EXHIBIT 10.13
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 February 27, 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 February 28, 2005 (the "ORIGINAL ISSUANCE DATE") and before 5:00 p.m.,
Eastern Time, on February 27, 2010 (the "EXPIRATION DATE"), to purchase from
PATRON SYSTEMS, INC., a Delaware corporation (the "COMPANY"), ______________
SHARES (_________) 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 $0.70 (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% senior convertible promissory notes
in an aggregate principal amount up to $3,000,000 (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 Amended Confidential Information Memorandum, dated as of February 16,
2005, as amended or supplemented from time to time (the "MEMORANDUM"). Xxxxxxx &
Company (UK) Ltd. acted as placement agent for the Offering (the "PLACEMENT
AGENT"). 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 to
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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
5
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 the Placement Agent and/or its affiliates
(including, but not limited to, upon exercise of
6
Placement Agent warrants and warrants issued to investors). The "EFFECTIVE
PRICE" of Additional Shares of Common Stock shall 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
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of 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 Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York without
regard to the conflicts of laws principles thereof. The parties hereto hereby
irrevocably agree that any suit or proceeding arising directly and/or indirectly
pursuant to or under this Agreement, shall be brought solely in a federal or
state court located in the City, County and State of New York. By its execution
hereof, the parties hereby covenant and irrevocably submit to the IN PERSONAM
jurisdiction of the federal and state courts located in the City, County and
State of New York and agree that any process in any such action may be served
upon any of them personally, or by certified mail or registered mail upon them
or their agent, return receipt requested, with the same full force and effect as
if personally served upon them in New York City. The parties hereto 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 all of its
reasonable legal fees and expenses.
Dated: , 2005
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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:
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(Signature of Registered Owner
--------------------------------------------
(Street Address)
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(City / State / Zip Code)
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:
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(Signature)
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(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 February 28, 2005, by
and between Patron Systems, Inc. and the Holder.
Dated:
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--------------------------------------------
(Signature)
