________,
pursuant to the provisions of the foregoing Warrant, hereby agrees to
subscribe for the purchase of ________ shares of the Common Stock of
US Patriot, Inc. covered by said Warrant, and makes payment therefor
in full at the price per share provided by said Warrant.
Dated:____________________________ Signature:______________________________
Address:__________________________
__________________________________
__________________________________
ASSIGNMENT
FOR VALUE RECEIVED ___________________________ hereby sells,
assigns and transfers unto ______________________________ the
foregoing Warrant and all rights evidenced thereby, and does
irrevocably constitute and appoint _____________________, attorney,
to transfer said Warrant on the books of US Patriot, Inc.
Dated:____________________________ Signature:_______________________________
Address:__________________________
__________________________________
__________________________________
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PARTIAL ASSIGNMENT
FOR VALUE RECEIVED _________________________ hereby sells, assigns
and transfers unto ___________________________ the right to
purchase _________ shares of the Common Stock of US Patriot, Inc.
by the foregoing Warrant, and a proportionate part of said Warrant
and the rights evidenced hereby, and does irrevocably constitute and
appoint ___________________________________, attorney, to transfer
that part of said Warrant on the books of US Patriot, Inc.
Dated:____________________________ Signature:_______________________________
Address:__________________________
__________________________________
__________________________________
NET ISSUANCE ELECTION
The undersigned, _______________________________, pursuant to
the provisions of the foregoing Warrant, hereby tenders the right to
purchase _____ shares of the Common Stock of US Patriot, Inc. and a
proportionate part of said Warrant and the rights evidenced thereby,
in exchange for a number of shares of said Common Stock to be
computed in accordance with the provisions of Section 1 (b) of said
Warrant.
Dated:____________________________ Signature:______________________________
Address:__________________________
__________________________________
__________________________________
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