THIS SECURITY AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGIS
EXHIBIT 4.03
THIS SECURITY AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR THE
SHARES ISSUABLE HEREUNDER MAY BE SOLD OR OTHERWISE TRANSFERRED
WITHOUT REGISTRATION UNDER THE ACT AND SUCH LAWS, OR PURSUANT TO
AN AVAILABLE EXEMPTION THEREFROM.
LEXON TECHNOLOGIES, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, XXXXXXX X XxXXXXXXX (the "Holder") is
entitled to subscribe for and purchase up to Twelve Thousand Five Hundred (12,500) shares
(subject to adjustment from time to time pursuant to the provisions of Section 5 hereof) of fully
paid and nonassessable Common Stock (as defined below) of LEXON TECHNOLOGIES, INC.,
a Delaware corporation (the "Company"), at the Warrant Price (as defined in Section 2 hereof),
subject to the provisions and upon the terms and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's presently
authorized common stock, $.001 par value, and any stock into or for which such Common Stock
may hereafter be converted or exchanged.
1. Term of Warrant. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time during the period beginning on the date hereof and ending on the
fifth (5th) anniversary of the date hereof.
2. Warrant Price. The initial exercise price of this Warrant is TWO AND 50/100
DOLLARS ($2.50) per share, subject to adjustment from time to time pursuant to the provisions
of Section 5 hereof (the "Warrant Price").
3. Method of Exercise; Payment; Issuance of New Warrant; Exercise. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be exercised by the Holder
hereof, in whole or in part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as Exhibit A duly executed) at the principal office of the Company and by the
payment to the Company of an amount equal to the then applicable Warrant Price per share
multiplied by the number of shares then being purchased either (i) by cash, cashier's check or
wire transfer, (ii) by cancellation by the Holder of indebtedness of the Company to the Holder,
(iii) through the written election of the Holder to use the In-the-money Value of the Warrant to
effectuate a cashless exercise of the Warrant, or (iv) by a combination of (i), (ii) and/or (iii). For
purposes of clause (iii) above, the "In-the-money Value of the Warrant" is calculated by
multiplying the number of shares as to which the Warrant is being exercised by an amount equal
to (A) the Market Value for the Common Stock on the trading day immediately prior to the date
of exercise, minus (B) the then applicable Warrant Price per share. The number of shares of
Common Stock issuable to the Holder or the designee of the Holder upon a cashless exercise
pursuant to such clause (iii) shall equal the In-the-money Value divided by the Market Value of
the Common Stock on the trading day immediately prior to the date of exercise. For purposes
hereof, the "Market Value" of the Common Stock shall be the last reported trading price of the
Common Stock if traded on a recognized securities exchange or over-the-counter market or, if
not traded on such an exchange or market, the fair market value per share of Common Stock as
determined by the Board of Directors of the Company in its good faith judgment. The Company
agrees that the shares so purchased shall be deemed to be issued to the Holder hereof or the
designee of the Holder hereof as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been surrendered and payment made for such shares as
aforesaid. In the event of any exercise of this Warrant, certificates for the shares of stock so
purchased shall be delivered to the Holder hereof or the designee of the Holder hereof within 15-days thereafter and, unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder hereof within such 15-day period. The
Holder may provide notice to the Company by facsimile of any exercise of the Warrant pursuant
to clause (iii) above and such exercise shall be effective on the date such facsimile is received;
provided, that such facsimile must be received by the Company not later than 3:00 p.m. eastern
time in order for such exercise to be effective on such date; and provided, further, that the Holder
shall deliver the original Warrant and notice of exercise to the Company within two (2) business
days of such facsimile notice.
4. Stock Fully Paid; Reservation of Shares. All Common Stock that may be issued
upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue thereof. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized but unissued
Common Stock, the full number of shares of Common Stock then deliverable upon exercise of
this Warrant.
5. Adjustment to Warrant Price. The Warrant Price shall be subject to adjustment
from time to time as follows:
(a) For purposes of this Section 5, the following definitions shall
apply:
(i) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.
(ii) "Original Issue Date" shall mean the date hereof.
(iii) "Convertible Securities" shall mean securities
convertible into or exchangeable for Common Stock.
(iv) "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued (or, pursuant to Section 5(c),
deemed to be issued) by the Company after the Original Issue Date
other than shares of Common Stock issued (or, pursuant to Section
5(c), deemed to be issued):
(1) to officers, directors and employees of, and
consultants to the Company to be designated and approved by the
Board of Directors pursuant to any stock option or incentive plan
(provided that the number of shares issuable under any such plan
from time to time shall not exceed ten percent (10%) of the number
of issued and outstanding shares of Common Stock);
(2) pursuant to clause (f), (g) or (h) of this
Section 5; or
(3) upon the exercise of Options issued prior to
the Original Issue Date; or
(4) by way of dividend or other distributions on
securities referred to in clauses (1), (2) and (3) hereof.
(b) No adjustment in the Warrant Price shall be made in respect of the
issuance of Additional Shares of Common Stock unless the consideration per
share for an Additional Share of Common Stock issued or deemed to be issued by
the Company is less than the Warrant Price in effect on the date of, and
immediately prior to, such issuance.
(c) Additional Shares of Common Stock shall be deemed to have been
issued under the following conditions:
(i) Except as otherwise provided in Sections
5(a)(iv)(1)-(4) and 5(b), in the event the Company at any time or
from time to time after the Original Issue Date shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of any holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of
such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time such Option or
Convertible Security, as the case may be, is issued or, in case such
a record date shall have been fixed, as of the close of business on
such record date, provided that in any such case in which
additional shares of Common Stock are deemed to be issued:
(1) no further adjustment in the Warrant Price or
the number of shares issuable upon exercise of this Warrant shall
be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any
increase or decrease in the consideration payable to the Company,
or increase or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the
Warrant Price and the number of shares issuable upon exercise of
this Warrant as computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible
Securities;
(3) upon the expiration of any such Options or
any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Warrant Price
and the number of shares issuable upon exercise of this Warrant as
computed upon the original issue thereof (or upon the occurrence
of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be
recomputed as if:
(A) in the case of Convertible Securities
or Options for Common Stock, the only additional shares of
Common Stock issued were shares of Common Stock, if any,
actually issued upon the exercise of such Options or the conversion
or exchange of such Convertible Securities, and the consideration
received therefor was the consideration actually received by the
Company for the issue of all such Options, whether or not
exercised, plus the consideration actually received by the Company
upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Company
upon such conversion or exchange, and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time of
issue of such Options and the consideration received by the
Company for the Additional Shares of Common Stock deemed to
have been then issued was the consideration actually received by
the Company for the issue of all such Options, whether or not
exercised, plus the consideration received by the Company upon
the issue of the Convertible Securities with respect to which such
Options were actually exercised;
(4) no readjustment pursuant to clause (2) or (3)
above shall have the effect of increasing the Warrant Price to a
price that is greater than (i) the Warrant Price on the original
adjustment date, or (ii) the Warrant Price that would have resulted
from any issuance of Additional Shares of Common Stock between
the original adjustment date and such readjustment date; and
(5) in the case of any Options which expire by
their terms not more than 30 days after the date of issue thereof, no
adjustment of the Warrant Price or the number of shares issuable
upon exercise of this Warrant shall be made until the expiration or
exercise of all such Options.
(d) In the event the Company shall, at any time on or prior to the third
(3rd) anniversary of the date of this Warrant, issue Additional Shares of Common
Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Section 5(c)) without consideration or for a consideration per share
less than an amount equal to the Warrant Price in effect on the date of, and
immediately prior to such issue, except in the case of any issuance of Additional
Shares of Common Stock subject to clause (f), (g) or (h) hereof, then and in such
event, the Warrant Price shall be decreased, concurrently with such issue, to the
amount of the consideration per share received by the Company for such
Additional Shares of Common Stock.
(e) For purposes of this Section 5, the consideration received by the
Company for the issue of any Additional Shares of Common Stock shall be
computed as follows:
(i) Such consideration shall:
(1) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Company prior to
amounts paid or payable for accrued interest or accrued dividends
and prior to any commissions or expenses paid by the Company;
(2) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and
(3) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other
assets of the Company for consideration which covers both, be the
proportion of such consideration so received, computed as
provided in clauses (1) and (2) above, as determined in good faith
by the Board of Directors.
(ii) The consideration per share received by the
Company for Additional Shares of Common Stock deemed to have
been issued pursuant to Section 5(c)(i), relating to Options and
Convertible Securities, shall be determined by dividing:
(1) the total amount, if any, received or
receivable by the Company as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the
Company upon the exercise of such Option or the conversion or
exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities by
(2) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
(f) In the event of any reorganization, merger, consolidation,
reclassification, recapitalization, combination or exchange involving the Common
Stock, or if the outstanding shares of Common Stock shall be subdivided by stock
split, stock dividends or otherwise, into a greater or lesser number of shares of
Common Stock, the Warrant Price then in effect and the number of shares of
Common Stock issuable upon exercise of this Warrant shall, concurrently with the
effectiveness of such event, be appropriately adjusted to reflect such event.
(g) In the event the Company at any time or from time to time makes
or fixes a record date for the determination of holders of Common Stock entitled
to receive any distribution (excluding any repurchases of securities by the
Company not made on a pro-rata basis from all holders of any class of the
Company's securities) payable in property or in securities of the Company other
than shares of Common Stock, and other than as otherwise adjusted in this
Section 5, then and in each such event the Holder of this Warrant shall receive at
the time of such distribution, the amount of property or the number of securities of
the Company that he would have received had his Warrant been converted into
Common Stock on the date of such event.
(h) If the Common Stock issuable upon exercise of the Warrant shall
be changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination of shares provided for above), the right
to acquire each share of Common Stock issuable on exercise of the Warrant shall
thereafter be converted into the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock deliverable
upon such conversion shall have been entitled upon such reorganization or
reclassification. In any such event, effective provision shall be made, in the
articles of incorporation of the resulting or surviving corporation or otherwise, so
that the provisions set forth herein for the protection of the exercise rights of the
Warrant shall thereafter be applicable to any such other shares of stock, other
securities, cash or property deliverable upon exercise of the Warrant or other
convertible stock or securities received by the holders in place thereof, and any
such resulting or surviving corporation shall expressly assume the obligation to
deliver, upon the exercise of the Warrant, such shares, other securities, cash or
property or other convertible stock or securities received by the Holder in place
thereof, shall be entitled to receive pursuant to the provisions hereof, and to make
provision for the protection of the Warrant exercise rights as above provided.
(i) The Company will not, by amendment of this Warrant or 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 to be observed or performance of any of the terms to be observed or
performed hereunder by the Company but will at all times in good faith assist in
the carrying out of all the provisions of this Section 5 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder of the Warrant against impairment.
(j) No adjustment in the number of shares of Common Stock issuable
upon exercise of the Warrant shall be required unless such adjustment would
require an increase or decrease of at least 1/100th of a share; provided, however,
that any adjustment which by reason hereof is not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
(k) Notwithstanding any other provision of this Section 5, other than
adjustments made pursuant to Section 5(f) or 5(h), no adjustment made pursuant to this
Section 5 shall result in an increase in the Warrant Price.
6. Notice of Adjustments. Whenever any adjustment is required to be made as
provided in Section 5, the Company shall promptly notify the Holder, describing in reasonable
detail the adjustment and method of calculation used.
7. Fractional Shares. In the sole discretion of the Company, instead of any fraction
of a share which would otherwise be issuable upon exercise of the Warrant, the Company shall
pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the
market price per share of Common Stock (as reasonably determined by the Board of Directors of
the Company), at the close of business on the date of exercise.
8. Compliance with the Act. The Holder of this Warrant, by acceptance hereof,
agrees that this Warrant and the shares of Common Stock to be issued upon exercise hereof are
being acquired for investment and that it will not offer, sell or otherwise dispose of this Warrant
or any shares of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Act or any state securities laws.
9. No Transfer of Warrant. This Warrant and the rights, interests and benefits
hereof, may not be sold, transferred, pledged, assigned, conveyed or otherwise disposed of by the
Holder, except by will or the laws of descent and distribution or with the consent of the
Company, which consent shall not be unreasonably withheld. Any purported sale, transfer,
pledge, assignment, conveyance or other attempt to dispose of this Warrant, or the rights,
interests or benefits hereof, other than as provided above, is null and void.
10. Notice to Holder. This Warrant is issued pursuant to the Securities Purchase
Agreement dated as of even date herewith between the Company and the purchaser named
therein. The Warrant is referred to in said Securities Purchase Agreement, by the terms of which
agreement the Holder hereof, by his acceptance hereof, agrees to be bound, in each case to the
extent provided in said agreement.
11. Registration Rights.
(a) Piggyback Registration Rights. If at any time prior to this Warrant's
expiration date the Company shall decide to file a registration statement under the Securities Act
of 1933 covering shares of its Common Stock (other than a registration statement on Form S-4,
Form S-14 or a comparable form), 60 days prior thereto the Company shall give written notice to
the Holder of its intention to file such registration statement. Within 30 days of such notice, the
Holder shall notify the Company in writing of the number of shares of Common Stock owned as
a consequence of exercise of this Warrant that it wishes included in any such registration
statement. Thereafter, the Company shall include the Holders' shares in the shares covered by
the registration statement unless the managing underwriter of any such offering shall certify, in
writing, that, in its judgment, the inclusion of the Holders' shares would have a material adverse
effect on the offering and jeopardize the Company's ability to raise capital in the offering;
provided, that if shares held by any other holders of Common Stock (excluding shares offered by
or for the account of the Company) are included in such offering, then the Holder's shares shall
be included on a pro rata basis with the shares of all such other holders of Common Stock. If
shares of Common Stock owned as a consequence of the exercise of this Warrant are included in
any such offering, the Holder shall not be responsible for any expenses of the offering other than
any underwriting discount or commission attributable to the shares of Common Stock offered by
it.
(b) Opinions and Other Documents. If the Holder participates in any offering
as described in this Section 11, it will provide the Company with such opinions of counsel and
other documents covering such legal and other matters as the Company reasonably may request.
(c) Indemnification of Holder. In the event of any registration with respect to
any shares of Common Stock issued pursuant to exercise of this Warrant, the Company will
indemnify and hold harmless the Holder whose shares are being registered and each person, if
any, who controls such Holder against any losses, claims, damages or liabilities to which the
holder or such controlling person may be subject under the Securities Act of 1933 insofar as such
losses, claims, damages or liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any such registration statement or arise
out of or are based upon the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but the Company shall not be liable for any loss, claim,
damage or liability based on or arising out of written information furnished by such Holder
specifically for use in the registration statement.
(d) Indemnification of Company. Any Holder requesting that shares of
Common Stock acquired upon exercise of Warrants be registered shall indemnify and hold
harmless the Company, each of its directors, each of its officers, and each person, if any, who
controls the Company, against any losses, claims, damages or liabilities to which the Company
or any such director, officer or controlling person may be subject under the Securities Act of
1933 insofar as such losses, claims, damages or liabilities arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in the registration statement or
arise out of or are based upon the omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in the registration statement in
reliance upon written information furnished by such Holder specifically for use in the preparation
of such registration statement.
12. Miscellaneous.
(a) No Rights as Shareholder. No Holder of this Warrant shall be entitled to
vote or receive dividends or be deemed the holder of Common Stock or any other securities of
the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of
stock, change of stock to par value, consolidation, merger, conveyance or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein.
(b) Replacement. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft
or destruction, on delivery of an indemnity agreement, or bond reasonably satisfactory in form
and amount to the Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company, at the Holder's expense, will execute and deliver, in lieu of this Warrant,
a new Warrant of like tenor.
(c) Notice. Any notice given to either party under this Warrant shall be in
writing, and any notice hereunder shall be deemed to have been given when delivered or
telecopied or, if mailed, when mailed, if sent registered or certified, addressed to the Company at
its principal executive offices and to the Holder at its address set forth in the Company's books
and records or at such other address as the Holder may have provided to the Company in writing.
(d) Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Arizona without regard to conflicts of law principles.
IN WITNESS WHEREOF, this Warrant is executed as of the 10th day of August, 1999.
LEXON TECHNOLOGIES, INC., a
Delaware corporation
By:
Title:
EXHIBIT A
NOTICE OF EXERCISE
TO: LEXON TECHNOLOGIES, INC.
1. The undersigned hereby elects to purchase ____________ shares of Common
Stock of LEXON TECHNOLOGIES, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full in accordance with the
provisions of the following section of the attached Warrant:
___ Section 3(i)
___ Section 3(ii)
___ Section 3(iii) [The number of shares of Common Stock issuable is
_____________ shares based on a Warrant Price of
$___ per share and the Market Value for the
Common Stock on ________, 19__ of $_____ per
share]
____ Section 3(iv) [Please provide details by supplemental letter]
2. Please issue a certificate or certificates representing said shares of Common Stock
in the name of the undersigned or in such other name as is specified below:
(Name)
(Address)
3. The undersigned represents that the aforesaid shares of Common Stock are being
acquired for the account of the undersigned for investment and not with a view to, or for resale in
connection with, the distribution thereof and that the undersigned will not offer, sell or otherwise
dispose of any such shares except under circumstances that will not result in a violation of the
Securities Act of 1933, as amended, or any state securities law.
Signature
THIS SECURITY AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR THE
SHARES ISSUABLE HEREUNDER MAY BE SOLD OR OTHERWISE TRANSFERRED
WITHOUT REGISTRATION UNDER THE ACT AND SUCH LAWS, OR PURSUANT TO
AN AVAILABLE EXEMPTION THEREFROM.
LEXON TECHNOLOGIES, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, XXXX XXXXXX (the "Holder") is entitled to
subscribe for and purchase up to Twelve Thousand Five Hundred (12,500) shares (subject to
adjustment from time to time pursuant to the provisions of Section 5 hereof) of fully paid and
nonassessable Common Stock (as defined below) of LEXON TECHNOLOGIES, INC., a
Delaware corporation (the "Company"), at the Warrant Price (as defined in Section 2 hereof),
subject to the provisions and upon the terms and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's presently
authorized common stock, $.001 par value, and any stock into or for which such Common Stock
may hereafter be converted or exchanged.
1. Term of Warrant. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time during the period beginning on the date hereof and ending on the
fifth (5th) anniversary of the date hereof.
2. Warrant Price. The initial exercise price of this Warrant is TWO AND 50/100
DOLLARS ($2.50) per share, subject to adjustment from time to time pursuant to the provisions
of Section 5 hereof (the "Warrant Price").
3. Method of Exercise; Payment; Issuance of New Warrant; Exercise. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be exercised by the Holder
hereof, in whole or in part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as Exhibit A duly executed) at the principal office of the Company and by the
payment to the Company of an amount equal to the then applicable Warrant Price per share
multiplied by the number of shares then being purchased either (i) by cash, cashier's check or
wire transfer, (ii) by cancellation by the Holder of indebtedness of the Company to the Holder,
(iii) through the written election of the Holder to use the In-the-money Value of the Warrant to
effectuate a cashless exercise of the Warrant, or (iv) by a combination of (i), (ii) and/or (iii). For
purposes of clause (iii) above, the "In-the-money Value of the Warrant" is calculated by
multiplying the number of shares as to which the Warrant is being exercised by an amount equal
to (A) the Market Value for the Common Stock on the trading day immediately prior to the date
of exercise, minus (B) the then applicable Warrant Price per share. The number of shares of
Common Stock issuable to the Holder or the designee of the Holder upon a cashless exercise
pursuant to such clause (iii) shall equal the In-the-money Value divided by the Market Value of
the Common Stock on the trading day immediately prior to the date of exercise. For purposes
hereof, the "Market Value" of the Common Stock shall be the last reported trading price of the
Common Stock if traded on a recognized securities exchange or over-the-counter market or, if
not traded on such an exchange or market, the fair market value per share of Common Stock as
determined by the Board of Directors of the Company in its good faith judgment. The Company
agrees that the shares so purchased shall be deemed to be issued to the Holder hereof or the
designee of the Holder hereof as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been surrendered and payment made for such shares as
aforesaid. In the event of any exercise of this Warrant, certificates for the shares of stock so
purchased shall be delivered to the Holder hereof or the designee of the Holder hereof within 15-days thereafter and, unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder hereof within such 15-day period. The
Holder may provide notice to the Company by facsimile of any exercise of the Warrant pursuant
to clause (iii) above and such exercise shall be effective on the date such facsimile is received;
provided, that such facsimile must be received by the Company not later than 3:00 p.m. eastern
time in order for such exercise to be effective on such date; and provided, further, that the Holder
shall deliver the original Warrant and notice of exercise to the Company within two (2) business
days of such facsimile notice.
4. Stock Fully Paid; Reservation of Shares. All Common Stock that may be issued
upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue thereof. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized but unissued
Common Stock, the full number of shares of Common Stock then deliverable upon exercise of
this Warrant.
5. Adjustment to Warrant Price. The Warrant Price shall be subject to adjustment
from time to time as follows:
(a) For purposes of this Section 5, the following definitions shall
apply:
(i) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.
(ii) "Original Issue Date" shall mean the date hereof.
(iii) "Convertible Securities" shall mean securities
convertible into or exchangeable for Common Stock.
(iv) "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued (or, pursuant to Section 5(c),
deemed to be issued) by the Company after the Original Issue Date
other than shares of Common Stock issued (or, pursuant to Section
5(c), deemed to be issued):
(1) to officers, directors and employees of, and
consultants to the Company to be designated and approved by the
Board of Directors pursuant to any stock option or incentive plan
(provided that the number of shares issuable under any such plan
from time to time shall not exceed ten percent (10%) of the number
of issued and outstanding shares of Common Stock);
(2) pursuant to clause (f), (g) or (h) of this
Section 5; or
(3) upon the exercise of Options issued prior to
the Original Issue Date; or
(4) by way of dividend or other distributions on
securities referred to in clauses (1), (2) and (3) hereof.
(b) No adjustment in the Warrant Price shall be made in respect of the
issuance of Additional Shares of Common Stock unless the consideration per
share for an Additional Share of Common Stock issued or deemed to be issued by
the Company is less than the Warrant Price in effect on the date of, and
immediately prior to, such issuance.
(c) Additional Shares of Common Stock shall be deemed to have been
issued under the following conditions:
(i) Except as otherwise provided in Sections
5(a)(iv)(1)-(4) and 5(b), in the event the Company at any time or
from time to time after the Original Issue Date shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of any holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of
such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time such Option or
Convertible Security, as the case may be, is issued or, in case such
a record date shall have been fixed, as of the close of business on
such record date, provided that in any such case in which
additional shares of Common Stock are deemed to be issued:
(1) no further adjustment in the Warrant Price or
the number of shares issuable upon exercise of this Warrant shall
be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any
increase or decrease in the consideration payable to the Company,
or increase or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the
Warrant Price and the number of shares issuable upon exercise of
this Warrant as computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible
Securities;
(3) upon the expiration of any such Options or
any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Warrant Price
and the number of shares issuable upon exercise of this Warrant as
computed upon the original issue thereof (or upon the occurrence
of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be
recomputed as if:
(A) in the case of Convertible Securities
or Options for Common Stock, the only additional shares of
Common Stock issued were shares of Common Stock, if any,
actually issued upon the exercise of such Options or the conversion
or exchange of such Convertible Securities, and the consideration
received therefor was the consideration actually received by the
Company for the issue of all such Options, whether or not
exercised, plus the consideration actually received by the Company
upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Company
upon such conversion or exchange, and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time of
issue of such Options and the consideration received by the
Company for the Additional Shares of Common Stock deemed to
have been then issued was the consideration actually received by
the Company for the issue of all such Options, whether or not
exercised, plus the consideration received by the Company upon
the issue of the Convertible Securities with respect to which such
Options were actually exercised;
(4) no readjustment pursuant to clause (2) or (3)
above shall have the effect of increasing the Warrant Price to a
price that is greater than (i) the Warrant Price on the original
adjustment date, or (ii) the Warrant Price that would have resulted
from any issuance of Additional Shares of Common Stock between
the original adjustment date and such readjustment date; and
(5) in the case of any Options which expire by
their terms not more than 30 days after the date of issue thereof, no
adjustment of the Warrant Price or the number of shares issuable
upon exercise of this Warrant shall be made until the expiration or
exercise of all such Options.
(d) In the event the Company shall, at any time on or prior to the third
(3rd) anniversary of the date of this Warrant, issue Additional Shares of Common
Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Section 5(c)) without consideration or for a consideration per share
less than an amount equal to the Warrant Price in effect on the date of, and
immediately prior to such issue, except in the case of any issuance of Additional
Shares of Common Stock subject to clause (f), (g) or (h) hereof, then and in such
event, the Warrant Price shall be decreased, concurrently with such issue, to the
amount of the consideration per share received by the Company for such
Additional Shares of Common Stock.
(e) For purposes of this Section 5, the consideration received by the
Company for the issue of any Additional Shares of Common Stock shall be
computed as follows:
(i) Such consideration shall:
(1) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Company prior to
amounts paid or payable for accrued interest or accrued dividends
and prior to any commissions or expenses paid by the Company;
(2) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and
(3) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other
assets of the Company for consideration which covers both, be the
proportion of such consideration so received, computed as
provided in clauses (1) and (2) above, as determined in good faith
by the Board of Directors.
(ii) The consideration per share received by the
Company for Additional Shares of Common Stock deemed to have
been issued pursuant to Section 5(c)(i), relating to Options and
Convertible Securities, shall be determined by dividing:
(1) the total amount, if any, received or
receivable by the Company as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the
Company upon the exercise of such Option or the conversion or
exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities by
(2) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
(f) In the event of any reorganization, merger, consolidation,
reclassification, recapitalization, combination or exchange involving the Common
Stock, or if the outstanding shares of Common Stock shall be subdivided by stock
split, stock dividends or otherwise, into a greater or lesser number of shares of
Common Stock, the Warrant Price then in effect and the number of shares of
Common Stock issuable upon exercise of this Warrant shall, concurrently with the
effectiveness of such event, be appropriately adjusted to reflect such event.
(g) In the event the Company at any time or from time to time makes
or fixes a record date for the determination of holders of Common Stock entitled
to receive any distribution (excluding any repurchases of securities by the
Company not made on a pro-rata basis from all holders of any class of the
Company's securities) payable in property or in securities of the Company other
than shares of Common Stock, and other than as otherwise adjusted in this
Section 5, then and in each such event the Holder of this Warrant shall receive at
the time of such distribution, the amount of property or the number of securities of
the Company that he would have received had his Warrant been converted into
Common Stock on the date of such event.
(h) If the Common Stock issuable upon exercise of the Warrant shall
be changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination of shares provided for above), the right
to acquire each share of Common Stock issuable on exercise of the Warrant shall
thereafter be converted into the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock deliverable
upon such conversion shall have been entitled upon such reorganization or
reclassification. In any such event, effective provision shall be made, in the
articles of incorporation of the resulting or surviving corporation or otherwise, so
that the provisions set forth herein for the protection of the exercise rights of the
Warrant shall thereafter be applicable to any such other shares of stock, other
securities, cash or property deliverable upon exercise of the Warrant or other
convertible stock or securities received by the holders in place thereof, and any
such resulting or surviving corporation shall expressly assume the obligation to
deliver, upon the exercise of the Warrant, such shares, other securities, cash or
property or other convertible stock or securities received by the Holder in place
thereof, shall be entitled to receive pursuant to the provisions hereof, and to make
provision for the protection of the Warrant exercise rights as above provided.
(i) The Company will not, by amendment of this Warrant or 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 to be observed or performance of any of the terms to be observed or
performed hereunder by the Company but will at all times in good faith assist in
the carrying out of all the provisions of this Section 5 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder of the Warrant against impairment.
(j) No adjustment in the number of shares of Common Stock issuable
upon exercise of the Warrant shall be required unless such adjustment would
require an increase or decrease of at least 1/100th of a share; provided, however,
that any adjustment which by reason hereof is not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
(k) Notwithstanding any other provision of this Section 5, other than
adjustments made pursuant to Section 5(f) or 5(h), no adjustment made pursuant to this
Section 5 shall result in an increase in the Warrant Price.
6. Notice of Adjustments. Whenever any adjustment is required to be made as
provided in Section 5, the Company shall promptly notify the Holder, describing in reasonable
detail the adjustment and method of calculation used.
7. Fractional Shares. In the sole discretion of the Company, instead of any fraction
of a share which would otherwise be issuable upon exercise of the Warrant, the Company shall
pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the
market price per share of Common Stock (as reasonably determined by the Board of Directors of
the Company), at the close of business on the date of exercise.
8. Compliance with the Act. The Holder of this Warrant, by acceptance hereof,
agrees that this Warrant and the shares of Common Stock to be issued upon exercise hereof are
being acquired for investment and that it will not offer, sell or otherwise dispose of this Warrant
or any shares of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Act or any state securities laws.
9. No Transfer of Warrant. This Warrant and the rights, interests and benefits
hereof, may not be sold, transferred, pledged, assigned, conveyed or otherwise disposed of by the
Holder, except by will or the laws of descent and distribution or with the consent of the
Company, which consent shall not be unreasonably withheld. Any purported sale, transfer,
pledge, assignment, conveyance or other attempt to dispose of this Warrant, or the rights,
interests or benefits hereof, other than as provided above, is null and void.
10. Notice to Holder. This Warrant is issued pursuant to the Securities Purchase
Agreement dated as of even date herewith between the Company and the purchaser named
therein. The Warrant is referred to in said Securities Purchase Agreement, by the terms of which
agreement the Holder hereof, by his acceptance hereof, agrees to be bound, in each case to the
extent provided in said agreement.
11. Registration Rights.
(a) Piggyback Registration Rights. If at any time prior to this Warrant's
expiration date the Company shall decide to file a registration statement under the Securities Act
of 1933 covering shares of its Common Stock (other than a registration statement on Form S-4,
Form S-14 or a comparable form), 60 days prior thereto the Company shall give written notice to
the Holder of its intention to file such registration statement. Within 30 days of such notice, the
Holder shall notify the Company in writing of the number of shares of Common Stock owned as
a consequence of exercise of this Warrant that it wishes included in any such registration
statement. Thereafter, the Company shall include the Holders' shares in the shares covered by
the registration statement unless the managing underwriter of any such offering shall certify, in
writing, that, in its judgment, the inclusion of the Holders' shares would have a material adverse
effect on the offering and jeopardize the Company's ability to raise capital in the offering;
provided, that if shares held by any other holders of Common Stock (excluding shares offered by
or for the account of the Company) are included in such offering, then the Holder's shares shall
be included on a pro rata basis with the shares of all such other holders of Common Stock. If
shares of Common Stock owned as a consequence of the exercise of this Warrant are included in
any such offering, the Holder shall not be responsible for any expenses of the offering other than
any underwriting discount or commission attributable to the shares of Common Stock offered by
it.
(b) Opinions and Other Documents. If the Holder participates in any offering
as described in this Section 11, it will provide the Company with such opinions of counsel and
other documents covering such legal and other matters as the Company reasonably may request.
(c) Indemnification of Holder. In the event of any registration with respect to
any shares of Common Stock issued pursuant to exercise of this Warrant, the Company will
indemnify and hold harmless the Holder whose shares are being registered and each person, if
any, who controls such Holder against any losses, claims, damages or liabilities to which the
holder or such controlling person may be subject under the Securities Act of 1933 insofar as such
losses, claims, damages or liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any such registration statement or arise
out of or are based upon the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but the Company shall not be liable for any loss, claim,
damage or liability based on or arising out of written information furnished by such Holder
specifically for use in the registration statement.
(d) Indemnification of Company. Any Holder requesting that shares of
Common Stock acquired upon exercise of Warrants be registered shall indemnify and hold
harmless the Company, each of its directors, each of its officers, and each person, if any, who
controls the Company, against any losses, claims, damages or liabilities to which the Company
or any such director, officer or controlling person may be subject under the Securities Act of
1933 insofar as such losses, claims, damages or liabilities arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in the registration statement or
arise out of or are based upon the omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in the registration statement in
reliance upon written information furnished by such Holder specifically for use in the preparation
of such registration statement.
12. Miscellaneous.
(a) No Rights as Shareholder. No Holder of this Warrant shall be entitled to
vote or receive dividends or be deemed the holder of Common Stock or any other securities of
the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of
stock, change of stock to par value, consolidation, merger, conveyance or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein.
(b) Replacement. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft
or destruction, on delivery of an indemnity agreement, or bond reasonably satisfactory in form
and amount to the Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company, at the Holder's expense, will execute and deliver, in lieu of this Warrant,
a new Warrant of like tenor.
(c) Notice. Any notice given to either party under this Warrant shall be in
writing, and any notice hereunder shall be deemed to have been given when delivered or
telecopied or, if mailed, when mailed, if sent registered or certified, addressed to the Company at
its principal executive offices and to the Holder at its address set forth in the Company's books
and records or at such other address as the Holder may have provided to the Company in writing.
(d) Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Arizona without regard to conflicts of law principles.
IN WITNESS WHEREOF, this Warrant is executed as of the 10th day of August, 1999.
LEXON TECHNOLOGIES, INC., a
Delaware corporation
By:
Title:
EXHIBIT A
NOTICE OF EXERCISE
TO: LEXON TECHNOLOGIES, INC.
1. The undersigned hereby elects to purchase ____________ shares of Common
Stock of LEXON TECHNOLOGIES, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full in accordance with the
provisions of the following section of the attached Warrant:
___ Section 3(i)
___ Section 3(ii)
___ Section 3(iii) [The number of shares of Common Stock issuable is
_____________ shares based on a Warrant Price of
$___ per share and the Market Value for the
Common Stock on ________, 19__ of $_____ per
share]
____ Section 3(iv) [Please provide details by supplemental letter]
2. Please issue a certificate or certificates representing said shares of Common Stock
in the name of the undersigned or in such other name as is specified below:
(Name)
(Address)
3. The undersigned represents that the aforesaid shares of Common Stock are being
acquired for the account of the undersigned for investment and not with a view to, or for resale in
connection with, the distribution thereof and that the undersigned will not offer, sell or otherwise
dispose of any such shares except under circumstances that will not result in a violation of the
Securities Act of 1933, as amended, or any state securities law.
Signature
THIS SECURITY AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR THE
SHARES ISSUABLE HEREUNDER MAY BE SOLD OR OTHERWISE TRANSFERRED
WITHOUT REGISTRATION UNDER THE ACT AND SUCH LAWS, OR PURSUANT TO
AN AVAILABLE EXEMPTION THEREFROM.
LEXON TECHNOLOGIES, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, XXXXXX CAPITAL CORPORATION (the
"Holder") is entitled to subscribe for and purchase up to Twenty Five Thousand (25,000) shares
(subject to adjustment from time to time pursuant to the provisions of Section 5 hereof) of fully
paid and nonassessable Common Stock (as defined below) of LEXON TECHNOLOGIES, INC.,
a Delaware corporation (the "Company"), at the Warrant Price (as defined in Section 2 hereof),
subject to the provisions and upon the terms and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's presently
authorized common stock, $.001 par value, and any stock into or for which such Common Stock
may hereafter be converted or exchanged.
1. Term of Warrant. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time during the period beginning on the date hereof and ending on the
fifth (5th) anniversary of the date hereof.
2. Warrant Price. The initial exercise price of this Warrant is TWO AND 50/100
DOLLARS ($2.50) per share, subject to adjustment from time to time pursuant to the provisions
of Section 5 hereof (the "Warrant Price").
3. Method of Exercise; Payment; Issuance of New Warrant; Exercise. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be exercised by the Holder
hereof, in whole or in part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as Exhibit A duly executed) at the principal office of the Company and by the
payment to the Company of an amount equal to the then applicable Warrant Price per share
multiplied by the number of shares then being purchased either (i) by cash, cashier's check or
wire transfer, (ii) by cancellation by the Holder of indebtedness of the Company to the Holder,
(iii) through the written election of the Holder to use the In-the-money Value of the Warrant to
effectuate a cashless exercise of the Warrant, or (iv) by a combination of (i), (ii) and/or (iii). For
purposes of clause (iii) above, the "In-the-money Value of the Warrant" is calculated by
multiplying the number of shares as to which the Warrant is being exercised by an amount equal
to (A) the Market Value for the Common Stock on the trading day immediately prior to the date
of exercise, minus (B) the then applicable Warrant Price per share. The number of shares of
Common Stock issuable to the Holder or the designee of the Holder upon a cashless exercise
pursuant to such clause (iii) shall equal the In-the-money Value divided by the Market Value of
the Common Stock on the trading day immediately prior to the date of exercise. For purposes
hereof, the "Market Value" of the Common Stock shall be the last reported trading price of the
Common Stock if traded on a recognized securities exchange or over-the-counter market or, if
not traded on such an exchange or market, the fair market value per share of Common Stock as
determined by the Board of Directors of the Company in its good faith judgment. The Company
agrees that the shares so purchased shall be deemed to be issued to the Holder hereof or the
designee of the Holder hereof as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been surrendered and payment made for such shares as
aforesaid. In the event of any exercise of this Warrant, certificates for the shares of stock so
purchased shall be delivered to the Holder hereof or the designee of the Holder hereof within 15-days thereafter and, unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder hereof within such 15-day period. The
Holder may provide notice to the Company by facsimile of any exercise of the Warrant pursuant
to clause (iii) above and such exercise shall be effective on the date such facsimile is received;
provided, that such facsimile must be received by the Company not later than 3:00 p.m. eastern
time in order for such exercise to be effective on such date; and provided, further, that the Holder
shall deliver the original Warrant and notice of exercise to the Company within two (2) business
days of such facsimile notice.
4. Stock Fully Paid; Reservation of Shares. All Common Stock that may be issued
upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue thereof. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized but unissued
Common Stock, the full number of shares of Common Stock then deliverable upon exercise of
this Warrant.
5. Adjustment to Warrant Price. The Warrant Price shall be subject to adjustment
from time to time as follows:
(a) For purposes of this Section 5, the following definitions shall
apply:
(i) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.
(ii) "Original Issue Date" shall mean the date hereof.
(iii) "Convertible Securities" shall mean securities
convertible into or exchangeable for Common Stock.
(iv) "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued (or, pursuant to Section 5(c),
deemed to be issued) by the Company after the Original Issue Date
other than shares of Common Stock issued (or, pursuant to Section
5(c), deemed to be issued):
(1) to officers, directors and employees of, and
consultants to the Company to be designated and approved by the
Board of Directors pursuant to any stock option or incentive plan
(provided that the number of shares issuable under any such plan
from time to time shall not exceed ten percent (10%) of the number
of issued and outstanding shares of Common Stock);
(2) pursuant to clause (f), (g) or (h) of this
Section 5; or
(3) upon the exercise of Options issued prior to
the Original Issue Date; or
(4) by way of dividend or other distributions on
securities referred to in clauses (1), (2) and (3) hereof.
(b) No adjustment in the Warrant Price shall be made in respect of the
issuance of Additional Shares of Common Stock unless the consideration per
share for an Additional Share of Common Stock issued or deemed to be issued by
the Company is less than the Warrant Price in effect on the date of, and
immediately prior to, such issuance.
(c) Additional Shares of Common Stock shall be deemed to have been
issued under the following conditions:
(i) Except as otherwise provided in Sections
5(a)(iv)(1)-(4) and 5(b), in the event the Company at any time or
from time to time after the Original Issue Date shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of any holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of
such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time such Option or
Convertible Security, as the case may be, is issued or, in case such
a record date shall have been fixed, as of the close of business on
such record date, provided that in any such case in which
additional shares of Common Stock are deemed to be issued:
(1) no further adjustment in the Warrant Price or
the number of shares issuable upon exercise of this Warrant shall
be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any
increase or decrease in the consideration payable to the Company,
or increase or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the
Warrant Price and the number of shares issuable upon exercise of
this Warrant as computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible
Securities;
(3) upon the expiration of any such Options or
any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Warrant Price
and the number of shares issuable upon exercise of this Warrant as
computed upon the original issue thereof (or upon the occurrence
of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be
recomputed as if:
(A) in the case of Convertible Securities
or Options for Common Stock, the only additional shares of
Common Stock issued were shares of Common Stock, if any,
actually issued upon the exercise of such Options or the conversion
or exchange of such Convertible Securities, and the consideration
received therefor was the consideration actually received by the
Company for the issue of all such Options, whether or not
exercised, plus the consideration actually received by the Company
upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Company
upon such conversion or exchange, and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time of
issue of such Options and the consideration received by the
Company for the Additional Shares of Common Stock deemed to
have been then issued was the consideration actually received by
the Company for the issue of all such Options, whether or not
exercised, plus the consideration received by the Company upon
the issue of the Convertible Securities with respect to which such
Options were actually exercised;
(4) no readjustment pursuant to clause (2) or (3)
above shall have the effect of increasing the Warrant Price to a
price that is greater than (i) the Warrant Price on the original
adjustment date, or (ii) the Warrant Price that would have resulted
from any issuance of Additional Shares of Common Stock between
the original adjustment date and such readjustment date; and
(5) in the case of any Options which expire by
their terms not more than 30 days after the date of issue thereof, no
adjustment of the Warrant Price or the number of shares issuable
upon exercise of this Warrant shall be made until the expiration or
exercise of all such Options.
(d) In the event the Company shall, at any time on or prior to the third
(3rd) anniversary of the date of this Warrant, issue Additional Shares of Common
Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Section 5(c)) without consideration or for a consideration per share
less than an amount equal to the Warrant Price in effect on the date of, and
immediately prior to such issue, except in the case of any issuance of Additional
Shares of Common Stock subject to clause (f), (g) or (h) hereof, then and in such
event, the Warrant Price shall be decreased, concurrently with such issue, to the
amount of the consideration per share received by the Company for such
Additional Shares of Common Stock.
(e) For purposes of this Section 5, the consideration received by the
Company for the issue of any Additional Shares of Common Stock shall be
computed as follows:
(i) Such consideration shall:
(1) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Company prior to
amounts paid or payable for accrued interest or accrued dividends
and prior to any commissions or expenses paid by the Company;
(2) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and
(3) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other
assets of the Company for consideration which covers both, be the
proportion of such consideration so received, computed as
provided in clauses (1) and (2) above, as determined in good faith
by the Board of Directors.
(ii) The consideration per share received by the
Company for Additional Shares of Common Stock deemed to have
been issued pursuant to Section 5(c)(i), relating to Options and
Convertible Securities, shall be determined by dividing:
(1) the total amount, if any, received or
receivable by the Company as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the
Company upon the exercise of such Option or the conversion or
exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities by
(2) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
(f) In the event of any reorganization, merger, consolidation,
reclassification, recapitalization, combination or exchange involving the Common
Stock, or if the outstanding shares of Common Stock shall be subdivided by stock
split, stock dividends or otherwise, into a greater or lesser number of shares of
Common Stock, the Warrant Price then in effect and the number of shares of
Common Stock issuable upon exercise of this Warrant shall, concurrently with the
effectiveness of such event, be appropriately adjusted to reflect such event.
(g) In the event the Company at any time or from time to time makes
or fixes a record date for the determination of holders of Common Stock entitled
to receive any distribution (excluding any repurchases of securities by the
Company not made on a pro-rata basis from all holders of any class of the
Company's securities) payable in property or in securities of the Company other
than shares of Common Stock, and other than as otherwise adjusted in this
Section 5, then and in each such event the Holder of this Warrant shall receive at
the time of such distribution, the amount of property or the number of securities of
the Company that he would have received had his Warrant been converted into
Common Stock on the date of such event.
(h) If the Common Stock issuable upon exercise of the Warrant shall
be changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination of shares provided for above), the right
to acquire each share of Common Stock issuable on exercise of the Warrant shall
thereafter be converted into the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock deliverable
upon such conversion shall have been entitled upon such reorganization or
reclassification. In any such event, effective provision shall be made, in the
articles of incorporation of the resulting or surviving corporation or otherwise, so
that the provisions set forth herein for the protection of the exercise rights of the
Warrant shall thereafter be applicable to any such other shares of stock, other
securities, cash or property deliverable upon exercise of the Warrant or other
convertible stock or securities received by the holders in place thereof, and any
such resulting or surviving corporation shall expressly assume the obligation to
deliver, upon the exercise of the Warrant, such shares, other securities, cash or
property or other convertible stock or securities received by the Holder in place
thereof, shall be entitled to receive pursuant to the provisions hereof, and to make
provision for the protection of the Warrant exercise rights as above provided.
(i) The Company will not, by amendment of this Warrant or 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 to be observed or performance of any of the terms to be observed or
performed hereunder by the Company but will at all times in good faith assist in
the carrying out of all the provisions of this Section 5 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder of the Warrant against impairment.
(j) No adjustment in the number of shares of Common Stock issuable
upon exercise of the Warrant shall be required unless such adjustment would
require an increase or decrease of at least 1/100th of a share; provided, however,
that any adjustment which by reason hereof is not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
(k) Notwithstanding any other provision of this Section 5, other than
adjustments made pursuant to Section 5(f) or 5(h), no adjustment made pursuant to this
Section 5 shall result in an increase in the Warrant Price.
6. Notice of Adjustments. Whenever any adjustment is required to be made as
provided in Section 5, the Company shall promptly notify the Holder, describing in reasonable
detail the adjustment and method of calculation used.
7. Fractional Shares. In the sole discretion of the Company, instead of any fraction
of a share which would otherwise be issuable upon exercise of the Warrant, the Company shall
pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the
market price per share of Common Stock (as reasonably determined by the Board of Directors of
the Company), at the close of business on the date of exercise.
8. Compliance with the Act. The Holder of this Warrant, by acceptance hereof,
agrees that this Warrant and the shares of Common Stock to be issued upon exercise hereof are
being acquired for investment and that it will not offer, sell or otherwise dispose of this Warrant
or any shares of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Act or any state securities laws.
9. No Transfer of Warrant. This Warrant and the rights, interests and benefits
hereof, may not be sold, transferred, pledged, assigned, conveyed or otherwise disposed of by the
Holder, except by will or the laws of descent and distribution or with the consent of the
Company, which consent shall not be unreasonably withheld. Any purported sale, transfer,
pledge, assignment, conveyance or other attempt to dispose of this Warrant, or the rights,
interests or benefits hereof, other than as provided above, is null and void.
10. Notice to Holder. This Warrant is issued pursuant to the Securities Purchase
Agreement dated as of even date herewith between the Company and the purchaser named
therein. The Warrant is referred to in said Securities Purchase Agreement, by the terms of which
agreement the Holder hereof, by his acceptance hereof, agrees to be bound, in each case to the
extent provided in said agreement.
11. Registration Rights.
(a) Piggyback Registration Rights. If at any time prior to this Warrant's
expiration date the Company shall decide to file a registration statement under the Securities Act
of 1933 covering shares of its Common Stock (other than a registration statement on Form S-4,
Form S-14 or a comparable form), 60 days prior thereto the Company shall give written notice to
the Holder of its intention to file such registration statement. Within 30 days of such notice, the
Holder shall notify the Company in writing of the number of shares of Common Stock owned as
a consequence of exercise of this Warrant that it wishes included in any such registration
statement. Thereafter, the Company shall include the Holders' shares in the shares covered by
the registration statement unless the managing underwriter of any such offering shall certify, in
writing, that, in its judgment, the inclusion of the Holders' shares would have a material adverse
effect on the offering and jeopardize the Company's ability to raise capital in the offering;
provided, that if shares held by any other holders of Common Stock (excluding shares offered by
or for the account of the Company) are included in such offering, then the Holder's shares shall
be included on a pro rata basis with the shares of all such other holders of Common Stock. If
shares of Common Stock owned as a consequence of the exercise of this Warrant are included in
any such offering, the Holder shall not be responsible for any expenses of the offering other than
any underwriting discount or commission attributable to the shares of Common Stock offered by
it.
(b) Opinions and Other Documents. If the Holder participates in any offering
as described in this Section 11, it will provide the Company with such opinions of counsel and
other documents covering such legal and other matters as the Company reasonably may request.
(c) Indemnification of Holder. In the event of any registration with respect to
any shares of Common Stock issued pursuant to exercise of this Warrant, the Company will
indemnify and hold harmless the Holder whose shares are being registered and each person, if
any, who controls such Holder against any losses, claims, damages or liabilities to which the
holder or such controlling person may be subject under the Securities Act of 1933 insofar as such
losses, claims, damages or liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any such registration statement or arise
out of or are based upon the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but the Company shall not be liable for any loss, claim,
damage or liability based on or arising out of written information furnished by such Holder
specifically for use in the registration statement.
(d) Indemnification of Company. Any Holder requesting that shares of
Common Stock acquired upon exercise of Warrants be registered shall indemnify and hold
harmless the Company, each of its directors, each of its officers, and each person, if any, who
controls the Company, against any losses, claims, damages or liabilities to which the Company
or any such director, officer or controlling person may be subject under the Securities Act of
1933 insofar as such losses, claims, damages or liabilities arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in the registration statement or
arise out of or are based upon the omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in the registration statement in
reliance upon written information furnished by such Holder specifically for use in the preparation
of such registration statement.
12. Miscellaneous.
(a) No Rights as Shareholder. No Holder of this Warrant shall be entitled to
vote or receive dividends or be deemed the holder of Common Stock or any other securities of
the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of
stock, change of stock to par value, consolidation, merger, conveyance or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein.
(b) Replacement. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft
or destruction, on delivery of an indemnity agreement, or bond reasonably satisfactory in form
and amount to the Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company, at the Holder's expense, will execute and deliver, in lieu of this Warrant,
a new Warrant of like tenor.
(c) Notice. Any notice given to either party under this Warrant shall be in
writing, and any notice hereunder shall be deemed to have been given when delivered or
telecopied or, if mailed, when mailed, if sent registered or certified, addressed to the Company at
its principal executive offices and to the Holder at its address set forth in the Company's books
and records or at such other address as the Holder may have provided to the Company in writing.
(d) Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Arizona without regard to conflicts of law principles.
IN WITNESS WHEREOF, this Warrant is executed as of the 10th day of August, 1999.
LEXON TECHNOLOGIES, INC., a
Delaware corporation
By:
Title:
EXHIBIT A
NOTICE OF EXERCISE
TO: LEXON TECHNOLOGIES, INC.
1. The undersigned hereby elects to purchase ____________ shares of Common
Stock of LEXON TECHNOLOGIES, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full in accordance with the
provisions of the following section of the attached Warrant:
___ Section 3(i)
___ Section 3(ii)
___ Section 3(iii) [The number of shares of Common Stock issuable is
_____________ shares based on a Warrant Price of
$___ per share and the Market Value for the
Common Stock on ________, 19__ of $_____ per
share]
____ Section 3(iv) [Please provide details by supplemental letter]
2. Please issue a certificate or certificates representing said shares of Common Stock
in the name of the undersigned or in such other name as is specified below:
(Name)
(Address)
3. The undersigned represents that the aforesaid shares of Common Stock are being
acquired for the account of the undersigned for investment and not with a view to, or for resale in
connection with, the distribution thereof and that the undersigned will not offer, sell or otherwise
dispose of any such shares except under circumstances that will not result in a violation of the
Securities Act of 1933, as amended, or any state securities law.
Signature
THIS SECURITY AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR THE
SHARES ISSUABLE HEREUNDER MAY BE SOLD OR OTHERWISE TRANSFERRED
WITHOUT REGISTRATION UNDER THE ACT AND SUCH LAWS, OR PURSUANT TO
AN AVAILABLE EXEMPTION THEREFROM.
LEXON TECHNOLOGIES, INC.
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, XXXXXXXXX XXXXXX (the "Holder") is entitled
to subscribe for and purchase up to Twenty Five Thousand (25,000) shares (subject to adjustment
from time to time pursuant to the provisions of Section 5 hereof) of fully paid and nonassessable
Common Stock (as defined below) of LEXON TECHNOLOGIES, INC., a Delaware corporation
(the "Company"), at the Warrant Price (as defined in Section 2 hereof), subject to the provisions
and upon the terms and conditions hereinafter set forth.
As used herein, the term "Common Stock" shall mean the Company's presently
authorized common stock, $.001 par value, and any stock into or for which such Common Stock
may hereafter be converted or exchanged.
1. Term of Warrant. The purchase right represented by this Warrant is exercisable,
in whole or in part, at any time during the period beginning on the date hereof and ending on the
fifth (5th) anniversary of the date hereof.
2. Warrant Price. The initial exercise price of this Warrant is TWO AND 50/100
DOLLARS ($2.50) per share, subject to adjustment from time to time pursuant to the provisions
of Section 5 hereof (the "Warrant Price").
3. Method of Exercise; Payment; Issuance of New Warrant; Exercise. Subject to
Section 1 hereof, the purchase right represented by this Warrant may be exercised by the Holder
hereof, in whole or in part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as Exhibit A duly executed) at the principal office of the Company and by the
payment to the Company of an amount equal to the then applicable Warrant Price per share
multiplied by the number of shares then being purchased either (i) by cash, cashier's check or
wire transfer, (ii) by cancellation by the Holder of indebtedness of the Company to the Holder,
(iii) through the written election of the Holder to use the In-the-money Value of the Warrant to
effectuate a cashless exercise of the Warrant, or (iv) by a combination of (i), (ii) and/or (iii). For
purposes of clause (iii) above, the "In-the-money Value of the Warrant" is calculated by
multiplying the number of shares as to which the Warrant is being exercised by an amount equal
to (A) the Market Value for the Common Stock on the trading day immediately prior to the date
of exercise, minus (B) the then applicable Warrant Price per share. The number of shares of
Common Stock issuable to the Holder or the designee of the Holder upon a cashless exercise
pursuant to such clause (iii) shall equal the In-the-money Value divided by the Market Value of
the Common Stock on the trading day immediately prior to the date of exercise. For purposes
hereof, the "Market Value" of the Common Stock shall be the last reported trading price of the
Common Stock if traded on a recognized securities exchange or over-the-counter market or, if
not traded on such an exchange or market, the fair market value per share of Common Stock as
determined by the Board of Directors of the Company in its good faith judgment. The Company
agrees that the shares so purchased shall be deemed to be issued to the Holder hereof or the
designee of the Holder hereof as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been surrendered and payment made for such shares as
aforesaid. In the event of any exercise of this Warrant, certificates for the shares of stock so
purchased shall be delivered to the Holder hereof or the designee of the Holder hereof within 15-days thereafter and, unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder hereof within such 15-day period. The
Holder may provide notice to the Company by facsimile of any exercise of the Warrant pursuant
to clause (iii) above and such exercise shall be effective on the date such facsimile is received;
provided, that such facsimile must be received by the Company not later than 3:00 p.m. eastern
time in order for such exercise to be effective on such date; and provided, further, that the Holder
shall deliver the original Warrant and notice of exercise to the Company within two (2) business
days of such facsimile notice.
4. Stock Fully Paid; Reservation of Shares. All Common Stock that may be issued
upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue thereof. The Company shall at all times
reserve and keep available, free from preemptive rights, out of its authorized but unissued
Common Stock, the full number of shares of Common Stock then deliverable upon exercise of
this Warrant.
5. Adjustment to Warrant Price. The Warrant Price shall be subject to adjustment
from time to time as follows:
(a) For purposes of this Section 5, the following definitions shall
apply:
(i) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.
(ii) "Original Issue Date" shall mean the date hereof.
(iii) "Convertible Securities" shall mean securities
convertible into or exchangeable for Common Stock.
(iv) "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued (or, pursuant to Section 5(c),
deemed to be issued) by the Company after the Original Issue Date
other than shares of Common Stock issued (or, pursuant to Section
5(c), deemed to be issued):
(1) to officers, directors and employees of, and
consultants to the Company to be designated and approved by the
Board of Directors pursuant to any stock option or incentive plan
(provided that the number of shares issuable under any such plan
from time to time shall not exceed ten percent (10%) of the number
of issued and outstanding shares of Common Stock);
(2) pursuant to clause (f), (g) or (h) of this
Section 5; or
(3) upon the exercise of Options issued prior to
the Original Issue Date; or
(4) by way of dividend or other distributions on
securities referred to in clauses (1), (2) and (3) hereof.
(b) No adjustment in the Warrant Price shall be made in respect of the
issuance of Additional Shares of Common Stock unless the consideration per
share for an Additional Share of Common Stock issued or deemed to be issued by
the Company is less than the Warrant Price in effect on the date of, and
immediately prior to, such issuance.
(c) Additional Shares of Common Stock shall be deemed to have been
issued under the following conditions:
(i) Except as otherwise provided in Sections
5(a)(iv)(1)-(4) and 5(b), in the event the Company at any time or
from time to time after the Original Issue Date shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of any holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common Stock issuable
upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of
such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time such Option or
Convertible Security, as the case may be, is issued or, in case such
a record date shall have been fixed, as of the close of business on
such record date, provided that in any such case in which
additional shares of Common Stock are deemed to be issued:
(1) no further adjustment in the Warrant Price or
the number of shares issuable upon exercise of this Warrant shall
be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any
increase or decrease in the consideration payable to the Company,
or increase or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the
Warrant Price and the number of shares issuable upon exercise of
this Warrant as computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible
Securities;
(3) upon the expiration of any such Options or
any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Warrant Price
and the number of shares issuable upon exercise of this Warrant as
computed upon the original issue thereof (or upon the occurrence
of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be
recomputed as if:
(A) in the case of Convertible Securities
or Options for Common Stock, the only additional shares of
Common Stock issued were shares of Common Stock, if any,
actually issued upon the exercise of such Options or the conversion
or exchange of such Convertible Securities, and the consideration
received therefor was the consideration actually received by the
Company for the issue of all such Options, whether or not
exercised, plus the consideration actually received by the Company
upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Company
upon such conversion or exchange, and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time of
issue of such Options and the consideration received by the
Company for the Additional Shares of Common Stock deemed to
have been then issued was the consideration actually received by
the Company for the issue of all such Options, whether or not
exercised, plus the consideration received by the Company upon
the issue of the Convertible Securities with respect to which such
Options were actually exercised;
(4) no readjustment pursuant to clause (2) or (3)
above shall have the effect of increasing the Warrant Price to a
price that is greater than (i) the Warrant Price on the original
adjustment date, or (ii) the Warrant Price that would have resulted
from any issuance of Additional Shares of Common Stock between
the original adjustment date and such readjustment date; and
(5) in the case of any Options which expire by
their terms not more than 30 days after the date of issue thereof, no
adjustment of the Warrant Price or the number of shares issuable
upon exercise of this Warrant shall be made until the expiration or
exercise of all such Options.
(d) In the event the Company shall, at any time on or prior to the third
(3rd) anniversary of the date of this Warrant, issue Additional Shares of Common
Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to Section 5(c)) without consideration or for a consideration per share
less than an amount equal to the Warrant Price in effect on the date of, and
immediately prior to such issue, except in the case of any issuance of Additional
Shares of Common Stock subject to clause (f), (g) or (h) hereof, then and in such
event, the Warrant Price shall be decreased, concurrently with such issue, to the
amount of the consideration per share received by the Company for such
Additional Shares of Common Stock.
(e) For purposes of this Section 5, the consideration received by the
Company for the issue of any Additional Shares of Common Stock shall be
computed as follows:
(i) Such consideration shall:
(1) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Company prior to
amounts paid or payable for accrued interest or accrued dividends
and prior to any commissions or expenses paid by the Company;
(2) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and
(3) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other
assets of the Company for consideration which covers both, be the
proportion of such consideration so received, computed as
provided in clauses (1) and (2) above, as determined in good faith
by the Board of Directors.
(ii) The consideration per share received by the
Company for Additional Shares of Common Stock deemed to have
been issued pursuant to Section 5(c)(i), relating to Options and
Convertible Securities, shall be determined by dividing:
(1) the total amount, if any, received or
receivable by the Company as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the instruments
relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the
Company upon the exercise of such Option or the conversion or
exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities by
(2) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
(f) In the event of any reorganization, merger, consolidation,
reclassification, recapitalization, combination or exchange involving the Common
Stock, or if the outstanding shares of Common Stock shall be subdivided by stock
split, stock dividends or otherwise, into a greater or lesser number of shares of
Common Stock, the Warrant Price then in effect and the number of shares of
Common Stock issuable upon exercise of this Warrant shall, concurrently with the
effectiveness of such event, be appropriately adjusted to reflect such event.
(g) In the event the Company at any time or from time to time makes
or fixes a record date for the determination of holders of Common Stock entitled
to receive any distribution (excluding any repurchases of securities by the
Company not made on a pro-rata basis from all holders of any class of the
Company's securities) payable in property or in securities of the Company other
than shares of Common Stock, and other than as otherwise adjusted in this
Section 5, then and in each such event the Holder of this Warrant shall receive at
the time of such distribution, the amount of property or the number of securities of
the Company that he would have received had his Warrant been converted into
Common Stock on the date of such event.
(h) If the Common Stock issuable upon exercise of the Warrant shall
be changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination of shares provided for above), the right
to acquire each share of Common Stock issuable on exercise of the Warrant shall
thereafter be converted into the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock deliverable
upon such conversion shall have been entitled upon such reorganization or
reclassification. In any such event, effective provision shall be made, in the
articles of incorporation of the resulting or surviving corporation or otherwise, so
that the provisions set forth herein for the protection of the exercise rights of the
Warrant shall thereafter be applicable to any such other shares of stock, other
securities, cash or property deliverable upon exercise of the Warrant or other
convertible stock or securities received by the holders in place thereof, and any
such resulting or surviving corporation shall expressly assume the obligation to
deliver, upon the exercise of the Warrant, such shares, other securities, cash or
property or other convertible stock or securities received by the Holder in place
thereof, shall be entitled to receive pursuant to the provisions hereof, and to make
provision for the protection of the Warrant exercise rights as above provided.
(i) The Company will not, by amendment of this Warrant or 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 to be observed or performance of any of the terms to be observed or
performed hereunder by the Company but will at all times in good faith assist in
the carrying out of all the provisions of this Section 5 and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder of the Warrant against impairment.
(j) No adjustment in the number of shares of Common Stock issuable
upon exercise of the Warrant shall be required unless such adjustment would
require an increase or decrease of at least 1/100th of a share; provided, however,
that any adjustment which by reason hereof is not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
(k) Notwithstanding any other provision of this Section 5, other than
adjustments made pursuant to Section 5(f) or 5(h), no adjustment made pursuant to this
Section 5 shall result in an increase in the Warrant Price.
6. Notice of Adjustments. Whenever any adjustment is required to be made as
provided in Section 5, the Company shall promptly notify the Holder, describing in reasonable
detail the adjustment and method of calculation used.
7. Fractional Shares. In the sole discretion of the Company, instead of any fraction
of a share which would otherwise be issuable upon exercise of the Warrant, the Company shall
pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the
market price per share of Common Stock (as reasonably determined by the Board of Directors of
the Company), at the close of business on the date of exercise.
8. Compliance with the Act. The Holder of this Warrant, by acceptance hereof,
agrees that this Warrant and the shares of Common Stock to be issued upon exercise hereof are
being acquired for investment and that it will not offer, sell or otherwise dispose of this Warrant
or any shares of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Act or any state securities laws.
9. No Transfer of Warrant. This Warrant and the rights, interests and benefits
hereof, may not be sold, transferred, pledged, assigned, conveyed or otherwise disposed of by the
Holder, except by will or the laws of descent and distribution or with the consent of the
Company, which consent shall not be unreasonably withheld. Any purported sale, transfer,
pledge, assignment, conveyance or other attempt to dispose of this Warrant, or the rights,
interests or benefits hereof, other than as provided above, is null and void.
10. Notice to Holder. This Warrant is issued pursuant to the Securities Purchase
Agreement dated as of even date herewith between the Company and the purchaser named
therein. The Warrant is referred to in said Securities Purchase Agreement, by the terms of which
agreement the Holder hereof, by his acceptance hereof, agrees to be bound, in each case to the
extent provided in said agreement.
11. Registration Rights.
(a) Piggyback Registration Rights. If at any time prior to this Warrant's
expiration date the Company shall decide to file a registration statement under the Securities Act
of 1933 covering shares of its Common Stock (other than a registration statement on Form S-4,
Form S-14 or a comparable form), 60 days prior thereto the Company shall give written notice to
the Holder of its intention to file such registration statement. Within 30 days of such notice, the
Holder shall notify the Company in writing of the number of shares of Common Stock owned as
a consequence of exercise of this Warrant that it wishes included in any such registration
statement. Thereafter, the Company shall include the Holders' shares in the shares covered by
the registration statement unless the managing underwriter of any such offering shall certify, in
writing, that, in its judgment, the inclusion of the Holders' shares would have a material adverse
effect on the offering and jeopardize the Company's ability to raise capital in the offering;
provided, that if shares held by any other holders of Common Stock (excluding shares offered by
or for the account of the Company) are included in such offering, then the Holder's shares shall
be included on a pro rata basis with the shares of all such other holders of Common Stock. If
shares of Common Stock owned as a consequence of the exercise of this Warrant are included in
any such offering, the Holder shall not be responsible for any expenses of the offering other than
any underwriting discount or commission attributable to the shares of Common Stock offered by
it.
(b) Opinions and Other Documents. If the Holder participates in any offering
as described in this Section 11, it will provide the Company with such opinions of counsel and
other documents covering such legal and other matters as the Company reasonably may request.
(c) Indemnification of Holder. In the event of any registration with respect to
any shares of Common Stock issued pursuant to exercise of this Warrant, the Company will
indemnify and hold harmless the Holder whose shares are being registered and each person, if
any, who controls such Holder against any losses, claims, damages or liabilities to which the
holder or such controlling person may be subject under the Securities Act of 1933 insofar as such
losses, claims, damages or liabilities arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any such registration statement or arise
out of or are based upon the omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but the Company shall not be liable for any loss, claim,
damage or liability based on or arising out of written information furnished by such Holder
specifically for use in the registration statement.
(d) Indemnification of Company. Any Holder requesting that shares of
Common Stock acquired upon exercise of Warrants be registered shall indemnify and hold
harmless the Company, each of its directors, each of its officers, and each person, if any, who
controls the Company, against any losses, claims, damages or liabilities to which the Company
or any such director, officer or controlling person may be subject under the Securities Act of
1933 insofar as such losses, claims, damages or liabilities arise out of or are based upon any
untrue or alleged untrue statement of any material fact contained in the registration statement or
arise out of or are based upon the omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, but only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in the registration statement in
reliance upon written information furnished by such Holder specifically for use in the preparation
of such registration statement.
12. Miscellaneous.
(a) No Rights as Shareholder. No Holder of this Warrant shall be entitled to
vote or receive dividends or be deemed the holder of Common Stock or any other securities of
the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of
stock, change of stock to par value, consolidation, merger, conveyance or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein.
(b) Replacement. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft
or destruction, on delivery of an indemnity agreement, or bond reasonably satisfactory in form
and amount to the Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company, at the Holder's expense, will execute and deliver, in lieu of this Warrant,
a new Warrant of like tenor.
(c) Notice. Any notice given to either party under this Warrant shall be in
writing, and any notice hereunder shall be deemed to have been given when delivered or
telecopied or, if mailed, when mailed, if sent registered or certified, addressed to the Company at
its principal executive offices and to the Holder at its address set forth in the Company's books
and records or at such other address as the Holder may have provided to the Company in writing.
(d) Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Arizona without regard to conflicts of law principles.
IN WITNESS WHEREOF, this Warrant is executed as of the 10th day of August, 1999.
LEXON TECHNOLOGIES, INC., a
Delaware corporation
By:
Title:
EXHIBIT A
NOTICE OF EXERCISE
TO: LEXON TECHNOLOGIES, INC.
1. The undersigned hereby elects to purchase ____________ shares of Common
Stock of LEXON TECHNOLOGIES, INC. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full in accordance with the
provisions of the following section of the attached Warrant:
___ Section 3(i)
___ Section 3(ii)
___ Section 3(iii) [The number of shares of Common Stock issuable is
_____________ shares based on a Warrant Price of
$___ per share and the Market Value for the
Common Stock on ________, 19__ of $_____ per
share]
____ Section 3(iv) [Please provide details by supplemental letter]
2. Please issue a certificate or certificates representing said shares of Common Stock
in the name of the undersigned or in such other name as is specified below:
(Name)
(Address)
3. The undersigned represents that the aforesaid shares of Common Stock are being
acquired for the account of the undersigned for investment and not with a view to, or for resale in
connection with, the distribution thereof and that the undersigned will not offer, sell or otherwise
dispose of any such shares except under circumstances that will not result in a violation of the
Securities Act of 1933, as amended, or any state securities law.
Signature
