EXHIBIT B
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
COMMON STOCK PURCHASE WARRANT
To Purchase 12,500,000 Shares of Common Stock of
Xxxxx Biometry, Inc.
THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for
value received, CAMOFI Master LDC (the "Holder"), is entitled, upon the terms
and subject to the limitations on exercise and the conditions hereinafter set
forth, at any time on or after the date hereof (the "Initial Exercise Date") and
on or prior to the close of business on May 31, 2013, the seven year anniversary
of the Initial Exercise Date (the "Termination Date") but not thereafter, to
subscribe for and purchase from Xxxxx Biometry, Inc., a Florida corporation (the
"Company"), 12,500,000 shares (the "Warrant Shares") of Common Stock, no par
value, of the Company (the "Common Stock"). The purchase price of one share of
Common Stock under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that
certain Securities Purchase Agreement (the "Purchase
Agreement"), dated May 31, 2006, between the Company and the
purchaser signatory thereto.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights
represented by this Warrant may be made at any time or
times on or after the Initial Exercise Date and on or
before the Termination Date by delivery to the Company
of a duly executed facsimile copy of the Notice of
Exercise Form annexed hereto (or such other office or
agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such
Holder appearing on the books of the Company); provided,
however, within 5 Trading Days of the date said Notice
of Exercise is delivered to the Company, the Holder
shall have surrendered this Warrant to the Company and
the Company shall have received payment of the aggregate
Exercise Price of the shares thereby purchased by wire
transfer or cashier's check drawn on a United States
bank.
b) Exercise Price. The exercise price of the Common Stock
under this Warrant shall be $0.40, subject to adjustment
hereunder (the "Exercise Price").
c) Cashless Exercise. If there is no registration statement
covering the resale of the Warrant Shares, this Warrant
may also be exercised by means of a "cashless exercise"
in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to
the quotient obtained by dividing [(A-B) (X)] by (A),
where:
(A) = the VWAP on the Trading Day immediately preceding the
date of such election;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise of
this Warrant in accordance with the terms of this
Warrant by means of a cash exercise rather than a
cashless exercise.
d) Exercise Limitations; Xxxxxx's Restrictions. The Holder
shall not have the right to exercise any portion of this
Warrant, pursuant to Section 2(c) or otherwise, to the
extent that after giving effect to such issuance after
exercise, the Holder (together with the Holder's
affiliates), as set forth on the applicable Notice of
Exercise, would beneficially own in excess of 4.99% of
the number of shares of the Common Stock outstanding
immediately after giving effect to such issuance. For
purposes of the foregoing sentence, the number of shares
of Common Stock beneficially owned by the Holder and its
affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with
respect to which the determination of such sentence is
being made, but shall exclude the number of shares of
Common Stock which would be issuable upon (A) exercise
of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its
affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other
securities of the Company (including, without
limitation, any other Notes or Warrants) subject to a
limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the
Holder or any of its affiliates. Except as set forth in
the preceding sentence, for purposes of this Section
2(d), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act, it
being acknowledged by Holder that the Company is not
representing to Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and
Holder is solely responsible for any schedules required
to be filed in accordance therewith. To the extent that
the limitation contained in this Section 2(d) applies,
the determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder)
and of which a portion of this Warrant is exercisable
shall be in the sole discretion of such Xxxxxx, and the
submission of a Notice of Exercise shall be deemed to be
such Holder's determination of whether this Warrant is
exercisable (in relation to other securities owned by
such Holder) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate
percentage limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such
determination. For purposes of this Section 2(d), in
determining the number of outstanding shares of Common
Stock, the Holder may rely on the number of outstanding
shares of Common Stock as reflected in (x) the Company's
most recent Form 10-QSB or Form 10-KSB, as the case may
be, (y) a more recent public announcement by the Company
or (z) any other notice by the Company or the Company's
Transfer Agent setting forth the number of shares of
Common Stock outstanding. Upon the written or oral
request of the Holder, the Company shall within two
Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its affiliates
since the date as of which such number of outstanding
shares of Common Stock was reported. The provisions of
this Section 2(d) may be waived by the Holder upon, at
the election of the Holder, not less than 61 days' prior
notice to the Company, and the provisions of this
Section 2(d) shall continue to apply until such 61st day
(or such later date, as determined by the Holder, as may
be specified in such notice of waiver).
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e) Mechanics of Exercise.
i) Authorization of Warrant Shares. The Company
covenants that all Warrant Shares which may be
issued upon the exercise of the purchase rights
represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and
charges in respect of the issue thereof (other
than taxes in respect of any transfer occurring
contemporaneously with such issue). The Company
covenants that during the period the Warrant is
outstanding, it will reserve from its authorized
and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants
that its issuance of this Warrant shall constitute
full authority to its officers who are charged
with the duty of executing stock certificates to
execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the
purchase rights under this Warrant. The Company
will take all such reasonable action as may be
necessary to assure that such Warrant Shares may
be issued as provided herein without violation of
any applicable law or regulation, or of any
requirements of the Trading Market upon which the
Common Stock may be listed.
ii) Delivery of Certificates Upon Exercise.
Certificates for shares purchased hereunder shall
be transmitted by the transfer agent of the
Company to the Holder by crediting the account of
the Holder's prime broker with the Depository
Trust Company through its Deposit Withdrawal Agent
Commission ("DWAC") system if the Company is a
participant in such system, and otherwise by
physical delivery to the address specified by the
Holder in the Notice of Exercise within 3 Trading
Days from the delivery to the Company of the
Notice of Exercise Form, surrender of this Warrant
and payment of the aggregate Exercise Price as set
forth above ("Warrant Share Delivery Date"). This
Warrant shall be deemed to have been exercised on
the date the Exercise Price is received by the
Company. The Warrant Shares shall be deemed to
have been issued, and Holder or any other person
so designated to be named therein shall be deemed
to have become a holder of record of such shares
for all purposes, as of the date the Warrant has
been exercised by payment to the Company of the
Exercise Price and all taxes required to be paid
by the Holder, if any, pursuant to Section
2(e)(vii) prior to the issuance of such shares,
have been paid.
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iii) Delivery of New Warrants Upon Exercise. If this
Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the
certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing
the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which
new Warrant shall in all other respects be
identical with this Warrant.
iv) Rescission Rights. If the Company fails to cause
its transfer agent to transmit to the Holder a
certificate or certificates representing the
Warrant Shares pursuant to this Section 2(e)(iv)
by the Warrant Share Delivery Date, then the
Holder will have the right to rescind such
exercise.
v) Compensation for Buy-In on Failure to Timely
Deliver Certificates Upon Exercise. In addition to
any other rights available to the Holder, if the
Company fails to cause its transfer agent to
transmit to the Holder a certificate or
certificates representing the Warrant Shares
pursuant to an exercise on or before the Warrant
Share Delivery Date, and if after such date the
Holder is required by its broker to purchase (in
an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale
by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a
"Buy-In"), then the Company shall (1) pay in cash
to the Holder the amount by which (x) the Holder's
total purchase price (including brokerage
commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount obtained
by multiplying (A) the number of Warrant Shares
that the Company was required to deliver to the
Holder in connection with the exercise at issue
times (B) the price at which the sell order giving
rise to such purchase obligation was executed, and
(2) at the option of the Holder, either reinstate
the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not
honored or deliver to the Holder the number of
shares of Common Stock that would have been issued
had the Company timely complied with its exercise
and delivery obligations hereunder. For example,
if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In
with respect to an attempted exercise of shares of
Common Stock with an aggregate sale price giving
rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence
the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company
written notice indicating the amounts payable to
the Holder in respect of the Buy-In, together with
applicable confirmations and other evidence
reasonably requested by the Company. Nothing
herein shall limit a Holder's right to pursue any
other remedies available to it hereunder, at law
or in equity including, without limitation, a
decree of specific performance and/or injunctive
relief with respect to the Company's failure to
timely deliver certificates representing shares of
Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
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vi) No Fractional Shares or Scrip. No fractional
shares or scrip representing fractional shares
shall be issued upon the exercise of this Warrant.
As to any fraction of a share which Holder would
otherwise be entitled to purchase upon such
exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise
Price.
vii) Charges, Taxes and Expenses. Issuance of
certificates for Warrant Shares shall be made
without charge to the Holder for any issue or
transfer tax or other incidental expense in
respect of the issuance of such certificate, all
of which taxes and expenses shall be paid by the
Company, and such certificates shall be issued in
the name of the Holder or in such name or names as
may be directed by the Holder; provided, however,
that in the event certificates for Warrant Shares
are to be issued in a name other than the name of
the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the Holder;
and the Company may require, as a condition
thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental
thereto.
viii) Closing of Books. The Company will not close its
stockholder books or records in any manner which
prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time while
this Warrant is outstanding: (A) pays a stock dividend or
otherwise make a distribution or distributions on shares of
its Common Stock or any other equity or equity equivalent
securities payable in shares of Common Stock (which, for
avoidance of doubt, shall not include any shares of Common
Stock issued by the Company pursuant to this Warrant), (B)
subdivides outstanding shares of Common Stock into a larger
number of shares, (C) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller
number of shares, or (D) issues by reclassification of shares
of the Common Stock any shares of capital stock of the
Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares,
if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock
outstanding after such event and the number of shares issuable
upon exercise of this Warrant shall be proportionately
adjusted. Any adjustment made pursuant to this Section 3(a)
shall become effective immediately after the record date for
the determination of stockholders entitled to receive such
dividend or distribution and shall become effective
immediately after the effective date in the case of a
subdivision, combination or re-classification.
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b) Subsequent Equity Sales. If the Company or any Subsidiary
thereof, as applicable, at any time while this Warrant is
outstanding, shall offer, sell, grant any option to purchase
or offer, sell or grant any right to reprice its securities,
or otherwise dispose of or issue (or announce any offer, sale,
grant or any option to purchase or other disposition) any
Common Stock or Common Stock Equivalents entitling any Person
to acquire shares of Common Stock, at an effective price per
share less than the then Exercise Price (such lower price, the
"Base Share Price" and such issuances collectively, a
"Dilutive Issuance"), as adjusted hereunder (if the holder of
the Common Stock or Common Stock Equivalents so issued shall
at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise
or exchange prices or otherwise, or due to warrants, options
or rights per share which is issued in connection with such
issuance, be entitled to receive shares of Common Stock at an
effective price per share which is less than the Exercise
Price, such issuance shall be deemed to have occurred for less
than the Exercise Price), then, the Exercise Price shall be
reduced to equal the Base Share Price and the number of
Warrant Shares issuable hereunder shall be increased such that
the aggregate Exercise Price payable hereunder, after taking
into account the decrease in the Exercise Price, shall be
equal to the aggregate Exercise Price prior to such
adjustment. Such adjustment shall be made whenever such Common
Stock or Common Stock Equivalents are issued. Such adjustment
shall be made whenever such Common Stock or Common Stock
Equivalents are issued. The Company shall notify the Holder in
writing, no later than the Trading Day following the issuance
of any Common Stock or Common Stock Equivalents subject to
this section, indicating therein the applicable issuance
price, or of applicable reset price, exchange price,
conversion price and other pricing terms (such notice the
"Dilutive Issuance Notice"). For purposes of clarification,
whether or not the Company provides a Dilutive Issuance Notice
pursuant to this Section 3(b), upon the occurrence of any
Dilutive Issuance, after the date of such Dilutive Issuance
the Holder is entitled to receive a number of Warrant Shares
based upon the Base Share Price regardless of whether the
Holder accurately refers to the Base Share Price in the Notice
of Exercise.
c) Pro Rata Distributions. If the Company, at any time prior to
the Termination Date, shall distribute to all holders of
Common Stock (and not to Holders of the Warrants) evidences of
its indebtedness or assets or rights or warrants to subscribe
for or purchase any security other than the Common Stock
(which shall be subject to Section 3(b)), then in each such
case the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive
such distribution by a fraction of which the denominator shall
be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record
date less the then per share fair market value at such record
date of the portion of such assets or evidence of indebtedness
so distributed applicable to one outstanding share of the
Common Stock as determined by the Board of Directors in good
faith. In either case the adjustments shall be described in a
statement provided to the Holders of the portion of assets or
evidences of indebtedness so distributed or such subscription
rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is
made and shall become effective immediately after the record
date mentioned above.
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d) Other Adjustments. In addition to the other adjustments set
forth in this Section 3, in the event that the Company fails
to satisfy all of the Special Adjustment Provisions on or
before the 180th day following the Closing Date (or the next
Business Day if such 180th day is not a Business Day), on such
180th day the Exercise Price shall be reset to the lower of:
(i) the initial Exercise Price; (ii) the closing bid price of
the Common Stock on the 180th day; and (iii) the VWAP for the
twenty Trading Days immediately prior to the 180th day.
e) Calculations. All calculations under this Section 3 shall be
made to the nearest cent or the nearest 1/100th of a share, as
the case may be. The number of shares of Common Stock
outstanding at any given time shall not includes shares of
Common Stock owned or held by or for the account of the
Company, and the description of any such shares of Common
Stock shall be considered on issue or sale of Common Stock.
For purposes of this Section 3, the number of shares of Common
Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock
(excluding treasury shares, if any) issued and outstanding.
f) Notice to Holders.
i. Adjustment to Exercise Price. Whenever the Exercise
Price is adjusted pursuant to this Section 3, the Company
shall promptly mail to each Holder a notice setting forth the
Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. If the
Company issues a variable rate security, despite the
prohibition thereon in the Purchase Agreement, the Company
shall be deemed to have issued Common Stock or Common Stock
Equivalents at the lowest possible conversion or exercise
price at which such securities may be converted or exercised
in the case of a Variable Rate Transaction (as defined in the
Purchase Agreement), or the lowest possible adjustment price
in the case of an MFN Transaction (as defined in the Purchase
Agreement).
ii. Notice to Allow Exercise by Xxxxxx. If (A) the
Company shall declare a dividend (or any other distribution)
on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common
Stock; (C) the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of
any rights; (D) the approval of any stockholders of the
Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or
merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, of
any compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; (E) the
Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be
mailed to the Holder at its last addresses as it shall appear
upon the Warrant Register of the Company, at least 20 calendar
days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record
is not to be taken, the date as of which the holders of the
Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of
which it is expected that holders of the Common Stock of
record shall be entitled to exchange their shares of the
Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided, that the failure
to mail such notice or any defect therein or in the mailing
thereof shall not affect the validity of the corporate action
required to be specified in such notice. The Holder is
entitled to exercise this Warrant during the 20-day period
commencing the date of such notice to the effective date of
the event triggering such notice.
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g) Fundamental Transaction. If, at any time while this Warrant is
outstanding, (A) the Company effects any merger or
consolidation of the Company with or into another Person, (B)
the Company effects any sale of all or substantially all of
its assets in one or a series of related transactions, (C) any
tender offer or exchange offer (whether by the Company or
another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares
for other securities, cash or property, or (D) the Company
effects any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock
is effectively converted into or exchanged for other
securities, cash or property (in any such case, a "Fundamental
Transaction"), then, upon any subsequent conversion of this
Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
absent such Fundamental Transaction, at the option of the
Holder, (a) upon exercise of this Warrant, the number of
shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving
corporation, and Alternate Consideration receivable upon or as
a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a Holder of the
number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event or (b) cash equal
to the value of this Warrant as determined in accordance with
the Black-Scholes option pricing formula (the "Alternate
Consideration"). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one
share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a
Fundamental Transaction, then the Holder shall be given the
same choice as to the Alternate Consideration it receives upon
any exercise of this Warrant following such Fundamental
Transaction. To the extent necessary to effectuate the
foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue
to the Holder a new warrant consistent with the foregoing
provisions and evidencing the Holder's right to exercise such
warrant into Alternate Consideration. The terms of any
agreement pursuant to which a Fundamental Transaction is
effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this
paragraph (f) and insuring that this Warrant (or any such
replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction.
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h) Exempt Issuance. Notwithstanding the foregoing, no
adjustments, Alternate Consideration nor notices shall be
made, paid or issued under this Section 3 in respect of an
Exempt Issuance.
i) Voluntary Adjustment By 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.
Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable
securities laws and the conditions set forth in Sections 5(a)
and 4(d) hereof and to the provisions of Section 4.1 of the
Purchase Agreement, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this
Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or
attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and
deliver a new Warrant or Warrants in the name of the assignee
or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to
the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be
cancelled. A Warrant, if properly assigned, may be exercised
by a new holder for the purchase of Warrant Shares without
having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with
other Warrants upon presentation hereof at the aforesaid
office of the Company, together with a written notice
specifying the names and denominations in which new Warrants
are to be issued, signed by the Holder or its agent or
attorney. Subject to compliance with Section 4(a), as to any
transfer which may be involved in such division or
combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to
be divided or combined in accordance with such notice.
c) Warrant Register. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose
(the "Warrant Register"), in the name of the record Holder
hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof
for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice
to the contrary.
d) Transfer Restrictions. If, at the time of the surrender of
this Warrant in connection with any transfer of this Warrant,
the transfer of this Warrant shall not be registered pursuant
to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws,
the Company may require, as a condition of allowing such
transfer (i) that the Holder or transferee of this Warrant, as
the case may be, furnish to the Company a written opinion of
counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions)
to the effect that such transfer may be made without
registration under the Securities Act and under applicable
state securities or blue sky laws, (ii) that the holder or
transferee execute and deliver to the Company an investment
letter in form and substance acceptable to the Company and
(iii) that the transferee be an "accredited investor" as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
promulgated under the Securities Act or a qualified
institutional buyer as defined in Rule 144A(a) under the
Securities Act.
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Section 5. Miscellaneous.
a) Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 4 of this Warrant,
this Warrant and all rights hereunder are transferable, in
whole or in part, at the office or agency of the Company by
the Holder in person or by duly authorized attorney, upon
surrender of this Warrant together with the Assignment Form
annexed hereto properly endorsed. The transferee shall sign an
investment letter in form and substance reasonably
satisfactory to the Company.
b) No Rights as Shareholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon
the surrender of this Warrant and the payment of the aggregate
Exercise Price (or by means of a cashless exercise), the
Warrant Shares so purchased shall be and be deemed to be
issued to such Holder as the record owner of such shares as of
the close of business on the later of the date of such
surrender or payment.
c) Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory
to it (which, in the case of the Warrant, shall not include
the posting of any bond), and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.
d) Saturdays, Sundays, Holidays, etc. If the last or appointed
day for the taking of any action or the expiration of any
right required or granted herein shall be a Saturday, Sunday
or a legal holiday, then such action may be taken or such
right may be exercised on the next succeeding day not a
Saturday, Sunday or legal holiday.
e) Authorized Shares. The Company covenants that during the
period the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon
the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant
shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as
may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable
law or regulation, or of any requirements of the Trading
Market upon which the Common Stock may be listed.
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Except and to the extent as waived or consented to by the
Holder, the Company shall not by any action, including,
without limitation, amending its certificate of incorporation
or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of
this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant
Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this
Warrant, and (c) use commercially reasonable efforts to obtain
all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations
under this Warrant.
Before taking any action which would result in an adjustment
in the number of Warrant Shares for which this Warrant is
exercisable or in the Exercise Price, the Company shall obtain
all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body
or bodies having jurisdiction thereof.
f) Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall
be determined in accordance with the provisions of the
Purchase Agreement.
g) Restrictions. The Holder acknowledges that the Warrant Shares
acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and
federal securities laws.
h) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder
shall operate as a waiver of such right or otherwise prejudice
Xxxxxx's rights, powers or remedies, notwithstanding the fact
that all rights hereunder terminate on the Termination Date.
If the Company willfully and knowingly fails to comply with
any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such
amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder
in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.
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i) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the
Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
j) Limitation of Liability. No provision hereof, in the absence
of any affirmative action by Holder to exercise this Warrant
or purchase Warrant Shares, and no enumeration herein of the
rights or privileges of Holder, shall give rise to any
liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
k) Remedies. Holder, in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this
Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby
agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
l) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted
assigns of Holder. The provisions of this Warrant are intended
to be for the benefit of all Holders from time to time of this
Warrant and shall be enforceable by any such Holder or holder
of Warrant Shares.
m) Amendment. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the
Company and the Holder.
n) Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this
Warrant.
o) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose,
be deemed a part of this Warrant.
********************
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
Dated: May 31, 2006
XXXXX BIOMETRY, INC.
-------------------------------------
Name:
Title:
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NOTICE OF EXERCISE
TO: XXXXX BIOMETRY, INC.
(1) The undersigned hereby elects to purchase ________ Warrant Shares of
the Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.
(2)Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares as is necessary,
in accordance with the formula set forth in subsection 2(c), to
exercise this Warrant with respect to the maximum number of Warrant
Shares purchasable pursuant to the cashless exercise procedure set
forth in subsection 2(c).
(3)Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
_______________________________
Tax ID Number _______________________________
The Warrant Shares shall be delivered to the following:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor. The undersigned is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ______________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Date: __________________________________________________________________________
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ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
_______________________________________________ whose address is
___________________________________________________________________.
___________________________________________________________________
Dated: ___________, _______
Xxxxxx's Signatur_____________________________
Holder's Address:_____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
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