EXHIBIT 10.4
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THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON
SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO LOCATEPLUS HOLDINGS CORPORATION THAT SUCH REGISTRATION
IS NOT REQUIRED.
Right to Purchase up to 1,320,000 Shares of Class A Common Stock of
LocatePLUS Holdings Corporation
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(subject to adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT
No. _________________ Issue Date: June 17, 2004
LocatePLUS Holdings Corporation, a corporation organized under the laws
of the State of Delaware ("LPLHA"), hereby certifies that, for value received,
LAURUS MASTER FUND, LTD., or assigns (the "Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company (as defined herein) from and
after the Issue Date of this Warrant and at any time or from time to time before
5:00 p.m., New York time, through the close of business June 17, 2009 (the
"Expiration Date"), up to 1,320,000 fully paid and nonassessable shares of Class
A Common Stock (as hereinafter defined), $0.01 par value per share, at the
applicable Exercise Price per share (as defined below). The number and character
of such shares of Class A Common Stock and the applicable Exercise Price per
share are subject to adjustment as provided herein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Class A Common Stock" includes (i) the Company's
Class A Voting Common Stock, par value $0.01 per share; and (ii) any
other securities into which or for which any of the securities
described in subsection (i) of this clause (a) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization,
combination, merger, sale of assets or otherwise.
(b) The term "Company" shall include LPLHA and any corporation
which shall succeed, or assume the obligations of, LPLHA
(c) The term "Other Securities" refers to any stock or other
securities of the Company or any other person (corporate or otherwise)
which the holder of this Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of this Warrant (or
adjustment of this Warrant pursuant to Section 4 hereof), in lieu of or
in addition to Class A Common Stock, or which at any time shall be
issuable or shall have been issued in connection with any exchange or
replacement or combination of Class A Common Stock or Other Securities
contemplated by Section 4 or otherwise.
(d) The "Exercise Price" applicable under this Warrant shall
be a price of $0.45.
1. Exercise of Warrant.
1.1 Number of Shares Issuable upon Exercise. From and after
the date hereof through and including the Expiration Date, the Holder shall be
entitled to receive, upon exercise of this Warrant in whole or in part, by
delivery of an original or fax copy of an exercise notice in the form attached
hereto as Exhibit A (the "Exercise Notice"), shares of Class A Common Stock of
the Company, subject to adjustment pursuant to Section 4.
1.2 Fair Market Value. For purposes hereof, the "Fair Market
Value" of a share of Class A Common Stock as of a particular date (the
"Determination Date") shall mean:
(a) If the Company's Class A Common Stock is traded on the
American Stock Exchange or another national exchange or is quoted on
the National or SmallCap Market of The Nasdaq Stock Market,
Inc.("Nasdaq"), then the closing or last sale price, respectively,
reported for the last business day immediately preceding the
Determination Date.
(b) If the Company's Class A Common Stock is not traded on the
American Stock Exchange or another national exchange or on the Nasdaq
but is traded on the NASD OTC Bulletin Board, then the mean of the
average of the closing bid and asked prices reported for the last
business day immediately preceding the Determination Date.
(c) Except as provided in clause (d) below, if the Company's
Class A Common Stock is not publicly traded, then as the Holder and the
Company agree or in the absence of agreement by arbitration in
accordance with the rules then in effect of the American Arbitration
Association, before a single arbitrator to be chosen from a panel of
persons qualified by education and training to pass on the matter to be
decided.
(d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company's charter, then all
amounts to be payable per share to holders of the Class A Common Stock
pursuant to the charter in the event of such liquidation, dissolution
or winding up, plus all other amounts to be payable per share in
respect of the Class A Common Stock in liquidation under the charter,
assuming for the purposes of this clause (d) that all of the shares of
Class A Common Stock then issuable upon exercise of the Warrant are
outstanding at the Determination Date.
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1.3 Company Acknowledgment. The Company will, at the time of
the exercise of the Warrant, upon the request of the holder hereof acknowledge
in writing its continuing obligation to afford to such holder any rights to
which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the holder shall fail to make
any such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the holders of the
Warrant pursuant to Subsection 3.2, such bank or trust company shall have all
the powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.
2. Procedure for Exercise.
2.1 Delivery of Stock Certificates, Etc., on Exercise. The
Company agrees that the shares of Class A Common Stock purchased upon exercise
of this Warrant shall be deemed to be issued to the Holder as the record owner
of such shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment made for such shares in accordance
herewith. As soon as practicable after the exercise of this Warrant in full or
in part, and in any event within three (3) business days thereafter, the Company
at its expense (including the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the Holder, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Class A Common Stock (or Other Securities) to which such Holder shall be
entitled on such exercise, plus, in lieu of any fractional share to which such
holder would otherwise be entitled, cash equal to such fraction multiplied by
the then Fair Market Value of one full share, together with any other stock or
other securities and property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or otherwise.
2.2 Exercise. Payment may be made either (i) in cash or by
certified or official bank check payable to the order of the Company equal to
the applicable aggregate Exercise Price, (ii) by delivery of the Warrant, or
shares of Class A Common Stock and/or Class A Common Stock receivable upon
exercise of the Warrant, or (iii) by a combination of any of the foregoing
methods, for the number of shares of Class A Common Stock specified in such
Exercise Notice (as such exercise number shall be adjusted to reflect any
adjustment in the total number of shares of Class A Common Stock issuable to the
Holder per the terms of this Warrant) and the Holder shall thereupon be entitled
to receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Class A Common Stock (or Other Securities) determined
as provided herein. Notwithstanding any provisions herein to the contrary, if
the Fair Market Value of one share of Class A Common Stock is greater than the
Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant for cash, the Holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
exercised) by surrender of this Warrant at the principal office of the Company
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together with the properly endorsed Exercise Notice in which event the Company
shall issue to the Holder a number of shares of Class A Common Stock computed
using the following formula:
X=Y (A-B)
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A
Where X = the number of shares of Class A Common Stock to be issued to
the Holder
Y = the number of shares of Class A Common Stock purchasable
under the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being exercised
(at the date of such calculation)
A = the Fair Market Value of one share of the Company's Class A
Common Stock (at the date of such calculation)
B = Exercise Price (as adjusted to the date of such calculation)
3. Effect of Reorganization, Etc.; Adjustment of Exercise Price.
3.1 Reorganization, Consolidation, Merger, Etc. In case at any
time or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Class A Common Stock (or Other Securities) issuable on such exercise prior to
such consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be, if
such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.
3.2 Dissolution. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, concurrently with any distributions made to holders of its
Class A Common Stock, shall at its expense deliver or cause to be delivered to
the Holder the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrant pursuant to Section 3.1, or,
if the Holder shall so instruct the Company, to a bank or trust company
specified by the Holder and having its principal office in New York, NY as
trustee for the Holder of the Warrant (the "Trustee").
3.3 Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and other
securities and property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the effective
date of
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dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 4. In the
event this Warrant does not continue in full force and effect after the
consummation of the transactions described in this Section 3, then the Company's
securities and property (including cash, where applicable) receivable by the
Holders of the Warrant will be delivered to Holder or the Trustee as
contemplated by Section 3.2.
4. Extraordinary Events Regarding Class A Common Stock. In the
event that the Company shall (a) issue additional shares of the Class A Common
Stock as a dividend or other distribution on outstanding Class A Common Stock,
(b) subdivide its outstanding shares of Class A Common Stock, or (c) combine (x)
its outstanding shares of the Class A Common Stock into a smaller number of
shares of the Class A Common Stock or (y) its outstanding shares of the Class A
Common Stock with another class of equity interests of the Company, then, in
each such event, the Exercise Price shall, simultaneously with the happening of
such event, be adjusted by multiplying the then Exercise Price by a fraction,
the numerator of which shall be the sum of the number of shares of Class A
Common Stock and Other Securities outstanding immediately prior to such event
and the denominator of which shall be the sum of the number of shares of Class A
Common Stock and Other Securities outstanding immediately after such event, and
the product so obtained shall thereafter be the Exercise Price then in effect.
The Exercise Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described herein in this Section
4. The number of shares of Class A Common Stock (and/or Other Securities) that
the holder of this Warrant shall thereafter, on the exercise hereof as provided
in Section 1, be entitled to receive shall be adjusted to a number determined by
multiplying the number of shares of Class A Common Stock that would otherwise
(but for the provisions of this Section 4) be issuable on such exercise by a
fraction of which (a) the numerator is the Exercise Price that would otherwise
(but for the provisions of this Section 4) be in effect, and (b) the denominator
is the Exercise Price in effect on the date of such exercise. Notwithstanding
the foregoing contained in this Section A, in the event that the Class A Common
Stock is combined with the existing Class B Common Stock of the Company (such
combination, the "Common Stock Combination"; the common stock of the Company
that results from the Common Stock Combination, the "Combined Common Stock"),
the Fixed Conversion Price shall not be adjusted in any manner, so long as the
ratio of (A) the sum of (i) the aggregate amount of shares of Class A Common
Stock immediately prior to the Common Stock Combination plus (ii) the aggregate
amount of shares of Class B Common Stock of the Company immediately prior to the
Common Stock Combination to (B) the aggregate amount of shares of Combined
Common Stock immediately after the Common Stock Combination, is equal to a ratio
of 1:1.
5. Certificate as to Adjustments. In each case of any adjustment
or readjustment in the shares of Class A Common Stock (or Other Securities)
issuable on the exercise of the Warrant, the Company at its expense will
promptly cause its Chief Financial Officer or other appropriate designee to
compute such adjustment or readjustment in accordance with the terms of the
Warrant and prepare a certificate setting forth such adjustment or readjustment
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and showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Class A Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the number
of shares of Class A Common Stock (or Other Securities) outstanding or deemed to
be outstanding, and (c) the Exercise Price and the number of shares of Class A
Common Stock to be received upon exercise of this Warrant, in effect immediately
prior to such adjustment or readjustment and as adjusted or readjusted as
provided in this Warrant. The Company will forthwith mail a copy of each such
certificate to the holder of the Warrant and any Warrant agent of the Company
(appointed pursuant to Section 11 hereof).
6. Reservation of Stock, Etc., Issuable on Exercise of Warrant.
The Company will at all times reserve and keep available, solely for issuance
and delivery on the exercise of the Warrant, shares of Class A Common Stock (or
Other Securities) from time to time issuable on the exercise of the Warrant.
7. Assignment; Exchange of Warrant. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced hereby, may
be transferred by any registered holder hereof (a "Transferor") in whole or in
part. On the surrender for exchange of this Warrant, with the Transferor's
endorsement in the form of Exhibit B attached hereto (the "Transferor
Endorsement Form") and together with evidence reasonably satisfactory to the
Company demonstrating compliance with applicable securities laws, which shall
include, without limitation, the provision of a legal opinion from the
Transferor's counsel (at the Company's expense) that such transfer is exempt
from the registration requirements of applicable securities laws, and with
payment by the Transferor of any applicable transfer taxes) will issue and
deliver to or on the order of the Transferor thereof a new Warrant of like
tenor, in the name of the Transferor and/or the transferee(s) specified in such
Transferor Endorsement Form (each a "Transferee"), calling in the aggregate on
the face or faces thereof for the number of shares of Class A Common Stock
called for on the face or faces of the Warrant so surrendered by the Transferor.
8. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
9. Registration Rights. The Holder of this Warrant has been
granted certain registration rights by the Company. These registration rights
are set forth in a Registration Rights Agreement entered into by the Company and
Purchaser dated as of even date of this Warrant.
10. Maximum Exercise. The Holder shall not be entitled to exercise
this Warrant on an exercise date, in connection with that number of shares of
Class A Common Stock which would be in excess of the sum of (i) the number of
shares of Class A Common Stock beneficially owned by the Holder and its
affiliates on an exercise date, and (ii) the number of shares of Class A Common
Stock issuable upon the exercise of this Warrant with respect to which the
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determination of this proviso is being made on an exercise date, which would
result in beneficial ownership by the Holder and its affiliates of more than
4.99% of the outstanding shares of Class A Common Stock of the Company on such
date. For the purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
Notwithstanding the foregoing, the restriction described in this paragraph may
be revoked upon 75 days prior notice from the Holder to the Company and is
automatically null and void upon an Event of Default under the Note.
11. Warrant Agent. The Company may, by written notice to the each
Holder of the Warrant, appoint an agent for the purpose of issuing Class A
Common Stock (or Other Securities) on the exercise of this Warrant pursuant to
Section 1, exchanging this Warrant pursuant to Section 7, and replacing this
Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.
12. Transfer on the Company's Books. Until this Warrant is
transferred on the books of the Company, the Company may treat the registered
holder hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.
13. Notices, Etc. 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, at such address as may have been furnished
to the Company in writing by such Holder or, until any such Holder furnishes to
the Company an address, then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.
14. Voluntary Adjustment by the Company. The Company may at any
time during the term of this Warrant reduce the then current Exercise Price to
any amount and for any period of time deemed appropriate by the Board of
Directors of the Company.
15. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Warrant shall be governed by and construed in
accordance with the laws of State of New York without regard to principles of
conflicts of laws. Any action brought concerning the transactions contemplated
by this Warrant shall be brought only in the state courts of New York or in the
federal courts located in the state of New York; provided, however, that the
Holder may choose to waive this provision and bring an action outside the state
of New York. The individuals executing this Warrant on behalf of the Company
agree to submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Warrant is invalid or unenforceable under any applicable statute or rule of law,
then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law. Any such provision that may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
of this Warrant. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way affect
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the validity or enforceability of any other provision hereof. The Company
acknowledges that legal counsel participated in the preparation of this Warrant
and, therefore, stipulates that the rule of construction that ambiguities are to
be resolved against the drafting party shall not be applied in the
interpretation of this Warrant to favor any party against the other party.
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SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.
LOCATEPLUS HOLDINGS CORPORATION
WITNESS:
By: /s/ Xxx X. Xxxxxxxxx
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Name: Xxx X. Xxxxxxxxx
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/ / Xxxxx X. Xxxxxx Title: President
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EXHIBIT A
FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Warrant)
TO: LocatePLUS Holdings Corporation
Attention: Chief Financial Officer
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):
________ shares of the Class A Common Stock covered by such Warrant; or
________ the maximum number of shares of Class A Common Stock covered
by such Warrant pursuant to the cashless exercise procedure
set forth in Section 2.
The undersigned herewith makes payment of the full Exercise Price for
such shares at the price per share provided for in such Warrant, which is
$___________. 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 _______ shares of Class A Common
Stock (using a Fair Market Value of $_______ per share for
purposes of this calculation); and/or
________ the cancellation of such number of shares of Class A Common
Stock as is necessary, in accordance with the formula set
forth in Section 2.2, to exercise this Warrant with respect to
the maximum number of shares of Class A Common Stock
purchasable pursuant to the cashless exercise procedure set
forth in Section 2.
The undersigned requests that the certificates for such shares be
issued in the name of, and delivered to _____________________________________
whose address is _____________________________________.
The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Class A Common Stock under the
Securities Act of 1933, as amended (the "Securities Act") or pursuant to an
exemption from registration under the Securities Act.
Dated: ____________________ _________________________________________
(Signature must conform to name of holder
as specified on the face of the Warrant)
Address:_________________________________
_________________________________________
_________________________________________
A-1
EXHIBIT B
FORM OF TRANSFEROR ENDORSEMENT
(To Be Signed Only On Transfer Of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading "Transferees" the
right represented by the within Warrant to purchase the percentage and number of
shares of Class A Common Stock of LocatePLUS Holdings Corporation into which the
within Warrant relates specified under the headings "Percentage Transferred" and
"Number Transferred," respectively, opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the books
of LocatePLUS Holdings Corporation with full power of substitution in the
premises.
Percentage Number
Transferees Address Transferred Transferred
----------- ------- ----------- -----------
_____________________ __________________ __________________ ______________
_____________________ __________________ __________________ ______________
_____________________ __________________ __________________ ______________
_____________________ __________________ __________________ ______________
Dated: ____________________ _________________________________________
(Signature must conform to name of holder
as specified on the face of the Warrant)
Address:_________________________________
_________________________________________
SIGNED IN THE PRESENCE OF:
_________________________________________
(Name)
ACCEPTED AND AGREED:
[TRANSFEREE]
______________________________
(Name)
