EXHIBIT 10.9
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR RAPTOR NETWORKS TECHNOLOGY, INC. SHALL HAVE
RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
RAPTOR NETWORKS TECHNOLOGY, INC.
Expires _________________
No.: W-E-______ Number of Shares: _________
Date of Issuance: _______________
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, Raptor Networks Technology, Inc., a Colorado corporation
(together with its successors and assigns, the "ISSUER"), hereby certifies that
________________________ or its registered assigns is entitled to subscribe for
and purchase, during the period specified in this Warrant, up to ___________
shares (subject to adjustment as hereinafter provided) of the duly authorized,
validly issued, fully paid and non-assessable Common Stock of the Issuer, at an
initial exercise price per share of $.60. If in the event that the Warrants
offered in the Qualified Financing is at an exercise price per share that is
less than $.60, then the Warrant Price shall be reduced to the lowest exercise
price of the warrants issued in the Qualified Financing. Capitalized terms used
in this Warrant and not otherwise defined herein shall have the respective
meanings specified in Section 9 hereof.
1. TERM. The right to subscribe for and purchase shares of Warrant
Stock represented hereby shall commence on the Date of Issuance and shall expire
at 5:00 p.m., eastern time, on five years thereafter (such period being the
"TERM").
2. METHOD OF EXERCISE PAYMENT; ISSUANCE OF NEW WARRANT; TRANSFER AND
EXCHANGE.
(a) TIME OF EXERCISE. The purchase rights represented by this
Warrant may be exercised in whole or in part at any time and from time to time
during the Term.
(b) METHOD OF EXERCISE. The Holder hereof may exercise this
Warrant, in whole or in part, by the surrender of this Warrant (with the
exercise form attached hereto duly executed) at the principal office of the
Issuer, and by the payment to the Issuer of an amount of consideration therefor
equal to the Warrant Price in effect on the date of such exercise multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election (i) by certified or official
bank check or by wire transfer to an account designated by the Issuer, (ii) by
"cashless exercise" in accordance with the provisions of subsection (c) of this
Section 2, but only when a registration statement under Securities Act providing
for the resale of the Warrant Stock is not then in effect, or (iii) by a
combination of the foregoing methods of payment selected by the Holder of this
Warrant.
(c) CASHLESS EXERCISE. Notwithstanding any provisions herein
to the contrary, if (i) the Per Share Market Value of one share of Common Stock
is greater than the Warrant Price (at the date of calculation as set forth
below) and (ii) a registration statement under the Securities Act providing for
the resale of the Warrant Stock is not then in effect, in lieu of exercising
this Warrant by payment of cash, the Holder may exercise this Warrant by a
cashless exercise and shall receive the number of shares of Common Stock equal
to an amount (as determined below) by surrender of this Warrant at the principal
office of the Issuer together with the properly endorsed Notice of Exercise in
which event the Issuer shall issue to the Holder a number of shares of Common
Stock computed using the following formula:
X = Y - (A)(Y)
------
B
Where X = the number of shares of Common Stock to be
issued to the Holder.
Y = the number of shares of Common Stock
purchasable upon exercise of all of the
Warrant or, if only a portion of the Warrant
is being exercised, the portion of the
Warrant being exercised.
A = the Warrant Price.
B = the Per Share Market Value of one share of
Common Stock.
(d) ISSUANCE OF STOCK CERTIFICATES. In the event of any
exercise of the rights represented by this Warrant in accordance with and
subject to the terms and conditions hereof, (i) certificates for the shares of
Warrant Stock so purchased shall be dated the date of such exercise and
delivered to the Holder hereof within a reasonable time, not exceeding five (5)
Trading Days after such exercise or, at the request of the Holder (provided that
a registration statement under the Securities Act providing for the resale of
the Warrant Stock is then in effect), issued and delivered to the Depository
Trust Company ("DTC") account on the Holder's behalf via the Deposit Withdrawal
Agent Commission System ("DWAC") within a reasonable time, not exceeding five
(5) Trading Days after such exercise, and the Holder hereof shall be deemed for
all purposes to be the holder of the shares of Warrant Stock so purchased as of
the date of such exercise and (ii) unless this Warrant has expired, a new
Warrant representing the number of shares of Warrant Stock, if any, with respect
to which this Warrant shall not then have been exercised (less any amount
thereof which shall have been canceled in payment or partial payment of the
Warrant Price as hereinabove provided) shall also be issued to the Holder hereof
at the Issuer's expense within such time.
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(e) TRANSFERABILITY OF WARRANT. Subject to Section 2(g), this
Warrant may be transferred by a Holder without the consent of the Issuer. If
transferred pursuant to this paragraph and subject to the provisions of
subsection (g) of this Section 2, this Warrant may be transferred on the books
of the Issuer by the Holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant at the principal office of the Issuer, properly
endorsed (by the Holder executing an assignment in the form attached hereto) and
upon payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. This Warrant is exchangeable at the principal office of the
Issuer for Warrants for the purchase of the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase such number
of shares of Warrant Stock as the Holder hereof shall designate at the time of
such exchange. All Warrants issued on transfers or exchanges shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant hereto.
(f) CONTINUING RIGHTS OF HOLDER. The Issuer will, at the time
of or at any time after each exercise of this Warrant, upon the request of the
Holder hereof, acknowledge in writing the extent, if any, of its continuing
obligation to afford to such Holder all rights to which such Holder shall
continue to be entitled after such exercise in accordance with the terms of this
Warrant, PROVIDED that if any such Holder shall fail to make any such request,
the failure shall not affect the continuing obligation of the Issuer to afford
such rights to such Holder.
(g) COMPLIANCE WITH SECURITIES LAWS.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below,
this Warrant and all certificates representing shares of Warrant Stock
issued upon exercise hereof shall be stamped or imprinted with a legend
in substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND
UNDER APPLICABLE STATE SECURITIES LAWS OR RAPTOR NETWORKS
TECHNOLOGY, INC. SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
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(iii) The Issuer agrees to reissue this Warrant or
certificates representing any of the Warrant Stock, without the legend
set forth above if at such time, prior to making any transfer of any
such securities, the Holder shall give written notice to the Issuer
describing the manner and terms of such transfer and removal as the
Issuer may reasonably request. Such proposed transfer and removal will
not be effected until: (a) either (i) the Issuer has received an
opinion of counsel reasonably satisfactory to the Issuer, to the effect
that the registration of such securities under the Securities Act is
not required in connection with such proposed transfer, (ii) a
registration statement under the Securities Act covering such proposed
disposition has been filed by the Issuer with the Securities and
Exchange Commission and has become effective under the Securities Act,
(iii) the Issuer has received other evidence reasonably satisfactory to
the Issuer that such registration and qualification under the
Securities Act and state securities laws are not required, or (iv) the
Holder provides the Issuer with reasonable assurances that such
security can be sold pursuant to Rule 144 under the Securities Act; and
(b) either (i) the Issuer has received an opinion of counsel reasonably
satisfactory to the Issuer, to the effect that registration or
qualification under the securities or "blue sky" laws of any state is
not required in connection with such proposed disposition, or (ii)
compliance with applicable state securities or "blue sky" laws has been
effected or a valid exemption exists with respect thereto. The Issuer
will respond to any such notice from a holder within five (5) business
days. In the case of any proposed transfer under this Section 2(g), the
Issuer will use reasonable efforts to comply with any such applicable
state securities or "blue sky" laws, but shall in no event be required,
(x) to qualify to do business in any state where it is not then
qualified, or (y) to take any action that would subject it to tax or to
the general service of process in any state where it is not then
subject. The restrictions on transfer contained in this Section 2(g)
shall be in addition to, and not by way of limitation of, any other
restrictions on transfer contained in any other section of this
Warrant.
(h) In no event may the Holder exercise this Warrant in whole
or in part unless the Holder is an "accredited investor" as defined in
Regulation D under the Securities Act.
3. STOCK FULLY PAID; RESERVATION AND LISTING OF SHARES; COVENANTS.
(a) STOCK FULLY PAID. The Issuer represents, warrants,
covenants and agrees that all shares of Warrant Stock which may be issued upon
the exercise of this Warrant or otherwise hereunder will, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges created by or through Issuer. The Issuer further
covenants and agrees that during the period within which this Warrant may be
exercised, the Issuer will at all times have authorized and reserved for the
purpose of the issue upon exercise of this Warrant a sufficient number of shares
of Common Stock to provide for the exercise of this Warrant.
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(b) RESERVATION. If any shares of Common Stock required to be
reserved for issuance upon exercise of this Warrant or as otherwise provided
hereunder require registration or qualification with any governmental authority
under any federal or state law before such shares may be so issued, the Issuer
will in good faith use its best efforts as expeditiously as possible at its
expense to cause such shares to be duly registered or qualified. If the Issuer
shall list any shares of Common Stock on any securities exchange or market it
will, at its expense, list thereon, maintain and increase when necessary such
listing, of, all shares of Warrant Stock from time to time issued upon exercise
of this Warrant or as otherwise provided hereunder, and, to the extent
permissible under the applicable securities exchange rules, all unissued shares
of Warrant Stock which are at any time issuable hereunder, so long as any shares
of Common Stock shall be so listed. The Issuer will also so list on each
securities exchange or market, and will maintain such listing of, any other
securities which the Holder of this Warrant shall be entitled to receive upon
the exercise of this Warrant if at the time any securities of the same class
shall be listed on such securities exchange or market by the Issuer.
(c) COVENANTS. The Issuer shall not by any action including,
without limitation, amending the Articles of Incorporation or the by-laws of the
Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other 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 the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the Articles of Incorporation or by-laws of the Issuer
in any manner that would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this Warrant,
and (iv) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.
(d) LOSS, THEFT, DESTRUCTION OF WARRANTS. Upon receipt of
evidence satisfactory to the Issuer of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security satisfactory to the
Issuer or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
4. ADJUSTMENT OF WARRANT PRICE AND WARRANT SHARE NUMBER. In the event
that the warrants offered in the Qualified Financing is at an exercise price per
share that is less than $.60, there will be a one-time adjustment to the Warrant
Price, where the exercise price will be reduced to the lowest exercise price of
the warrants issued in Qualified Financing. Pursuant to the one-time price
adjustment in connection to the Qualified Financing, the number of shares of
Common Stock for which this Warrant is exercisable, and the price at which such
shares may be purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 4. The Issuer shall
give the Holder notice of any event described below which requires an adjustment
pursuant to this Section 4 in accordance with Section 5.
5
(a) RECAPITALIZATION, REORGANIZATION, RECLASSIFICATION,
CONSOLIDATION, MERGER OR SALE.
(i) In case the Issuer after the Original Issue Date
shall do any of the following (each, a "TRIGGERING Event"): (a)
consolidate with or merge into any other Person and the Issuer shall
not be the continuing or surviving corporation of such consolidation or
merger, or (b) permit any other Person to consolidate with or merge
into the Issuer and the Issuer shall be the continuing or surviving
Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged for
Securities of any other Person or cash or any other property, or (c)
transfer all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, then, and in the case of each
such Triggering Event, proper provision shall be made so that, upon the
basis and the terms and in the manner provided in this Warrant, the
Holder of this Warrant shall be entitled upon the exercise hereof at
any time after the consummation of such Triggering Event, to the extent
this Warrant is not exercised prior to such Triggering Event, to
receive at the Warrant Price in effect at the time immediately prior to
the consummation of such Triggering Event in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such Triggering
Event, the Securities, cash and property to which such Holder would
have been entitled upon the consummation of such Triggering Event if
such Holder had exercised the rights represented by this Warrant
immediately prior thereto, subject to adjustments (subsequent to such
corporate action) as nearly equivalent as possible to the adjustments
provided for elsewhere in this Section 4.
(ii) Notwithstanding anything contained in this
Warrant to the contrary, the Issuer will not effect any Triggering
Event if, prior to the consummation thereof, each Person (other than
the Issuer) which may be required to deliver any Securities, cash or
property upon the exercise of this Warrant as provided herein shall
assume, by written instrument delivered to, and reasonably satisfactory
to, the Holder of this Warrant, (A) the obligations of the Issuer under
this Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall
not release the Issuer from, any continuing obligations of the Issuer
under this Warrant) and (B) the obligation to deliver to such Holder
such shares of Securities, cash or property as, in accordance with the
foregoing provisions of this subsection (a), such Holder shall be
entitled to receive, and such Person shall have similarly delivered to
such Holder an opinion of counsel for such Person, which counsel shall
be reasonably satisfactory to such Holder, stating that this Warrant
shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this
subsection (a)) shall be applicable to the Securities, cash or property
which such Person may be required to deliver upon any exercise of this
Warrant or the exercise of any rights pursuant hereto.
6
(b) STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any
time the Issuer shall:
(i) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend payable in, or
other distribution of, Additional Shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, or
(iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock,
then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.
(c) CERTAIN OTHER DISTRIBUTIONS. If at any time the Issuer
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(i) cash (other than a cash dividend payable out of
earnings or earned surplus legally available for the payment of
dividends under the laws of the jurisdiction of incorporation of the
Issuer),
(ii) any evidences of its indebtedness, any shares of
stock of any class or any other securities or property of any nature
whatsoever (other than cash, Common Stock Equivalents or Additional
Shares of Common Stock), or
(iii) any warrants or other rights to subscribe for
or purchase any evidences of its indebtedness, any shares of stock of
any class or any other securities or property of any nature whatsoever
(other than cash, Common Stock Equivalents or Additional Shares of
Common Stock),
then (1) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the amount
allocable to one share of Common Stock of any such cash so distributable and of
the fair value (as determined in good faith by the Board of Directors of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to the Holder) of any and all such evidences of
indebtedness, shares of stock, other securities or property or warrants or other
7
subscription or purchase rights so distributable, and (2) the Warrant Price then
in effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment. A reclassification of the Common Stock (other than a change in
par value, or from par value to no par value or from no par value to par value)
into shares of Common Stock and shares of any other class of stock shall be
deemed a distribution by the Issuer to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 4(c) and,
if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be, of
the outstanding shares of Common Stock within the meaning of Section 4(b).
(d) ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.
(i) n the event the Issuer shall at any time
following the Original Issue Date issue any Additional Shares of Common
Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share less than the
Warrant Price then in effect or without consideration, then the Warrant
Price upon each such issuance shall be adjusted to that price
determined by multiplying the Warrant Price then in effect by a
fraction:
(A) the numerator of which shall be equal to
the sum of (x) the number of shares of Outstanding Common
Stock immediately prior to the issuance of such Additional
Shares of Common Stock PLUS (y) the number of shares of Common
Stock (rounded to the nearest whole share) which the aggregate
consideration for the total number of such Additional Shares
of Common Stock so issued would purchase at a price per share
equal to the Warrant Price then in effect, and
(B) the denominator of which shall be equal
to the number of shares of Outstanding Common Stock
immediately after the issuance of such Additional Shares of
Common Stock.
(ii) No adjustment of the number of shares of Common
Stock for which this Warrant shall be exercisable shall be made under
paragraph (i) of Section 4(d) upon the issuance of any Additional
Shares of Common Stock which are issued pursuant to the exercise of any
Common Stock Equivalents, if any such adjustment shall previously have
been made upon the issuance of such Common Stock Equivalents or upon
the issuance of any warrant or other rights therefor pursuant to
Sections 4(e) or 4(f), or in connection with any Permitted Issuances.
(e) ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time the
Issuer shall take a record of the Holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Issuer is the surviving
corporation) issue or sell any warrants or options, whether or not immediately
8
exercisable, and the Warrant Consideration (hereafter defined) per share for
which Common Stock is issuable upon the exercise of such warrant or option shall
be less than the Warrant Price in effect immediately prior to the time of such
issue or sale, then the Warrant Price then in effect immediately prior to the
time of such issue or sale, shall be adjusted to that price (rounded to the
nearest cent) determined by multiplying the Warrant Price by a fraction: (1) the
numerator of which shall be equal to the sum of (A) the number of shares of
Common Stock outstanding immediately prior to the issuance or sale of such
warrants or options PLUS (B) the number of shares of Common Stock (rounded to
the nearest whole share) which the Warrant Consideration multiplied by the
number of shares of Common Stock issuable upon the exercise or conversion of all
such warrants or options, would purchase at a price per share equal to the
Warrant Price then in effect, and (2) the denominator of which shall be equal to
the number of shares of Common Stock that would be outstanding assuming the
exercise or conversion of all such warrants and options. No adjustments of the
Warrant Price then in effect shall be made upon the actual issue of such Common
Stock or of such Common Stock Equivalents upon exercise of such warrants or
other rights or upon the actual issue of such Common Stock upon such conversion
or exchange of such Common Stock Equivalents. No adjustments of the Warrant
Price shall be required under this Section 4(e) in connection with any Permitted
Issuances.
(f) ISSUANCE OF COMMON STOCK EQUIVALENTS. If at any time the
Issuer shall take a record of the Holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Issuer is the surviving
corporation) issue or sell, any Common Stock Equivalents, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
Common Stock Equivalent Consideration (hereafter defined) per share for which
Common Stock is issuable upon such conversion or exchange shall be less than the
Warrant Price in effect immediately prior to the time of such issue or sale,
then the Warrant Price then in effect immediately prior to the time of such
issue or sale, shall upon each such issuance or sale be adjusted to that price
(rounded to the nearest cent) determined by multiplying the Warrant Price by a
fraction: (1) the numerator of which shall be equal to the sum of (A) the number
of shares of Common Stock outstanding immediately prior to the issuance or sale
of such Common Stock Equivalents plus (B) the number of shares of Common Stock
(rounded to the nearest whole share) which the Common Stock Equivalent
Consideration multiplied by the number of shares of Common Stock issuable upon
the exercise or conversion of all such Common Stock Equivalents, would purchase
at a price per share equal to the Warrant Price then in effect, and (2) the
denominator of which shall be equal to the number of shares of Common Stock that
would be outstanding assuming the exercise or conversion of all such Common
Stock Equivalents. No further adjustment of the Warrant Price then in effect
shall be made under this Section 4(f) upon the issuance of any Common Stock
Equivalents which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to Section 4(e). No further adjustments of the Warrant Price then in
effect shall be made upon the actual issue of such Common Stock upon conversion
or exchange of such Common Stock Equivalents. No adjustments of the Warrant
Price shall be required under this Section 4(f) in connection with any Permitted
Issuances.
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(g) SUPERSEDING ADJUSTMENT. If, at any time after any
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Warrant Price then in effect shall have been made pursuant
to Section 4(e) or Section 4(f) as the result of any issuance of warrants, other
rights or Common Stock Equivalents, and (i) such warrants or other rights, or
the right of conversion or exchange in such other Common Stock Equivalents,
shall expire, and all or a portion of such warrants or other rights, or the
right of conversion or exchange with respect to all or a portion of such other
Common Stock Equivalents, as the case may be shall not have been exercised, or
(ii) the consideration per share for which shares of Common Stock are issuable
pursuant to such Common Stock Equivalents, shall be increased solely by virtue
of provisions therein contained for an automatic increase in such consideration
per share upon the occurrence of a specified date or event, then for each
outstanding Warrant such previous adjustment shall be rescinded and annulled and
the Additional Shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation. Upon the occurrence of an event set forth in this Section 4(g)
above, there shall be a recomputation made of the effect of such Common Stock
Equivalents on the basis of: (i) treating the number of Additional Shares of
Common Stock or other property, if any, theretofore actually issued or issuable
pursuant to the previous exercise of any such warrants or other rights or any
such right of conversion or exchange, as having been issued on the date or dates
of any such exercise and for the consideration actually received and receivable
therefor, and (ii) treating any such Common Stock Equivalents which then remain
outstanding as having been granted or issued immediately after the time of such
increase of the consideration per share for which shares of Common Stock or
other property are issuable under such Common Stock Equivalents; whereupon a new
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Warrant Price then in effect shall be made, which new
adjustment shall supersede the previous adjustment so rescinded and annulled.
(h) PURCHASE OF COMMON STOCK BY THE ISSUER. If the Issuer at
any time while this Warrant is outstanding shall, directly or indirectly through
a Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value, then
the Warrant Price upon each such purchase, redemption or acquisition shall be
adjusted to that price determined by multiplying such Warrant Price by a
fraction (i) the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such purchase, redemption or acquisition
minus the number of shares of Common Stock which the aggregate consideration for
the total number of such shares of Common Stock so purchased, redeemed or
acquired would purchase at the Per Share Market Value; and (ii) the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such purchase, redemption or acquisition. For the purposes of this
subsection (h), the date as of which the Per Share Market Price shall be
computed shall be the earlier of (x) the date on which the Issuer shall enter
into a firm contract for the purchase, redemption or acquisition of such Common
Stock, or (y) the date of actual purchase, redemption or acquisition of such
Common Stock. For the purposes of this subsection (h), a purchase, redemption or
acquisition of a Common Stock Equivalent shall be deemed to be a purchase of the
underlying Common Stock, and the computation herein required shall be made on
the basis of the full exercise, conversion or exchange of such Common Stock
Equivalent on the date as of which such computation is required hereby to be
made, whether or not such Common Stock Equivalent is actually exercisable,
convertible or exchangeable on such date.
10
(i) OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
SECTION. The following provisions shall be applicable to the making of
adjustments of the number of shares of Common Stock for which this Warrant is
exercisable and the Warrant Price then in effect provided for in this Section 4:
(i) COMPUTATION OF CONSIDERATION. To the extent that
any Additional Shares of Common Stock or any Common Stock Equivalents
(or any warrants or other rights therefor) shall be issued for cash
consideration, the consideration received by the Issuer therefor shall
be the amount of the cash received by the Issuer therefor, or, if such
Additional Shares of Common Stock or Common Stock Equivalents are
offered by the Issuer for subscription, the subscription price, or, if
such Additional Shares of Common Stock or Common Stock Equivalents are
sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price (in any such
case subtracting any amounts paid or receivable for accrued interest or
accrued dividends and without taking into account any compensation,
discounts or expenses paid or incurred by the Issuer for and in the
underwriting of, or otherwise in connection with, the issuance
thereof). To the extent that such issuance shall be for a consideration
other than cash, then, except as herein otherwise expressly provided,
the amount of such consideration shall be deemed to be the fair value
of such consideration at the time of such issuance as determined in
good faith by the Board of Directors of the Issuer. The consideration
for any Additional Shares of Common Stock issuable pursuant to any
warrants or other rights to subscribe for or purchase the same shall be
the consideration received by the Issuer for issuing such warrants or
other rights divided by the number of shares of Common Stock issuable
upon the exercise of such warrant or right plus the additional
consideration payable to the Issuer upon exercise of such warrant or
other right for one share of Common Stock (together the "WARRANT
CONSIDERATION"). The consideration for any Additional Shares of Common
Stock issuable pursuant to the terms of any Common Stock Equivalents
shall be the consideration received by the Issuer for issuing such
Common Stock Equivalent, divided by the number of shares of Common
Stock issuable upon the conversion or other exercise of such Common
Stock Equivalent, plus the additional consideration, if any, payable to
the Issuer upon the exercise of the right of conversion or exchange in
such Common Stock Equivalent for one share of Common Stock (together
the "Common Stock Equivalent Consideration"). In case of the issuance
at any time of any Additional Shares of Common Stock or Common Stock
Equivalents in payment or satisfaction of any dividends upon any class
of stock other than Common Stock, the Issuer shall be deemed to have
received for such Additional Shares of Common Stock or Common Stock
Equivalents a consideration equal to the amount of such dividend so
paid or satisfied.
(ii) WHEN ADJUSTMENTS TO BE MADE. The adjustments
required by this Section 4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that any
adjustment of the number of shares of Common Stock for which this
Warrant is exercisable that would otherwise be required may be
postponed (except in the case of a subdivision or combination of shares
of the Common Stock, as provided for in Section 4(b)) up to, but not
beyond the date of exercise if such adjustment either by itself or with
other adjustments not previously made adds or subtracts less than one
percent (1%) of the shares of Common Stock for which this Warrant is
exercisable immediately prior to the making of such adjustment. Any
11
adjustment representing a change of less than such minimum amount
(except as aforesaid) which is postponed shall be carried forward and
made as soon as such adjustment, together with other adjustments
required by this Section 4 and not previously made, would result in a
minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(iii) FRACTIONAL INTERESTS. In computing adjustments under
this Section 4, fractional interests in Common Stock shall be taken
into account to the nearest one one-hundredth (1/100th) of a share.
(iv) WHEN ADJUSTMENT NOT REQUIRED. If the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(j) FORM OF WARRANT AFTER ADJUSTMENTS. The form of this
Warrant need not be changed because of any adjustments in the Warrant Price or
the number and kind of Securities purchasable upon the exercise of this Warrant.
(k) ESCROW OF WARRANT STOCK. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any record
of the holders of Common Stock, but prior to the occurrence of the event for
which such record is taken, and the Holder exercises this Warrant, any shares of
Common Stock issuable upon exercise by reason of such adjustment shall be deemed
the last shares of Common Stock for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein) and such shares or
other property shall be held in escrow for the Holder by the Issuer to be issued
to the Holder upon and to the extent that the event actually takes place, upon
payment of the current Warrant Price. Notwithstanding any other provision to the
contrary herein, if the event for which such record was taken fails to occur or
is rescinded, then such escrowed shares shall be cancelled by the Issuer and
escrowed property returned.
5. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with respect to the matters set forth in such certificate may at
the option of the Holder of this Warrant be submitted to one of the national
accounting firms currently known as the "big five" selected by the Holder,
PROVIDED that the Issuer shall have ten (10) days after receipt of notice from
such Holder of its selection of such firm to object thereto, in which case such
Holder shall select another such firm and the Issuer shall have no such right of
12
objection. The firm selected by the Holder of this Warrant as provided in the
preceding sentence shall be instructed to deliver a written opinion as to such
matters to the Issuer and such Holder within thirty (30) days after submission
to it of such dispute. Such opinion shall be final and binding on the parties
hereto.
6. FRACTIONAL SHARES. No fractional shares of Warrant Stock will be
issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.
7. CALL. Notwithstanding anything herein to the contrary, the Issuer
may at any time following the Original Issue Date call up to fifty percent (50%)
of this Warrant, and commencing two (2) years following the Original Issue Date
may call up to one hundred percent (100%) of this Warrant then still outstanding
by providing the Holder of this Warrant written notice pursuant to Section 13
(the "CALL NOTICE"); PROVIDED, THAT, in connection with any call by the Issuer
under this Section 7, (A) the Per Share Market Value of the Common Stock has
been greater than $2.50 for a period of ten (10) consecutive Trading Days
immediately prior to the date of delivery of the Call Notice (a "CALL NOTICE
PERIOD"); (B) a registration statement under the Securities Act providing for
the resale of the Warrant Stock and the shares of Common Stock issued pursuant
to the Purchase Agreement (the "REGISTRATION STATEMENT") is then in effect and
has been effective, without lapse or suspension of any kind, for a period of
sixty (60) consecutive calendar days, (C) trading in the Common Stock shall not
have been suspended by the Securities and Exchange Commission or the OTC
Bulletin Board (or other exchange or market on which the Common Stock is
trading) and (D) the Issuer is in material compliance with the terms and
conditions of this Warrant and the other Transaction Documents (as defined in
the Purchase Agreement); PROVIDED, FURTHER, that the Registration Statement must
be effective from the date of delivery of the Call Notice until the date which
is the later of (i) the date the Holder exercises the Warrant pursuant to the
Call Notice and (ii) the 20th day after the Holder receives the Call Notice (the
"EARLY TERMINATION DATE"). The rights and privileges granted pursuant to this
Warrant with respect to the shares of Warrant Stock subject to the Call Notice
(the "CALLED WARRANT SHARES") shall expire on the Early Termination Date if this
Warrant is not exercised with respect to such Called Warrant Shares prior to
such Early Termination Date. In the event this Warrant is not exercised with
respect to the Called Warrant Shares, the Issuer shall remit to the Holder of
this Warrant (i) $.01 per Called Warrant Share and (ii) a new Warrant
representing the number of shares of Warrant Stock, if any, which shall not have
been subject to the Call Notice upon the Holder tendering to the Issuer the
applicable Warrant certificate.
8. CERTAIN EXERCISE RESTRICTIONS.
(a) Notwithstanding anything to the contrary set forth in this
Warrant, at no time may a Holder of this Warrant exercise this Warrant if the
number of shares of Common Stock to be issued pursuant to such exercise would
cause the number of shares of Common Stock owned by the Holder at such time to
exceed, when aggregated with all other shares of Common Stock owned by such
Holder at such time, the number of shares of Common Stock which would result in
such Holder beneficially owning (as determined in accordance with Section 13(d)
of the Exchange Act and the rules thereunder) in excess of 4.9% of all of the
Common Stock outstanding at such time; PROVIDED, HOWEVER, that upon the Holder
of this Warrant providing the Issuer with sixty-one (61) days notice (pursuant
13
to Section 13 hereof) (the "WAIVER NOTICE") that such Holder would like to waive
this Section 8(a) with regard to any or all shares of Common Stock issuable upon
exercise of this Warrant, this Section 8(a) will be of no force or effect with
regard to all or a portion of the Warrant referenced in the Waiver Notice;
PROVIDED, FURTHER, that this provision shall be of no further force or effect
(i) during the sixty-one (61) days immediately preceding the expiration of the
term of this Warrant or (ii) upon the Holder's receipt of a Call Notice.
(b) Notwithstanding anything to the contrary set forth in this
Warrant, at no time may a Holder of this Warrant exercise this Warrant if the
number of shares of Common Stock to be issued pursuant to such exercise would
cause the number of shares of Common Stock owned by the Holder at such time to
exceed, when aggregated with all other shares of Common Stock owned by such
Holder at such time, the number of shares of Common Stock which would result in
such Holder beneficially owning (as determined in accordance with Section 13(d)
of the Exchange Act and the rules thereunder) in excess of 9.9% of all of the
Common Stock outstanding at such time; PROVIDED, HOWEVER, that upon a holder of
this Warrant providing the Issuer with a Waiver Notice that such holder would
like to waive this Section 8(b) with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 8(b) shall be of no force
or effect with regard to those shares of Warrant Stock referenced in the Waiver
Notice; PROVIDED, FURTHER, that this provision shall be of no further force or
effect (i) during the sixty-one (61) days immediately preceding the expiration
of the term of this Warrant or (ii) upon the Holder's receipt of a Call Notice.
9. DEFINITIONS. For the purposes of this Warrant, the following terms
have the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock (including Common stock Equivalents) issued by the Issuer after the
Original Issue Date, and all shares of Other Common, if any, issued by the
Issuer after the Original Issue Date, except for Permitted Issuances.
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in (however
designated) corporate stock, including, without limitation, shares of preferred
or preference stock, (ii) all partnership interests (whether general or limited)
in any Person which is a partnership, (iii) all membership interests or limited
liability company interests in any limited liability company, and (iv) all
equity or ownership interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date, and as
hereafter from time to time amended, modified, supplemented or restated in
accordance with the terms hereof and thereof and pursuant to applicable law.
14
"Common Stock" means the Common Stock, par value $.001 per
share, of the Issuer and any other Capital Stock into which such stock may
hereafter be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any Additional
Shares of Common Stock or any Convertible Security.
"Common Stock Equivalent Consideration" has the meaning
specified in Section 4 (i) (i) hereof.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any time
convertible into or exchangeable for Additional Shares of Common Stock. The term
"Convertible Security" means one of the Convertible Securities.
"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority, commission,
board, agency or instrumentality, whether federal, state or local, and whether
domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (which may be the firm that regularly
examines the financial statements of the Issuer) that is regularly engaged in
the business of appraising the Capital Stock or assets of corporations or other
entities as going concerns, and which is not affiliated with either the Issuer
or the Holder of any Warrant.
"Issuer" means Raptor Networks Technology, Inc., a Colorado
corporation, and its successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable under the
Warrants at the time outstanding.
"Original Issue Date" means _______________, 2005.
"OTC Bulletin Board" means the over-the-counter electronic
bulletin board.
"Other Common" means any other Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this Warrant
(other than Common Stock) and which shall have the right to participate in the
distribution of earnings and assets of the Issuer without limitation as to
amount.
"Outstanding Common Stock" means, at any given time, the
aggregate amount of outstanding shares of Common Stock, assuming full exercise,
conversion or exchange (as applicable) of all options, warrants and other
Securities which are convertible into or exercisable or exchangeable for, and
any right to subscribe for, shares of Common Stock that are outstanding at such
time.
15
"Permitted Issuances" means (i) the issuance of the Warrant
Stock; (ii) issuances in connection with strategic license agreements or other
partnering arrangements so long as such issuances are not for the purpose of
raising capital; (iii) issuances (other than for cash) in connection with a
merger, acquisition or consolidation of the Issuer; (iv) issuances in connection
with a bona fide firm underwritten public offering by the Issuer of its shares
of Common Stock; (v) issuances to the Issuer's officers, directors and employees
for the issuance of (A) up to 1,800,000 shares of Common Stock without payment
therefor, provided that the persons or other entities to whom such shares are
issued agree in writing not to sell, hypothecate, transfer or otherwise dispose
of such shares prior to January 2007, (B) grants of options or warrants to
purchase up to an aggregate of 1,000,000 shares of Common Stock in addition to
options that may be granted pursuant to the Issuer's stock option plan as it now
exists whether the grants of such options or warrants are made under the
Issuer's Employee Stock Option Plan as it may be hereafter amended, an employee
or director stock option plan hereafter adopted or otherwise and (C) common
stock or warrants to third party providers of goods and services for goods or
services provided or in satisfaction of outstanding liabilities, as approved by
the Company's Board of Directors; (vi) securities issued upon the exercise,
conversion or exchange of any Common Stock Equivalents outstanding on the
Original Issue Date and shares of Common Stock hereafter issued upon the
exercise of options hereafter granted pursuant to the Company's stock option
plan as it now exists; and (vii) any warrants, shares of Common Stock or other
securities issued to a placement agent and its designees for the transactions
contemplated by the Purchase Agreement or in any other sales of the Company's
securities and the shares of Common Stock issued upon exercise of any such
warrants or conversion of any such other securities.
"Person" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated organization,
joint venture, Governmental Authority or other entity of whatever nature.
"Per Share Market Value" means on any particular date (a) the
closing bid price for a share of Common Stock in the over the counter market, as
reported by the OTC Bulletin Board or in the National Quotation Bureau
Incorporated or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (b) if the Common
Stock is not then reported by the OTC Bulletin Board or the National Quotation
Bureau Incorporated (or similar organization or agency succeeding to its
functions of reporting prices), then the average of the "Pink Sheet" quotes for
the relevant conversion period, as determined in good faith by the holder, or
(c) if the Common Stock is not then publicly traded the fair market value of a
share of Common Stock as determined by the Board in good faith; PROVIDED,
HOWEVER, that the Majority Holders, after receipt of the determination by the
Board, shall have the right to select, jointly with the Issuer, an Independent
Appraiser, in which case, the fair market value shall be the determination by
such Independent Appraiser; and PROVIDED, FURTHER that all determinations of the
Per Share Market Value shall be appropriately adjusted for any stock dividends,
stock splits or other similar transactions during such period. The determination
of fair market value shall be based upon the fair market value of the Issuer
determined on a going concern basis as between a willing buyer and a willing
seller and taking into account all relevant factors determinative of value, and
shall be final and binding on all parties. In determining the fair market value
of any shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by federal
or state securities laws, or to the existence or absence of, or any limitations
on, voting rights.
16
"Purchase Agreement" means the Bridge Loan Agreement dated as
of _______________, 2005 among the Issuer and the lenders a party thereto.
"Qualified Financing" means any equity-based financing
resulting in gross proceeds (excluding the exchange of bridge debt) of at least
$4,000,000 to the Company.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible into or
exchangeable for Securities or a Security, and any option, warrant or other
right to purchase or acquire any Security. "Security" means one of the
Securities.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or indirectly by
the Issuer or by one or more of its Subsidiaries, or by the Issuer and one or
more of its Subsidiaries.
"Term" has the meaning specified in Section 1 hereof.
"Trading Day" means (a) a day on which the Common Stock is
traded on the OTC Bulletin Board, or (b) if the Common Stock is not traded on
the OTC Bulletin Board, a day on which the Common Stock is quoted in the over
the counter market as reported by the National Quotation Bureau Incorporated (or
any similar organization or agency succeeding its functions of reporting
prices); PROVIDED, HOWEVER, that in the event that the Common Stock is not
listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean
any day except Saturday, Sunday and any day which shall be a legal holiday or a
day on which banking institutions in the State of New York are authorized or
required by law or other government action to close.
"Voting Stock" means, as applied to the Capital Stock of any
corporation, Capital Stock of any class or classes (however designated) having
ordinary voting power for the election of a majority of the members of the Board
of Directors (or other governing body) of such corporation, other than Capital
Stock having such power only by reason of the happening of a contingency.
"Warrants" means the Warrants issued and sold pursuant to the
Bridge Loan Agreement, including, without limitation, this Warrant, and any
other warrants of like tenor issued in substitution or exchange for any thereof
pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or of any of
such other Warrants.
"Warrant Consideration" has the meaning specified in Section
4(i)(i) hereof.
17
"Warrant Price" initially means U.S. $60. In the event that
the warrants offered in the Qualified Financing is at an exercise price per
share that is less than $.60, there will be a one-time adjustment to the Warrant
Price, where the exercise price will be reduced to the lowest exercise price of
the warrants issued in Qualified Financing. Pursuant to the one-time price
adjustment in connection to the Qualified Financing, the exercise price may be
adjusted from time to time as shall result from the adjustments specified in
this Warrant, including Section 4 hereto.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon exercise of
this Warrant, after giving effect to all prior adjustments and increases to such
number made or required to be made under the terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants or otherwise issuable pursuant to any Warrant or
Warrants. 10. OTHER NOTICES. In case at any time:
(A) the Issuer shall make any distributions to
the holders of Common Stock; or
(B) the Issuer shall authorize the granting to
all holders of its Common Stock of rights to
subscribe for or purchase any shares of
Capital Stock of any class or of any Common
Stock Equivalents or other rights; or
(C) there shall be any reclassification of the
Capital Stock of the Issuer; or
(D) there shall be any capital reorganization by
the Issuer; or
(E) there shall be any (i) consolidation or
merger involving the Issuer or (ii) sale,
transfer or other disposition of all or
substantially all of the Issuer's property,
assets or business (except a merger or other
reorganization in which the Issuer shall be
the surviving corporation and its shares of
Capital Stock shall continue to be
outstanding and unchanged and except a
consolidation, merger, sale, transfer or
other disposition involving a wholly-owned
Subsidiary); or
(F) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of
the Issuer or any partial liquidation of the
Issuer or distribution to holders of Common
Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
18
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the action in question and not less than twenty (20) days
prior to the record date or the date on which the Issuer's transfer books are
closed in respect thereto. The Holder shall have the right to send two (2)
representatives selected by it to each meeting, who shall be permitted to
attend, but not vote at, such meeting and any adjournments thereof. This Warrant
entitles the Holder to receive copies of all financial and other information
distributed or required to be distributed to the holders of the Common Stock.
11. AMENDMENT AND WAIVER. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; PROVIDED, HOWEVER, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 11 without the consent of the Holder of this Warrant.
12. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. This Warrant shall
not be interpreted or construed with any presumption against the party causing
this Warrant to be drafted.
13. NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date of mailing, if sent by nationally recognized overnight courier service or
(iv) actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be with respect to the Holder of
this Warrant or of Warrant Stock issued pursuant hereto, addressed to such
Holder at its last known address or facsimile number appearing on the books of
the Issuer maintained for such purposes, or with respect to the Issuer,
addressed to:
Raptor Networks Technology, Inc.
0000 X. Xxxx Xxxx
Xxxxx Xxx, XX 00000
Attention: Chief Financial Officer
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
19
with a copy to:
Xxxxx & Xxxxxx, LLP
000 Xxxxx Xxxx., 00xx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx, Esq.
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Copies of Notices to the Warrant Holders shall be sent to the address provided
to the Company upon issuance of the Warrant. Any party hereto may from time to
time change its address for notices by giving at least ten (10) days written
notice of such changed address to the other party hereto.
14. WARRANT AGENT. The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.
15. REMEDIES. The Issuer stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
are not and will not be adequate and that, to the fullest extent permitted by
law, such terms may be specifically enforced by a decree for the specific
performance of any agreement contained herein or by an injunction against a
violation of any of the terms hereof or otherwise.
16. SUCCESSORS AND ASSIGNS. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.
17. MODIFICATION AND SEVERABILITY. If, in any action before any court
or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
18. HEADINGS. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
20
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day
and year first above written.
RAPTOR NETWORKS TECHNOLOGY, INC.
By:_______________________________
Name:
Title:
21
EXERCISE FORM
RAPTOR NETWORKS TECHNOLOGY, INC.
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of Raptor
Networks Technology, Inc. covered by the within Warrant.
Dated: _________________ Signature ___________________________
Address ___________________________
___________________________
Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise determined in accordance with Section 16
of the Securities Exchange Act of 1934, as amended: _________________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: _________________ Signature ___________________________
Address ___________________________
___________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: _________________ Signature ___________________________
Address ___________________________
___________________________
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FOR USE BY THE ISSUER ONLY:
This Warrant No. W-_____ canceled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
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