EXHIBIT 10.2
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
SYSCAN IMAGING, INC.
WARRANT
Warrant No. __ Date of Original Issuance: March 15, 2005
Syscan Imaging, Inc., a Delaware corporation (the "COMPANY"), hereby
certifies that, for value received, __ or its registered assigns (the "HOLDER"),
has the right to purchase from the Company up to a total of __ shares of common
stock, $0.001 par value per share (the "COMMON STOCK"), of the Company (each
such share, a "WARRANT SHARE" and all such shares, the "WARRANT SHARES") at an
exercise price equal to $2.00 per share (as adjusted from time to time as
provided in Section 8, the "EXERCISE PRICE"), at any time and from time to time
from and after the date hereof and through and including March 14, 2010 (the
"EXPIRATION DATE"), and subject to the following terms and conditions. The
Warrant Shares possess certain registration rights pursuant to that certain
Registration Rights Agreement, dated as of March 15, 2005, by and between the
Company and the investors signatory thereto (the "REGISTRATION RIGHTS
Agreement").
1. REGISTRATION OF WARRANT. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "WARRANT
REGISTER"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.
2. REGISTRATION OF TRANSFERS. The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Company's transfer agent or to the Company at its address specified
herein. Upon any such registration or transfer, a new warrant to purchase Common
Stock, in substantially the form of this Warrant (any such new warrant, a "NEW
WARRANT"), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.
3. EXERCISE AND DURATION OF WARRANTS.
(a) This Warrant shall be exercisable by the registered Holder at
any time and from time to time on or after the date hereof to and including the
Expiration Date. At 11:59 p.m., Eastern Time on the Expiration Date, the portion
of this Warrant not exercised prior thereto shall be and become void and of no
value.
(b) If on any date after the effectiveness of the initial
Registration Statement (as defined below), the closing price of the Common
Stock, as quoted on the OTC, any stock exchange, market or trading facility on
which the Common Stock is then listed, for 20 consecutive trading days equals at
least $3.50 (subject to adjustment in the event of any subdivision, combination
or reclassification affecting the Common Stock), the Company shall have the
right, at its option and upon 30 days written notice to the Holder, to terminate
this Warrant; provided that (i) the Holder shall have the right to exercise this
Warrant pursuant to Section 3(a) at any time prior to the termination of the
30-day notice period, and (ii) the Registration Statement shall be effective at
all times during such 30-day notice period, except if Holder may sell all
Warrant Shares covered hereby pursuant to Rule 144(k) of the Securities Act.
Upon such termination, the Holder shall have no further rights hereunder.
(c) At any time after March 14, 2006 that a Registration Statement
(as defined in the Registration Rights Agreement) covering the resale of the
Warrant Shares is not effective or is suspended, or that the related Prospectus
(as defined in the Registration Rights Agreement) is outdated, defective or
requires a supplement or amendment for any reason, including upon the occurrence
of any event contemplated by Section 6(e) of the Registration Rights Agreement,
the Holder may, at its option during such time, elect to pay some or all of the
Exercise Price payable upon an exercise of this Warrant by canceling a portion
of this Warrant exercisable for such number of Warrant Shares as is determined
by dividing (i) the total Exercise Price payable in respect of the number of
Warrant Shares being purchased upon such exercise by (ii) the excess of the Fair
Market Value per share of Common Stock as of the effective date of exercise, as
determined pursuant to Section 3(d) below (the "Exercise Date") over the
Exercise Price per share. If the Holder wishes to exercise this Warrant pursuant
to this method of payment with respect to the maximum number of Warrant Shares
purchasable pursuant to this method, then the number of Warrant Shares so
purchasable shall be equal to the total number of Warrant Shares, minus the
product obtained by multiplying (x) the total number of Warrant Shares by (y) a
fraction, the numerator of which shall be the Exercise Price per share and the
denominator of which shall be the Fair Market Value per share of Common Stock as
of the Exercise Date.
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(d) For purposes of this Warrant, "Fair Market Value" shall mean, on
any day:
(i) the closing price of the Common Stock on a national
securities exchange or as quoted on the Nasdaq National Market or the Nasdaq
SmallCap Market on such day, as reported by the Wall Street Journal; or
(ii) if the Common Stock is quoted on the Nasdaq National
Market or the Nasdaq SmallCap Market but no sale occurs on such day, the average
of the closing bid and asked prices of the Common Stock on the Nasdaq National
Market or the Nasdaq SmallCap Market on such day, as reported by the Wall Street
Journal; or
(iii) if the Common Stock is not so listed or quoted, the
average of the closing bid and asked prices of the Common Stock in the U.S.
over-the-counter market; or
(iv) if no such trading market is readily available, the fair
market value of the Common Stock as determined in good faith and certified by a
majority of the members of the Board of Directors of the Company.
4. DELIVERY OF WARRANT SHARES.
(a) Upon delivery of the Form of Election to Purchase to the Company
(with the attached Warrant Shares Exercise Log) at its address for notice set
forth in Section 14 and upon payment of the Exercise Price multiplied by the
number of Warrant Shares that the Holder intends to purchase hereunder, the
Company shall promptly (but in no event later than three trading days after the
Date of Exercise (as defined herein)) issue and deliver to the Holder, a
certificate for the Warrant Shares issuable upon such exercise free of all
restrictive or other legends, other than as required under Section 4(d).
Notwithstanding, at any time when there is an effective Registration Statement,
certificates for Warrant Shares shall be transmitted by the transfer agent of
the Company to the Holder by crediting the account of the Holder's prime broker
with the Depository Trust Company through its Deposit Withdrawal Agent
Commission (DWAC) system, if the Company's transfer agent is a participant in
such system. The Company agrees to cause its transfer agent to be a participant
in such system (or engage a new transfer agent which is a participant in such
system) within 60 days after the date hereof. Any person so designated by the
Holder to receive Warrant Shares shall be deemed to have become holder of record
of such Warrant Shares as of the Date of Exercise of this Warrant.
A "DATE OF EXERCISE" means the date on which the Holder shall have
delivered to the Company (i) the Form of Election to Purchase attached hereto
(with the Warrant Exercise Log attached to it), appropriately completed and duly
signed and (ii) payment of the Exercise Price for the number of Warrant Shares
so indicated by the Holder to be purchased.
(b) If the Company fails to deliver to the Holder a certificate or
certificates representing the Warrant Shares issuable upon an exercise by the
third trading day after the Date of Exercise, then the Holder will have the
right to rescind such exercise.
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(c) The Company's obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment against any
person or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by the
Holder or any other person of any obligation to the Company or any violation or
alleged violation of law by the Holder or any other person, and irrespective of
any other circumstance which might otherwise limit such obligation of the
Company to the Holder in connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company's
failure to timely deliver certificates representing shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof. If the Company
breaches its obligations under this Warrant, then, in addition to any other
liabilities the Company may have hereunder and under applicable law, the Company
shall pay or reimburse the Holder on demand for all costs of collection and
enforcement (including reasonable attorneys fees and expenses).
(d) Transfer Restrictions.
(i) This Warrant and the Warrant Shares may only be disposed
of pursuant to an effective registration statement under the Securities Act, to
the Company or pursuant to an available exemption from or in a transaction not
subject to the registration requirements of the Securities Act, and in
compliance with any applicable federal and state securities laws. In connection
with any transfer of this Warrant or any Warrant Shares other than pursuant to
an effective registration statement or to the Company, except as otherwise set
forth herein, the Company may require the transferor to obtain an opinion of
counsel reasonably acceptable to the Company to the effect that such transfer
does not require registration under the Securities Act, it being agreed that
Xxxxxx Rosedale & Xxxxxxxxx LLP is reasonably acceptable to the Company.
Notwithstanding the foregoing, the Company, without requiring a legal opinion as
described in the immediately preceding sentence, hereby consents to and agrees
to register on the books of the Company and with any transfer agent for the
securities of the Company any transfer of this Warrant and the Warrant Shares by
the Holder to an Affiliate (as defined in Rule 405 under the Securities Act) of
the Holder or to one or more funds or managed accounts under common management
with such Holder, and any transfer among any such Affiliates or one or more
funds or managed accounts, provided that the transferee certifies to the Company
that it is an "accredited investor" as defined in Rule 501(a) under the
Securities Act and that it is acquiring the Warrant and the Warrant Shares
solely for investment purposes (subject to the qualifications hereof).
(ii) Warrant Shares issued while there is not an effective
registration statement covering the resale by the Holder of the Warrant Shares
(a "REGISTRATION STATEMENT") or while the Holder may not resell such Warrant
Shares pursuant to Rule 144(k) under the Securities Act shall be issued with the
following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. HOWEVER, THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
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(iii) Notwithstanding anything to the contrary contained
herein, Warrant Shares issued when there is an effective Registration Statement,
or at a time when the Holder may resell such Warrant Shares under Rule 144(k)
under the Securities Act, or when such legend is not required under the
Securities Act (including judicial interpretations and pronouncements issued by
the Staff of the Securities and Exchange Commission) shall be issued free of all
restrictions and other legends. The Company agrees that following the date on
which a Registration Statement is first declared effective by the Securities and
Exchange Commission and the date on which Warrant Shares may be resold under
144(k), it will, no later than five trading days following the delivery by a
Holder to the Company of a certificate or certificates representing any Warrant
Shares issued with a restrictive legend, deliver to such Holder certificates
representing such Warrant Shares which shall be free from all restrictive
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company which enlarge the restrictions
of transfer set forth in this Section.
5. CHARGES, TAXES AND EXPENSES. Issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
6. REPLACEMENT OF WARRANT. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction, if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe.
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7. RESERVATION OF WARRANT SHARES. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (taking into
account the adjustments and restrictions of Section 8). The Company covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and validly authorized, issued and fully paid and nonassessable.
8. CERTAIN ADJUSTMENTS. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 8.
(a) STOCK DIVIDENDS AND SPLITS. If the Company, at any time while
this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.
(b) PRO RATA DISTRIBUTIONS. If the Company, at any time while this
Warrant is outstanding, distributes to all holders of Common Stock (i) evidences
of its indebtedness, (ii) any security (other than a distribution of Common
Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe
for or purchase any security, or (iv) any other asset (in each case,
"DISTRIBUTED PROPERTY"), then in each such case the Exercise Price in effect
immediately prior to the record date fixed for determination of stockholders
entitled to receive such distribution shall be adjusted (effective on such
record date) to equal the product of such Exercise Price times a fraction of
which the denominator shall be such Exercise Price and of which the numerator
shall be such Exercise Price less the then fair market value of the Distributed
Property distributed in respect of one outstanding share of Common Stock, as
determined by the Company's independent certified public accountants that
regularly examine the financial statements of the Company (an "APPRAISER"). In
such event, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case such fair market value
shall be deemed to equal the average of the values determined by each of the
Appraiser and such appraiser. As an alternative to the foregoing adjustment to
the Exercise Price, at the request of the Holder delivered before the 90th day
after such record date, the Company will deliver to such Holder, within five
trading days after such request (or, if later, on the effective date of such
distribution), the Distributed Property that such Holder would have been
entitled to receive in respect of the Warrant Shares for which this Warrant
could have been exercised immediately prior to such record date.
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(c) SUBSEQUENT SALES. If the Company at any time prior to the
Effectiveness Date shall sell shares of Common Stock (or securities convertible
into shares of Common Stock) at a price per share (or having a conversion price
per share, if a security convertible into Common Stock) which is less than
$2.00, then the Warrant Exercise Price shall be reduced to equal the lower
offering price. Notwithstanding anything to the contrary herein, the provisions
of this Section 8(c) shall not apply to any such securities issued or to be
issued pursuant to: (i) employees, consultants, officers or directors of the
Company pursuant to any stock option, stock purchase or stock bonus plan,
agreement or arrangement approved by the Board of Directors; (ii) the
acquisition of another business entity or business segment of any such entity by
the Company by merger, purchase of substantially all of the assets or other
reorganization whereby the Company will own more than fifty (50%) of the voting
power of such business segment of any such entity; (iii) vendors or customers or
to other persons in similar commercial situations with the Company if such
issuance is approved by the Board of Directors; (iv) corporate partnering
transactions on terms approved by the Board of Directors; (v) the terms of any
of the Company's preferred stock, warrants or other convertible securities
outstanding on the date hereof; (vi) borrowings, direct or indirect, from
financial institutions regularly engaged in the business of lending money,
whether or not presently authorized which include an equity component which is
not a major component of such borrowing; (vii) a merger, consolidation,
reorganization, recapitalization, sale of assets, stock purchase, contribution
or other similar transaction that involves the Company, on the one hand, and any
corporation or other entity that controls, directly or indirectly, the Company,
on the other hand; or (viii) other non-cash transactions.
(d) FUNDAMENTAL TRANSACTIONS. If, at any time while this Warrant is
outstanding, (i) the Company effects any merger or consolidation of the Company
with or into another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions,
(iii) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Common Stock are permitted to
tender or exchange their shares for other securities, cash or property, or (iv)
the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property (in any such case, a
"FUNDAMENTAL TRANSACTION"), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the "ALTERNATE CONSIDERATION").
The aggregate Exercise Price for this Warrant will not be affected by any such
Fundamental Transaction, but the Company shall apportion such aggregate Exercise
Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction. In addition, at
the Holder's request, any successor to the Company or surviving entity in such
Fundamental Transaction shall issue to the Holder a new warrant consistent with
the foregoing provisions and evidencing the Holder's right to purchase the
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Alternate Consideration for the aggregate Exercise Price upon exercise thereof.
The terms of any agreement pursuant to which a Fundamental Transaction is
affected shall include terms requiring any such successor or surviving entity to
comply with the provisions of this paragraph (c) and insuring that the Warrant
(or any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction. If any
Fundamental Transaction constitutes or results in a Change of Control, then at
the request of the Holder delivered before the 90th day after such Fundamental
Transaction, the Company (or any such successor or surviving entity) will
purchase the Warrant from the Holder for a purchase price, payable in cash
within five trading days after such request (or, if later, on the effective date
of the Fundamental Transaction), equal to the Black Scholes value of the
remaining unexercised portion of this Warrant on the date of such request. As
used in this Warrant, "CHANGE OF CONTROL" means the occurrence of any of (i) an
acquisition after the date hereof by any Person or "GROUP" (as described in Rule
13d-5(b)(1) promulgated under the Exchange Act) of more than one-third of the
voting rights or equity interests in the Company, (ii) a replacement of more
than one-half of the members of the Company's board of directors that is not
approved by those individuals who are member of the board of directors on the
date hereof in one or a series of related transactions, (iii) a merger or
consolidation of the Company or any subsidiary or a sale of more than one-third
of the assets of the Company in one or a series of related transactions, unless
following such transactions or series of transactions, the holders of the
Company's securities prior to the first such transaction continue to hold at
least two-thirds of the voting rights and equity interests in of the surviving
entity or acquirer of such assets, or (iv) the execution by the Company of an
agreement to which the Company is a party or by which it is bound, providing for
any of the events set forth above in (i), (ii) or (iii).
(e) NUMBER OF WARRANT SHARES. Simultaneously with any adjustment to
the Exercise Price pursuant to paragraphs (a), (b) or (c) of this Section, the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price in
effect immediately prior to such adjustment. Notwithstanding the foregoing, no
adjustment will be made under this Section 8 in respect of any grant of options
or warrants, or the issuance of additional securities, under any duly authorized
Company stock option, restricted stock plan or stock purchase plan.
(f) CALCULATIONS. All calculations under this Section 8 shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable. The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.
(g) NOTICE OF ADJUSTMENTS. Upon the occurrence of each adjustment
pursuant to this Section 8, the Company at its expense will promptly compute
such adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's transfer agent.
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(h) NOTICE OF CORPORATE EVENTS. If the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
subsidiary, (ii) authorizes or approves, enters into any agreement contemplating
or solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes the voluntary dissolution, liquidation or winding up of the affairs
of the Company, then the Company shall deliver to the Holder a notice describing
the material terms and conditions of such transaction, at least 20 calendar days
prior to the applicable record or effective date on which a Person would need to
hold Common Stock in order to participate in or vote with respect to such
transaction, and the Company will take all steps reasonably necessary in order
to insure that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with respect to such
transaction; provided, however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate action required to
be described in such notice. Until the exercise of this Warrant or any portion
of this Warrant, the Holder shall not have nor exercise any rights by virtue
hereof as a stockholder of the Company (including without limitation the right
to notification of stockholder meetings or the right to receive any notice or
other communication concerning the business and affairs of the Company other
than as provided in this Section 8(h)).
(i) PAYMENT OF EXERCISE PRICE. Except as otherwise provided in
Section 3(c), the Holder shall pay the Exercise Price in cash, by certified or
bank check, or by wire transfer of immediately available funds, in lawful money
of the United States.
9. LIMITATION ON EXERCISE. Notwithstanding anything to the contrary
contained herein, 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 under Section 13(d) of the
Exchange Act, does not exceed 4.999% 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. Each delivery of an
Exercise Notice hereunder will constitute a representation by the Holder that it
has evaluated the limitation set forth in this paragraph and determined that
issuance of the full number of Warrant Shares requested in such Exercise Notice
is permitted under this paragraph. The restrictions set forth in this Section 9
shall not apply in determining the consideration and the number of shares or
other securities, and other property to which Holder may be entitled upon any
adjustment or event contemplated in Section 8 of this Warrant.
10. NO FRACTIONAL SHARES. No fractional shares of Warrant Shares will be
issued in connection with any exercise of this Warrant. In lieu of any
fractional shares which would, otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the closing price of one
Warrant Share as reported on the OTC, any stock exchange, market or trading
facility on which the Common Stock is then listed on the date of exercise.
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11. EXCHANGE ACT FILINGS. The Holder agrees and acknowledges that it shall
have sole responsibility for making any applicable filings with the Securities
and Exchange Commission pursuant to Sections 13 and 16 of the Securities
Exchange Act of 1934, as amended, as a result of its acquisition of this Warrant
and the Warrant Shares and any future retention or transfer thereof.
12. PIGGY-BACK REGISTRATIONS. If at any time during after the Original
Issue Date and through the Expiration Date there is not an effective
Registration Statement covering all of the Warrant Shares and the Company shall
determine to prepare and file with the Securities and Exchange Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Holder written notice of such
determination and, if within twenty (20) days after receipt of such notice, any
such Holder shall so request in writing, the Company shall include in such
registration statement all or any of the Warrant Shares such holder requests to
be registered, subject to customary underwriter cutbacks applicable to all
holders of registration rights.
13. NOTICES. Any and all notices or other communications or deliveries
hereunder (including without limitation any Exercise Notice) shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section at or prior to 5:00 p.m. (Eastern
Time) on a trading day, (ii) the next trading day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a trading day or
later than 5:00 p.m. (Eastern Time) on any trading day, (iii) the trading day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be: (i) if to
the Company, to Syscan Imaging, Inc., 0000 Xxxxxxxxxx Xxxxx, Xxx Xxxx,
Xxxxxxxxxx 00000, Facsimile No.: (000) 000-0000, Attn: Chief Executive Officer,
or (ii) if to the Holder, to the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section.
14. WARRANT AGENT. The Company shall serve as warrant agent under this
Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
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15. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. Subject to the
preceding sentence, nothing in this Warrant shall be construed to give to any
Person other than the Company and the Holder any legal or equitable right,
remedy or cause of action under this Warrant. This Warrant may be amended only
in writing signed by the Company and the Holder and their successors and
assigns.
(b) All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware, without
regard to the principles of conflicts of law thereof. Each party hereto
(including its affiliates, agents, officers, directors and employees) hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Warrant or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Warrant, then
the prevailing party in such action or proceeding shall be reimbursed by the
other party for its attorneys fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such action or proceeding.
(c) The headings herein are for convenience only, do not constitute
a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
(d) In case any one or more of the provisions of this Warrant shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
[REMAINDER OF XXXX INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.
SYSCAN IMAGING, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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FORM OF ELECTION TO PURCHASE
To Syscan Imaging, Inc.:
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned hereby irrevocably elects to purchase _____________
shares of common stock ("Common Stock"), $0.001 par value per share, of Syscan
Imaging, Inc. The undersigned herewith makes payment of $____________,
representing the full purchase price for such shares at the Exercise Price
provided for in such Warrant, together with any applicable taxes payable by the
undersigned pursuant to the Warrant. Such payment takes the form of (check
applicable box or boxes):
|_| $______ in lawful money of the United States; and/or
|_| The cancellation of such portion of the attached Warrant as is exercisable
for a total of _____ Warrant Shares (using a Fair Market Value of $_____
per share for purposes of this calculation).
By its delivery of this Form of Election To Purchase, the Holder
represents and warrants to the Company that in giving effect to the exercise
evidenced hereby the Holder will not beneficially own in excess of the number of
shares of Common Stock (determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934) permitted to be owned under Section 9 of this
Warrant to which this notice relates.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
---------------------------------
(Name)
---------------------------------
---------------------------------
(Address)
---------------------------------
(SSN or Tax ID No.)
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WARRANT SHARES EXERCISE LOG
--------------------------------------------------------------------------------
Date Number of Warrant Number of Warrant Number of Warrant
Shares Available Shares Exercised Shares Remaining
to be Exercised to be Exercised
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Syscan Imaging, Inc.
to which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of Syscan Imaging, Inc. with full power of
substitution in the premises.
Dated: _______________, ____
---------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
---------------------------------------
Address of Transferee
---------------------------------------
---------------------------------------
In the presence of:
--------------------------
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