[EXHIBIT 4.4]
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
OFFERED FOR SALE, SOLD OR TRANSFERRED UNLESS A REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE
WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN
CONNECTION WITH SUCH OFFER, SALE OR TRANSFER. SUBJECT TO COMPLIANCE
WITH THE REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, THIS WARRANT AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY BE PLEDGED OR HYPOTHECATED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS WARRANT
OR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT.
SERIES B WARRANT TO PURCHASE COMMON STOCK
OF
RAPTOR NETWORKS TECHNOLOGY, INC.
Issue Date: April 1, 2004 Warrant No. B-___
THIS CERTIFIES that ______________________ or any subsequent
holder hereof (the "Holder"), has the right to purchase from RAPTOR
NETWORKS TECHNOLOGY, INC., a Colorado corporation (the "Company"), up
to __________ fully paid and nonassessable shares of the Company's
common stock, par value $0.001 per share (the "Common Stock"), subject
to adjustment as provided herein, at a price per share equal to the
Exercise Price (as defined below), at any time and from time to time
beginning on the date on which this Warrant is issued (the "Issue
Date") and ending at 5:00 p.m., eastern time, on the fifth (5th)
anniversary of the Issue Date (the "Expiration Date"). This Warrant
is issued pursuant to a Securities Purchase Agreement, dated as of
April 1, 2004 (the "Securities Purchase Agreement"). Capitalized
terms used herein and not otherwise defined shall have the respective
meanings set forth in the Securities Purchase Agreement.
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1. Exercise.
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() Right to Exercise; Exercise Price. The Holder shall have
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the right to exercise this Warrant at any time and from time to time
during the period beginning on the Issue Date and ending on the
Expiration Date as to all or any part of the shares of Common Stock
covered hereby (the "Warrant Shares"). The "Exercise Price" for each
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Warrant Share purchased by the Holder upon the exercise of this
Warrant shall be equal to $3.50, subject to adjustment for the events
specified in Section 6 below.
() Exercise Notice. In order to exercise this Warrant, the
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Holder shall send by facsimile transmission, at any time prior to 5:00
p.m., eastern time, on the Business Day on which the Holder wishes to
effect such exercise (the "Exercise Date"), to the Company an executed
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copy of the notice of exercise in the form attached hereto as Exhibit A
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(the "Exercise Notice"), the original Warrant and, in the case of a
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Cash Exercise (as defined below), the Exercise Price. The Exercise
Notice shall also state the name or names (with address) in which the
shares of Common Stock that are issuable on such exercise shall be
issued. If shares are to be issued in the name of a person other than
the Holder, the Holder will pay all transfer taxes payable with
respect thereto. In the case of a dispute as to the calculation of the
Exercise Price or the number of Warrant Shares issuable hereunder
(including, without limitation, the calculation of any adjustment
pursuant to Section 6 below), the Company shall promptly issue to the
Holder the number of Warrant Shares that are not disputed and shall
submit the disputed calculations to a certified public accounting firm
of national recognition (other than the Company's independent
accountants) within two (2) Business Days following the date on which
the Exercise Notice is delivered to the Company. The Company shall
cause such accountant to calculate the Exercise Price and/or the
number of Warrant Shares issuable hereunder and to notify the Company
and the Holder of the results in writing no later than three (3)
Business Days following the day on which such accountant received the
disputed calculations (the "Dispute Procedure"). Such accountant's
calculation shall be deemed conclusive absent manifest error. The
fees of any such accountant shall be borne by the party whose
calculations were most at variance with those of such accountant.
(c) Holder of Record. The Holder shall, for all purposes, be
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deemed to have become the holder of record of the Warrant Shares
specified in an Exercise Notice on the Exercise Date specified
therein, irrespective of the date of delivery of such Warrant Shares.
Except as specifically provided herein, nothing in this Warrant shall
be construed as conferring upon the Holder hereof any rights as a
stockholder of the Company prior to the Exercise Date.
(d) Cancellation of Warrant. This Warrant shall be canceled
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upon its exercise and, if this Warrant is exercised in part, the
Company shall, at the time that it delivers Warrant Shares to the
Holder pursuant to such exercise as provided herein, issue a new
warrant, and deliver to the Holder a certificate representing such new
warrant, with terms identical in all respects to this Warrant (except
that such new warrant shall be exercisable into the number of shares
of Common Stock with respect to which this Warrant shall remain
unexercised); provided, however, that the Holder shall be entitled to
exercise all or any portion of such new warrant at any time following
the time at which this Warrant is exercised, regardless of whether the
Company has actually issued such new warrant or delivered to the
Holder a certificate therefor.
2. Delivery of Warrant Shares Upon Exercise. Upon receipt of
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an Exercise Notice pursuant to paragraph 1 above, the Company shall,
(A) in the case of a Cash Exercise (as defined below) no later than
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the close of business on the later to occur of (i) the third (3rd)
Business Day following the Exercise Date set forth in such Exercise
Notice and (ii) the date on which the Company has received payment of
the Exercise Price and the taxes specified in paragraph 1(b) above, if
any, are paid in full, (B) in the case of a Cashless Exercise (as
defined below), no later than the close of business on the third (3rd)
Business Day following the Exercise Date set forth in such Exercise
Notice, and (C) with respect to Warrant Shares that are the subject of
a Dispute Procedure, the close of business on the third (3rd) Business
Day following the determination made pursuant to paragraph 1(b) (each
of the dates specified in (A), (B) or (C) being referred to as a
"Delivery Date"), issue and deliver or cause to be delivered to the
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Holder the number of Warrant Shares as shall be determined as provided
herein. The Company shall effect delivery of Warrant Shares to the
Holder by, as long as the Transfer Agent participates in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer
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program ("FAST"), crediting the account of the Holder or its nominee
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at DTC (as specified in the applicable Exercise Notice) with the
number of Warrant Shares required to be delivered, no later than the
close of business on such Delivery Date. In the event that the
Transfer Agent is not a participant in FAST, or if the Warrant Shares
are not otherwise eligible for delivery through FAST, or if the Holder
so specifies in an Exercise Notice or otherwise in writing on or
before the Exercise Date, the Company shall effect delivery of Warrant
Shares by delivering to the Holder or its nominee physical
certificates representing such Warrant Shares, no later than the close
of business on such Delivery Date.
3. Failure to Deliver Warrant Shares.
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(a) In the event that the Company fails for any reason to
deliver to the Holder the number of Warrant Shares specified in the
applicable Exercise Notice on or before the Delivery Date therefor (an
"Exercise Default"), and such default continues for five (5) Business
Days following delivery of a written notice of such default by the
Holder to the Company, the Company shall pay to the Holder payments
("Exercise Default Payments") in the amount of (i) (N/365) multiplied
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by (ii) the aggregate Exercise Price of the Warrant Shares which are
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the subject of such Exercise Default multiplied by (iii) the lower of
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fifteen percent (15%) and the maximum rate permitted by applicable law
(the "Default Interest Rate"), where "N" equals the number of day
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elapsed between the original Delivery Date of such Warrant Shares and
the date on which all of such Warrant Shares are issued and delivered
to the Holder. Cash amounts payable hereunder shall be paid on or
before the fifth (5th) Business Day of each calendar month following
the calendar month in which such amount has accrued.
(b) The Holder's rights and remedies hereunder are cumulative,
and no right or remedy is exclusive of any other. In addition to the
amounts specified herein, the Holder shall have the right to pursue
all other remedies available to it at law or in equity (including,
without limitation, a decree of specific performance and/or injunctive
relief). Nothing herein shall limit the Holder's right to pursue
actual damages for the Company's failure to issue and deliver Warrant
Shares on the applicable Delivery Date (including, without limitation,
damages relating to any purchase of Common Stock by the Holder to make
delivery on a sale effected in anticipation of receiving Warrant
Shares upon exercise, such damages to be in an amount equal to (A) the
aggregate amount paid by the Holder for the Common Stock so purchased
minus (B) the aggregate amount of net proceeds, if any, received by
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the Holder from the sale of the Warrant Shares issued by the Company
pursuant to such exercise).
4. Exercise Limitations. In no event shall the Holder be
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permitted to exercise this Warrant, or part thereof, if, upon such
exercise, the number of shares of Common Stock beneficially owned by
the Holder (other than shares which would otherwise be deemed
beneficially owned except for being subject to a limitation on
conversion or exercise analogous to the limitation contained in this
paragraph 4), would exceed 4.99% of the number of shares of Common
Stock then issued and outstanding. As used herein, beneficial
ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and the rules thereunder.
To the extent that the limitation contained in this paragraph 4
applies, the submission of an Exercise Notice by the Holder shall be
deemed to be the Holder's representation that this Warrant is
exercisable pursuant to the terms hereof and the Company shall be
entitled to rely on such representation without making any further
inquiry as to whether this Section 4 applies. The Company shall have no
liability to any person if the Holder's determination of whether this
Warrant is convertible pursuant to the terms hereof is incorrect.
Nothing contained herein shall be deemed to restrict the right of a
Holder to exercise this Warrant, or part thereof, at such time as such
exercise will not violate the provisions of this Section 4. This
Section 4 may not be amended unless such amendment is agreed to in
writing by the Holder and approved by the holders of a majority of the
Common Stock then outstanding; provided, however, that the Holder shall
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have the right, upon sixty (60) days' prior written notice to the
Company, to waive the provisions of this Section 4.
5. Payment of the Exercise Price; Cashless Exercise. The
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Holder may pay the Exercise Price in either of the following forms or,
at the election of Holder, a combination thereof:
() through a cash exercise (a "Cash Exercise") by delivering
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immediately available funds, or
(b) if, following the one-year anniversary of the Issue Date, an
effective Registration Statement is not available for the resale of
all of the Warrant Shares issuable hereunder at the time an Exercise
Notice is delivered to the Company, through a cashless exercise (a
"Cashless Exercise"). The Holder may effect a Cashless Exercise by
surrendering this Warrant to the Company and noting on the Exercise
Notice that the Holder wishes to effect a Cashless Exercise, upon
which the Company shall issue to the Holder a number of Warrant Shares
determined as follows:
X = Y x (A-B)/A
where: X = the number of Warrant Shares to be issued to
the Holder;
Y = the number of Warrant Shares with respect to which
this Warrant is being exercised;
A = the Market Price as of the Exercise Date; and
B = the Exercise Price.
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It is intended and acknowledged that the Warrant Shares issued in
a Cashless Exercise transaction shall be deemed to have been acquired
by the Holder, and the holding period for the Warrant Shares required
by Rule 144 shall be deemed to have been commenced, on the Issue Date.
For purposes hereof, (A) "Market Price" means, as of a particular
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date, the average of the Closing Prices for the Common Stock occurring
during the ten (10) Trading Day period ending on (and including) the
Trading Day immediately preceding such date, and (B) "Closing Price"
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means, with respect to the Common Stock as of any Trading Day, the
closing price on such date for the Common Stock on the Principal
Market as reported by Bloomberg Financial Markets ("Bloomberg"), or if
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the Principal Market begins to operate on an extended hours basis, and
does not designate the closing price, then the last price at 4:00 p.m.
(eastern time), as reported by Bloomberg, or if the foregoing do not
apply, the last closing price of the Common Stock in the over-the-
counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing price is reported for such
security by Bloomberg, the last closing trade price for such security
as reported by Bloomberg, or, if no last closing trade price is
reported for such security by Bloomberg, the average of the prices of
any market makers for such security as reported in the "pink sheets"
by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
the Closing Price cannot be calculated for the Common Stock on such
date on any of the foregoing bases, then the Company shall submit such
calculation to an independent investment banking firm of national
reputation, and shall cause such investment banking firm to perform
such determination and notify the Company and each Investor of the
results of determination no later than two (2) Business Days from the
time such calculation was submitted to it by the Company. Such
investment banking firm's determination shall be deemed conclusive
absent manifest error. All such determinations shall be appropriately
adjusted for any stock dividend, stock split or other similar
transaction during such period.
6. Anti-Dilution Adjustments; Distributions; Other Events. The
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Exercise Price and the number of Warrant Shares issuable hereunder
shall be subject to adjustment from time to time as provided in this
Section 6.
() Subdivision or Combination of Common Stock. If the Company,
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at any time after the Issue Date, subdivides (by any stock split,
stock dividend, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a greater number of shares,
then after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company, at any time after the Issue
Date, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Common
Stock into a smaller number of shares, then, after the date of record
for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionally
increased.
(b) Distributions. If the Company shall declare or make any
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distribution of its assets (or rights to acquire its assets) to
holders of Common Stock as a partial liquidating dividend or otherwise
(including without limitation any dividend or distribution to the
Company's stockholders in cash or shares (or rights to acquire shares)
of capital stock of a subsidiary) (a "Distribution"), the Company
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shall deliver written notice of such Distribution (a "Distribution
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Notice") to the Holder at least fifteen (15) Business Days prior to
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the earlier to occur of (i) the record date for determining
stockholders entitled to such Distribution (the "Record Date") and
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(ii) the date on which such Distribution is made (the "Distribution
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Date"). The Holder shall be entitled, at its option (to be exercised
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by written notice delivered to the Company on or before the fifteenth
(15th) Business Day following the date on which a Distribution Notice
is delivered to the Holder), either (A) upon any exercise of this
Warrant on or after the Record Date, to be entitled to receive on the
Distribution Date (for any exercise effected on or prior to the
Distribution Date) or the applicable Delivery Date (for any exercise
effected after the Distribution Date), the amount of such assets which
would have been payable to the holder with respect to the shares of
Common Stock issuable upon such exercise (without giving effect to any
limitations on such exercise contained in this Warrant) had the Holder
been the holder of such shares of Common Stock on the Record Date or
(B) upon any exercise of this Warrant on or after the Record Date, to
reduce the Exercise Price applicable to such exercise by reducing the
Exercise Price in effect on the Business Day immediately preceding the
Record Date by an amount equal to the fair market value of the assets
to be distributed divided by the number of shares of Common Stock as
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to which such Distribution is to be made, such fair market value to be
reasonably determined by a nationally recognized investment banking
firm retained by the Company and reasonably acceptable to the holders
of a majority of the Outstanding Registrable Securities.
(c) Dilutive Issuances.
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(i) Adjustment Upon Dilutive Issuance. If, at any time
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after the Issue Date, the Company issues or sells, or in accordance
with subparagraph (iii) of this paragraph (c), is deemed to have
issued or sold, any shares of Common Stock for no consideration or for
a consideration per share less than the Exercise Price on the date of
such issuance or sale (or deemed issuance or sale) (a "Dilutive
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Issuance"), then the Exercise Price shall be adjusted as follows:
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(A) If such Dilutive Issuance occurs prior to the
Effective Date (as defined in the Registration Rights Agreement),
then effective immediately upon the Dilutive Issuance, the
Exercise Price shall be adjusted so as to equal the consideration
received or receivable by the Company (on a per share basis) for
the additional shares of Common Stock so issued, sold or deemed
issued or sold in such Dilutive Issuance (which, in the case of a
deemed issuance or sale, shall be calculated in accordance with
subparagraph (ii) below). Notwithstanding the foregoing, prior
to the Effective Date, the Company shall not engage in any
transaction that would result in the issuance or deemed issuance
of shares of Common Stock (other than Excluded Securities (as
defined below) for no consideration.
(B) If such Dilutive Issuance occurs on or after the
Effective Date, then effective immediately upon the Dilutive
Issuance, the Exercise Price shall be adjusted so as to equal an
amount determined by multiplying such Exercise Price by the
following fraction:
N0 + N1
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N0 + N2
where:
N0 = the number of shares of Common Stock outstanding
immediately prior to the issuance, sale or deemed
issuance or sale of such additional shares of
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Common Stock in such Dilutive Issuance (without
taking into account any shares of Common Stock
issuable upon conversion, exchange or exercise of
any securities or other instruments which are
convertible into or exercisable or exchangeable
for Common Stock ("Convertible Securities") or
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options, warrants or other rights to purchase or
subscribe for Common Stock or Convertible
Securities ("Purchase Rights"), including the
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Additional Investment Rights and Warrants);
N1 = the number of shares of Common Stock which the
aggregate consideration, if any, received or
receivable by the Company for the total number of
such additional shares of Common Stock so issued,
sold or deemed issued or sold in such Dilutive
Issuance (which, in the case of a deemed issuance
or sale, shall be calculated in accordance with
subparagraph (iii) below) would purchase at the
Exercise Price in effect immediately prior to
such Dilutive Issuance; and
N2 = the number of such additional shares of Common
Stock so issued, sold or deemed issued or sold in
such Dilutive Issuance.
Notwithstanding the foregoing, no adjustment shall be
made pursuant hereto if such adjustment would result in an increase
in the Exercise Price.
(ii) Adjustment Upon Below Market Issuance. If, at
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any time after the Issue Date, the Company issues or sells, or in
accordance with subparagraph (iii) of this paragraph (c), is
deemed to have issued or sold, any shares of Common Stock for no
consideration or for a consideration per share less than the
Market Price on the date of such issuance or sale (or deemed
issuance or sale) (a "Below Market Issuance"), then the Exercise
Price shall be adjusted so as to equal an amount determined by
multiplying such Exercise Price by the following fraction:
N0 + X0
X0 + N2
where:
N0 = the number of shares of Common Stock outstanding
immediately prior to the issuance, sale or deemed
issuance or sale of such additional shares of
Common Stock in such Below Market Issuance
(without taking into account any shares of Common
Stock issuable upon conversion, exchange or
exercise of any Convertible Securities or
Purchase Rights, including the Additional
Investment Rights and Warrants);
N1 = the number of shares of Common Stock which the
aggregate consideration, if any, received or
receivable by the Company for the total number of
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such additional shares of Common Stock so issued,
sold or deemed issued or sold in such Below
Market Issuance (which, in the case of a deemed
issuance or sale, shall be calculated in
accordance with subparagraph (iii) below) would
purchase at the Market Price in effect on the
date of such Below Market Issuance; and
N2 = the number of such additional shares of Common
Stock so issued, sold or deemed issued or sold in
such Below Market Issuance.
Notwithstanding the foregoing, no adjustment shall be
made pursuant to this paragraph (c)(ii) if such adjustment would
result in an increase in the Exercise Price or if such adjustment
would lead to a higher exercise price than an adjustment pursuant
to paragraph c(i), in which case the provisions of paragraph
(c)(i) shall apply.
(iii) Effect On Exercise Price Of Certain Events. For
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purposes of determining the adjusted Exercise Price under subparagraph
(i) or (ii) of this paragraph (c), the following will be applicable:
(A) Issuance Of Purchase Rights. If the Company
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issues or sells any Purchase Rights, whether or not immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Purchase Rights (and the price
of any conversion of Convertible Securities, if applicable) is
less than the Exercise Price in effect on the date of issuance or
sale of such Purchase Rights, then the maximum total number of
shares of Common Stock issuable upon the exercise of all such
Purchase Rights (assuming full conversion, exercise or exchange
of Convertible Securities, if applicable) shall, as of the date
of the issuance or sale of such Purchase Rights, be deemed to be
outstanding and to have been issued and sold by the Company for
such price per share. For purposes of the preceding sentence, the
"price per share for which Common Stock is issuable upon the
exercise of such Purchase Rights" shall be determined by dividing
(x) the total amount, if any, received or receivable by the
Company as consideration for the issuance or sale of all such
Purchase Rights, plus the minimum aggregate amount of additional
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consideration, if any, payable to the Company upon the exercise
of all such Purchase Rights, plus, in the case of Convertible
Securities issuable upon the exercise of such Purchase Rights,
the minimum aggregate amount of additional consideration payable
upon the conversion, exercise or exchange thereof (determined in
accordance with the calculation method set forth in subparagraph
(iii)(B) below) at the time such Convertible Securities first
become convertible, exercisable or exchangeable, by (y) the
maximum total number of shares of Common Stock issuable upon the
exercise of all such Purchase Rights (assuming full conversion,
exercise or exchange of Convertible Securities, if applicable).
No further adjustment to the Exercise Price shall be made upon
the actual issuance of such Common Stock upon the exercise of
such Purchase Rights or upon the conversion, exercise or exchange
of Convertible Securities issuable upon exercise of such Purchase
Rights. To the extent that shares of Common Stock or Convertible
Securities are not delivered pursuant to such Purchase Rights,
upon the expiration or termination of such Purchase Rights, the
Exercise Price shall be readjusted to the Exercise Price that
would then be in effect had the adjustments made upon the
issuance of such Purchase Rights been made on the basis of
delivery of only the number of shares of Common Stock actually
delivered.
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(B) Issuance Of Convertible Securities. If the
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Company issues or sells any Convertible Securities, whether or
not immediately convertible, exercisable or exchangeable, and the
price per share for which Common Stock is issuable upon such
conversion, exercise or exchange is less than the Exercise Price
in effect on the date of issuance or sale of such Convertible
Securities, then the maximum total number of shares of Common
Stock issuable upon the conversion, exercise or exchange of all
such Convertible Securities shall, as of the date of the issuance
or sale of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for
such price per share. If the Convertible Securities so issued or
sold do not have a fluctuating conversion or exercise price or
exchange ratio, then for the purposes of the immediately
preceding sentence, the "price per share for which Common Stock
is issuable upon such conversion, exercise or exchange" shall be
determined by dividing (A) the total amount, if any, received or
receivable by the Company as consideration for the issuance or
sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to
the Company upon the conversion, exercise or exchange thereof
(determined in accordance with the calculation method set forth
in this subparagraph (iii)(B)) at the time such Convertible
Securities first become convertible, exercisable or exchangeable,
by (B) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such
Convertible Securities. If the Convertible Securities so issued
or sold have a fluctuating conversion or exercise price or
exchange ratio (a "Variable Rate Convertible Security") provided,
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however, that if the conversion or exercise price or exchange
ratio of a Convertible Security may fluctuate solely as a result
of provisions designed to protect against dilution, such
Convertible Security shall not be deemed to be a Variable Rate
Convertible Security, then for purposes of the first sentence of
this subparagraph (B), the "price per share for which Common
Stock is issuable upon such conversion, exercise or exchange"
shall be deemed to be the lowest price per share which would be
applicable (assuming all holding period and other conditions to
any discounts contained in such Variable Rate Convertible
Security have been satisfied) if the conversion price of such
Variable Rate Convertible Security on the date of issuance or
sale thereof were seventy-five percent (75%) of the actual
conversion price on such date (the "Assumed Variable Market
-----------------------
Price"), and, further, if the conversion price of such Variable
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Rate Convertible Security at any time or times thereafter is less
than or equal to the Assumed Variable Market Price last used for
making any adjustment under this paragraph (c) with respect to
any Variable Rate Convertible Security, the Exercise Price in
effect at such time shall be readjusted to equal the Exercise
Price which would have resulted if the Assumed Variable Market
Price at the time of issuance of the Variable Rate Convertible
Security had been seventy-five percent (75%) of the actual
conversion price of such Variable Rate Convertible Security
existing at the time of the adjustment required by this sentence.
No further adjustment to the Exercise Price shall be made upon
the actual issuance of such Common Stock upon conversion,
exercise or exchange of such Convertible Securities. To the
extent that shares of Common Stock are not delivered pursuant to
conversion of such Convertible Securities, upon the expiration or
termination of the right to convert such Convertible Securities
into Common Stock, the Exercise Price shall be readjusted to the
Exercise Price that would then be in effect had the adjustments
made upon the issuance of such Convertible Securities been made
on the basis of delivery of only the number of shares of Common
Stock actually delivered.
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(C) Change In Option Price Or Conversion Rate. If
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there is a change at any time in (x) the amount of additional
consideration payable to the Company upon the exercise of any
Purchase Rights; (y) the amount of additional consideration, if
any, payable to the Company upon the conversion, exercise or
exchange of any Convertible Securities; or (z) the rate at which
any Convertible Securities are convertible into or exercisable or
exchangeable for Common Stock (in each such case, other than
under or by reason of provisions designed to protect against
dilution), then in any such case, the Exercise Price in effect at
the time of such change shall be readjusted to the Exercise Price
which would have been in effect at such time had such Purchase
Rights or Convertible Securities still outstanding provided for
such changed additional consideration or changed conversion,
exercise or exchange rate, as the case may be, at the time
initially issued or sold.
(D) Calculation Of Consideration Received. If any
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Common Stock, Purchase Rights or Convertible Securities are
issued or sold for cash, the consideration received therefor will
be the amount received by the Company therefor. In case any
Common Stock, Purchase Rights or Convertible Securities are
issued or sold for a consideration part or all of which shall be
other than cash, including in the case of a strategic or similar
arrangement in which the other entity will provide services to
the Company, purchase services from the Company or otherwise
provide intangible consideration to the Company, the amount of
the consideration other than cash received by the Company
(including the net present value of the consideration expected by
the Company for the provided or purchased services) shall be the
fair market value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company will be the average of the
last sale prices thereof on the principal market for such
securities during the period of ten Trading Days immediately
preceding the date of receipt. In case any Common Stock,
Purchase Rights or Convertible Securities are issued in
connection with any merger or consolidation in which the Company
is the surviving corporation, the amount of consideration
therefor will be deemed to be the fair market value of such
portion of the net assets and business of the non-surviving
corporation as is attributable to such Common Stock, Purchase
Rights or Convertible Securities, as the case may be.
Notwithstanding anything else herein to the contrary, if Common
Stock, Purchase Rights or Convertible Securities are issued or
sold in conjunction with each other as part of a single
transaction or in a series of related transactions, the Holder
may elect to determine the amount of consideration deemed to be
received by the Company therefor by deducting the fair value of
any type of securities (the "Disregarded Securities") issued or
----------------------
sold in such transaction or series of transactions. If the holder
makes an election pursuant to the immediately preceding sentence,
no adjustment to the Exercise Price shall be made pursuant to
this paragraph (c) for the issuance of the Disregarded Securities
or upon any conversion, exercise or exchange thereof. The
independent members of the Corporation's Board of Directors shall
calculate reasonably and in good faith, using standard commercial
valuation methods appropriate for valuing such assets, the fair
market value of any consideration other than cash or securities.
(E) Issuances Pursuant To Existing Securities. If
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the Company issues (or becomes obligated to issue) shares of
Common Stock pursuant to any antidilution or similar adjustments
(other than as a result of stock splits, stock dividends and the
like) contained in any Convertible Securities or Purchase Rights
10
outstanding as of the date hereof but not included in the
Disclosure Schedule to the Securities Purchase Agreement, then
all shares of Common Stock so issued shall be deemed to have been
issued for no consideration. If the Company issues (or becomes
obligated to issue) shares of Common Stock pursuant to any
antidilution or similar adjustments contained in any Convertible
Securities or Purchase Rights disclosed in a schedule to the
Securities Purchase Agreement as a result of the issuance of the
Additional Investment Rights or Warrants and the number of shares
that the Company issues (or is obligated to issue) as a result of
such initial issuance exceeds the amount specified in such
schedule, such excess shares shall be deemed to have been issued
for no consideration.
(iv) Exceptions To Adjustment Of Exercise Price.
------------------------------------------
Notwithstanding the foregoing, no adjustment to the Exercise Price
shall be made pursuant to this paragraph (c) upon the issuance of any
Excluded Securities. For purposes hereof, "Excluded Securities" means
-------------------
(I) securities purchased under the Securities Purchase Agreement; (II)
securities issued upon exercise of the Additional Investment Rights or
the Warrants; (III) shares of Common Stock issuable or issued to (x)
employees or directors from time to time upon the exercise of options,
in such case granted or to be granted in the discretion of the Board
of Directors pursuant to one or more stock option plans or restricted
stock plans in effect as of the Issue Date or adopted after the Issue
Date by the independent members of the Board of Directors with
substantially the same terms as such plans in effect as of the Issue
Date, and (y) vendors pursuant to warrants to purchase Common Stock
that are outstanding on the date hereof or issued hereafter, provided
such issuances are approved by the Board of Directors; (IV) shares of
Common Stock issued in connection with any stock split, stock dividend
or recapitalization of the Company; (V) shares of Common Stock issued
in connection with the acquisition by the Company of any corporation
or other entity occurring after the Effective Date and as long as a
fairness opinion with respect to such acquisition is rendered by an
investment bank of national recognition; (VI) shares of Common Stock
issued in connection with any Convertible Securities or Purchase
Rights outstanding on the date hereof and (VII) shares issued to
Persons with whom the Corporation is entering into a joint venture,
strategic alliance or other commercial relationship in connection with
the operation of the Company's business and not in connection with a
transaction the primary purpose of which is to raise equity capital.
(v) Notice Of Adjustments. Upon the occurrence of one or
---------------------
more adjustments or readjustments of the Exercise Price pursuant to
this paragraph (c) resulting in a change in the Exercise Price by more
than one percent (1%) in the aggregate, or any change in the number or
type of stock, securities and/or other property issuable upon exercise
of this Warrant, the Company, at its expense, shall promptly compute
such adjustment or readjustment or change and prepare and furnish to
the Holder a certificate setting forth such adjustment or readjustment
or change and showing in detail the facts upon which such adjustment
or readjustment or change is based. The Company shall, upon the
written request at any time of the Holder, furnish to the Holder a
like certificate setting forth (i) such adjustment or readjustment or
change, (ii) the Exercise Price at the time in effect and (iii) the
number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon
exercise of this Warrant.
(d) Major Transactions. In the event of a merger,
------------------
consolidation, business combination, tender offer, exchange of shares,
recapitalization, reorganization, redemption or other similar event,
11
as a result of which shares of Common Stock of the Company shall be
changed into the same or a different number of shares of the same or
another class or classes of stock or securities or other assets of the
Company or another entity or the Company shall sell all or
substantially all of its assets (each of the foregoing being a "Major
-----
Transaction"), the Company will give the Holder at least thirty (30)
-----------
days written notice prior to the closing of such Major Transaction
(which period shall be increased to sixty one (61) days if, at such
time, without giving effect to the limitation on exercise contained in
paragraph 4 hereof, the Holder would beneficially own more than 4.99%
of the Common Stock then outstanding); provided, however, that the
-----------------
Company shall publicly disclose the terms of any such Major
Transaction on or before the date on which it delivers notice of a
Major Transaction to the Holder. Upon the occurrence of a Major
Transaction, (i) the Holder shall be permitted to exercise this
Warrant in whole or in part at any time prior to the record date for
the receipt of such consideration and shall be entitled to receive,
for each share of Common Stock issued to Holder for such exercise, the
same per share consideration paid to the other holders of Common Stock
in connection with such Major Transaction, and (ii) if and to the
extent that the Holder retains any portion of this Warrant following
such record date, the Company will cause the surviving or, in the
event of a sale of assets, purchasing entity, as a condition precedent
to such Major Transaction, to assume the obligations of the Company
under this Warrant, with such adjustments to the Exercise Price and
the securities covered hereby as are deemed appropriate by the
Company's Board of Directors in order to preserve the economic
benefits of this Warrant to the Holder.
(e) Adjustments; Additional Shares, Securities or Assets. In
----------------------------------------------------
the event that at any time, as a result of an adjustment made pursuant
to this paragraph 6, the Holder of this Warrant shall, upon exercise
of this Warrant, become entitled to receive securities or assets
(other than Common Stock) then, wherever appropriate, all references
herein to shares of Common Stock shall be deemed to refer to and
include such shares and/or other securities or assets; and thereafter
the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as
nearly equivalent as practicable to the provisions of this paragraph
6. Any adjustment made herein other than pursuant to Section 6(c)
hereof that results in a decrease in the Exercise Price shall also
effect a proportional increase in the number of shares of Common Stock
into which this Warrant is exercisable.
7. Fractional Interests.
--------------------
No fractional shares or scrip representing fractional shares
shall be issuable upon the exercise of this Warrant. If, on exercise
of this Warrant, the Holder hereof would be entitled to a fractional
share of Common Stock or a right to acquire a fractional share of
Common Stock, the Company shall, in lieu of issuing any such
fractional share, pay to the Holder an amount in cash equal to the
product resulting from multiplying such fraction by the Market Price
as of the Exercise Date.
8. Transfer of this Warrant.
------------------------
The Holder may sell, transfer, assign, pledge or otherwise
dispose of this Warrant, in whole or in part, as long as such sale or
other disposition is made pursuant to an effective registration
statement or an exemption from the registration requirements of the
Securities Act, and applicable state securities laws, and is otherwise
made in accordance with the applicable provisions of the Securities
Purchase Agreement. Upon such transfer or other disposition, the
12
Holder shall deliver this Warrant to the Company together with a
written notice to the Company, substantially in the form of the
Transfer Notice attached hereto as Exhibit B (the "Transfer Notice"),
--------- ---------------
indicating the person or persons to whom this Warrant shall be
transferred and, if less than all of this Warrant is transferred, the
number of Warrant Shares to be covered by the part of this Warrant to
be transferred to each such person. Within three (3) Business Days of
receiving a Transfer Notice and the original of this Warrant, the
Company shall deliver to the each transferee designated by the Holder
a Warrant or Warrants of like tenor and terms for the appropriate
number of Warrant Shares and, if less than all this Warrant is
transferred, shall deliver to the Holder a Warrant for the remaining
number of Warrant Shares.
9. Benefits of this Warrant.
------------------------
This Warrant shall be for the sole and exclusive benefit of
the Holder of this Warrant and nothing in this Warrant shall be
construed to confer upon any person other than the Holder of this
Warrant any legal or equitable right, remedy or claim hereunder.
10. Loss, theft, destruction or mutilation of Warrant.
--------------------------------------------------
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of indemnity reasonably satisfactory to the
Company, and upon surrender of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
11. Notice or Demands.
-----------------
Any notice, demand or request required or permitted to be
given by the Company or the Holder pursuant to the terms of this
Warrant shall be in writing and shall be deemed delivered (i) when
delivered personally or by verifiable facsimile transmission, unless
such delivery is made on a day that is not a Business Day, in which
case such delivery will be deemed to be made on the next succeeding
Business Day, (ii) on the next Business Day after timely delivery to
an overnight courier and (iii) on the Business Day actually received
if deposited in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid), addressed as follows:
If to the Company:
Raptor Networks Technology, Inc.
00 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attn: Xxx Xxxxxxxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
13
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
000 X.X. Xxxxx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
and if to the Holder, to such address as shall be designated by the
Holder in writing to the Company.
12. Taxes.
-----
(a) The issue of stock certificates on exercises of this Warrant
shall be made without charge to the exercising Holder for any tax in
respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other
than that of the Holder of any Warrant exercised, and the Company
shall not be required to issue or deliver any such stock certificate
unless and until the person or persons requesting the issue thereof
shall have paid to the Company the amount of such tax or shall have
established to the reasonable satisfaction of the Company that such
tax has been paid.
(b) Notwithstanding any other provision of this Warrant or any
other Transaction Document, for income tax purposes, any assignee or
transferee shall agree that the Company and the Transfer Agent shall
be permitted to withhold from any amounts payable to such assignee or
transferee any taxes required by law to be withheld from such amounts.
Unless exempt from the obligation to do so, each assignee or
transferee shall, upon request, execute and deliver to the Company or
the Transfer Agent, as applicable, a properly completed Form W-8 or W-
9, indicating that such assignee or transferee is not subject to back-
up withholding for United States Federal income tax purposes.
13. Applicable Law.
--------------
This Warrant is issued under and shall for all purposes be
governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely
within the State of New York.
14. Amendments.
----------
No amendment, modification or other change to, or waiver of
any provision of, this Warrant may be made unless such amendment,
modification or change is (A) set forth in writing and is signed by
the Company and the Holder and (B) agreed to in writing by the holders
of at least sixty-six percent (66%) of the number of shares into which
the Warrants are exercisable (without regard to any limitation
contained therein on such exercise), it being understood that upon the
satisfaction of the conditions described in (A) and (B) above, each
Warrant (including any Warrant held by the Holder who did not execute
the agreement specified in (B) above) shall be deemed to incorporate
any amendment, modification, change or waiver effected thereby as of
the effective date thereof.
[Signature Page to Follow]
14
IN WITNESS WHEREOF, the Company has duly executed and delivered
this Warrant as of the Issue Date.
RAPTOR NETWORKS TECHNOLOGY, INC.
By:_________________________________
Name:
Title:
15
EXHIBIT A to WARRANT
--------------------
EXERCISE NOTICE
---------------
The undersigned Holder hereby irrevocably exercises the right to
purchase ________________ of the shares of Common Stock ("Warrant
-------
Shares") of RAPTOR NETWORKS TECHNOLOGY, INC. evidenced by the attached
------
Warrant (the "Warrant"). Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Warrant.
Form of Exercise Price. The Holder intends that payment of
the Exercise Price shall be made as:
______ a Cash Exercise with respect to _________________
Warrant Shares; and/or
______ a Cashless Exercise with respect to _________________
Warrant Shares, as permitted by Section 5(b) of the attached
Warrant.
Payment of Exercise Price. In the event that the Holder has
elected a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the Holder shall pay the sum of
$________________ to the Company in accordance with the terms of the
Warrant.
Date:______________________
___________________________________
Name of Registered Holder
By:________________________________
Name:
Title:
16
EXHIBIT B to WARRANT
--------------------
TRANSFER NOTICE
---------------
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby
sells, assigns and transfers unto the person or persons named below the
right to purchase shares of the Common Stock of RAPTOR
NETWORKS TECHNOLOGY, INC. evidenced by the attached Warrant.
Date:______________________
___________________________________
Name of Registered Holder
By:________________________________
Name:
Title:
Transferee Name and Address:
___________________________________
___________________________________
___________________________________
