THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 ACT, AS AMENDED (THE "1933 ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE BENEFIT OF THE COMPANY THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, OR
(C) IF REGISTERED UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
IN ADDITION, A SECURITIES PURCHASE AGREEMENT ("PURCHASE AGREEMENT"), DATED THE
DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL AGREEMENTS AMONG THE PARTIES,
INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH LIMIT THE EXERCISE RIGHTS OF THE
HOLDER AND SPECIFY MANDATORY REDEMPTION OBLIGATIONS OF THE COMPANY.
---------------------------------------
WindsorTech, Inc.
COMMON STOCK PURCHASE WARRANT
Number of shares: Up to
----------------------------------
Holder:
--------------------------
--------------------------
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Expiration Date: May 18, 2009
Exercise Price per Share: $1.50
WindsorTech, a company organized and existing under the laws of the State of
Delaware (the "Company"), hereby certifies that, for value received,__________ ,
or its registered assigns (the "Warrant Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company up to_____________shares
(the "Warrant Shares") of common stock, $0.001 par value (the "Common Stock"),
of the Company (each such share, a "Warrant Share" and all such shares, the
COMMON STOCK PURCHASE WARRANT
PAGE 1 OF 9
"Warrant Shares") at $1.50 (the "Exercise Price"), at any time and from time to
time from and after the date thereof and through and including 5:00 p.m. New
York City time on May 17, 2009 (the "Expiration Date"), and subject to the
following terms and conditions:
1. Registration of Warrant. The Company shall register this Warrant
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Warrant Holder hereof from time to time.
The Company may deem and treat the registered Warrant Holder of this Warrant as
the absolute owner hereof for the purpose of any exercise hereof or nay
distribution to the Warrant Holder, and for all other purposes, and the Company
shall not be affected by notice to the contrary.
2. Investment Representation. The Warrant Holder by accepting this
Warrant represents that the Warrant Holder is acquiring this Warrant for its own
account or the account of an affiliate for investment purposes and not with the
view to any offering or distribution and that the Warrant Holder will not sell
or otherwise dispose of this Warrant or the underlying Warrant Shares in
violation of applicable securities laws. The Warrant Holder acknowledges that
the certificates representing any Warrant Shares will bear a legend indicating
that they have not been registered under the United States Securities Act of
1933, as amended (the "1933 Act") and may not be sold by the Warrant Holder
except pursuant to an effective registration statement or pursuant to an
exemption from registration requirements of the 1933 Act and in accordance with
federal and state securities laws. If this Warrant was acquired by the Warrant
Holder pursuant to the exemption from the registration requirements of the 1933
Act afforded by Regulation S thereunder, the Warrant Holder acknowledges and
covenants that this Warrant may not be exercised by or on behalf of a Person
during the one year distribution compliance period (as defined in Regulation S)
following the date hereof. "Person" means an individual, partnership, firm,
limited liability company, trust, joint venture, association, corporation, or
any other legal entity.
3. Validity of Warrant and Issue of Shares. The Company represents and
warrants that this Warrant has been duly authorized and validly issued and
warrants and agrees that all of Common Stock that may be issued upon the
exercise of the rights represented by this Warrant will, when issued upon such
exercise, be duly authorized, validly issued, fully paid and non-assessable and
free from all taxes, liens and charges with respect to the issue thereof. The
Company further warrants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of Common Stock to
provide for the exercise of the rights represented by this Warrant.
COMMON STOCK PURCHASE WARRANT
PAGE 2 OF 9
4. Registration of Transfers and Exchange of Warrants.
a. Subject to compliance with the legend set forth on the face
of this Warrant, the Company shall register the transfer of any portion of this
Warrant in the Warrant in the Warrant Register, upon surrender of this Warrant
with the Form of Assignment attached hereto duly completed and signed, to the
Company at the office specified in or pursuant to Section 9. Upon any such
registration or transfer, a new warrant to purchase Common Stock, in
substantially the same form of this Warrant (any such new warrant, a "New
Warrant"), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the transferring Warrant
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance of such transferee of all of the rights and obligations of
a Warrant Holder of a Warrant.
b. This Warrant is exchangeable, upon the surrender hereof by
the Warrant Holder to the office of the Company specified in or pursuant to
Section 9 for one or more New Warrants, evidencing in the aggregate the right to
purchase the number of Warrant Shares which may then be purchased hereunder. Any
such New Warrant will be dated the date of such exchange.
5. Exercise of Warrants.
a. Upon surrender of this Warrant with the Form of Election to
Purchase attached hereto duly completed and signed to the Company, at its
address set forth in Section 9, and upon payment and delivery of the Exercise
Price per Warrant Share multiplied by the number of Warrant Shares that the
Warrant Holder intends to purchase hereunder, in lawful money of the United
States of America, in cash or by certified or official bank check or checks, to
the Company, all as specified by the Warrant Holder in the Form of Election to
Purchase, the Company shall promptly (but in no event later than 7 business days
after the Date of Exercise [as defined herein]) issue or cause to be issued and
cause to be delivered to or upon the written order of the Warrant Holder and in
such name or names as the Warrant Holder may designate (subject to the
restrictions on transfer described in the legend set forth on the face of this
Warrant), a share certificate of Company common stock for the Warrant Shares
issuable upon such exercise, with such restrictive legend as required by the
1933 Act. Any person so designated by the Warrant Holder to receive Warrant
Shares shall be deemed to have become holder of record of such Warrant Shares as
of the Date of Exercise of this Warrant.
b. A "Date of Exercise" means the date on which the Company
shall have received (i) this Warrant (or any New Warrant, as applicable), with
the Form of Election to Purchase attached hereto (or attached to such New
Warrant) appropriately completed and duly signed, and (ii) payment of the
Exercise Price for the number of Warrant Shares so indicated by the Warrant
Holder to be purchased.
COMMON STOCK PURCHASE WARRANT
PAGE 3 OF 9
c. This Warrant shall be exercisable at any time and from time
to time for such number of Warrant Shares as is indicated in the attached Form
of Election To Purchase. If less than all of the Warrant Shares which may be
purchased under this Warrant are exercised at any time, the Company shall issue
or cause to be issued, at its expense, a New Warrant utilizing this form of
Warrant evidencing the right to purchase the remaining number of Warrant Shares
for which no exercise has been evidenced by this Warrant.
d. (i) Notwithstanding anything contained herein to the
contrary, the holder of this Warrant may, at its election exercised in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the "Net Number" of shares of Common Stock determined according to the
following formula (a "Cashless Exercise"): Net Number = (A x (B - C))/B
(ii) For purposes of the foregoing formula:
A= the total number shares with respect to which this
Warrant is then being exercised.
B= the last reported sale price (as reported by
Bloomberg) of the Common Stock on immediately
preceding the date of the Exercise Notice.
C= the Warrant Exercise Price then in effect at the
time of such exercise.
(i). The holder of this Warrant agrees not to elect for a
period of one (1) year a Cashless Exercise. The holder of this Warrant also
agrees not to elect a Cashless Exercise so long as there is an effective
registration statement for the shares underlying this Warrant.
Call by the Company. This Warrant contains a callable feature until May
17, 2005 requiring the automatic exercise if during the period commencing one
year from the date of issuance of each Warrant at any closing public market
price of the Company's common stock is equal to or in excess of the callable
price of $2.25 for a period of twenty (20) consecutive days and there is an
effective Registration Statement covering the shares of Common Stock underlying
this Warrant ("Automatic Exercise") during such twenty (20) consecutive day
period. Upon occurrence of the Automatic Exercise, the Company shall provide the
Holder with notice of such Automatic Conversion ("Automatic Exercise Notice").
Upon receipt of the Automatic Exercise Notice, the Holder must (i) exercise, in
whole , this Warrant within ten (10) days; or (ii) notify the Company of its
intent to transfer this Warrant pursuant to Section 4 of this Warrant. In the
event that the Holder elects to transfer this Warrant pursuant to
COMMON STOCK PURCHASE WARRANT
PAGE 4 OF 9
Section 4 of this Warrant, then the subsequent holder of this Warrant must
exercise this Warrant on or before the thirtieth (30) day after notification of
intent to transfer this Warrant. In the event that this Warrant is exercised,
the Holder must deliver to the Company at its office at 00 Xxxx Xxxxx,
Xxxxxxxxxx, XX 00000, Attention: Xx Xxxxxxxx; with a copy to Burger, Trailor &
Xxxxxx, P.A., 0000 Xxxxx Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxxx, Xxxxxxx 00000 on or
before 3:00 p.m., Eastern Time, on the required date, (i) Form of Election to
Purchase properly executed and completed by Holder or an authorized officer
thereof, (ii) a check payable to the order of the Company, in an amount equal to
the product of the Exercise Price multiplied by the number of Warrant Shares
specified in the Exercise Notice, and (iii) this Warrant. If the Holder does not
exercise this Warrant within ten (10) days from receipt of the Automatic
Exercise Notice or, in the event that this Warrant has been transferred pursuant
to Section 4 of this Warrant, the subsequent holder of this Warrant does not
exercise this Warrant within thirty (30) days after notification of intent to
transfer this Warrant, then this Warrant will expire.
6. Adjustment of Exercise Price and Number of Shares. The character of
the shares of stock or other securities at the time issuable upon exercise of
this Warrant and the Exercise Price therefor, are subject to adjustment upon the
occurrence of the following events:
a. Adjustment for Stock Splits, Stock Dividends,
Recapitalizations, Etc. The Exercise Price of this Warrant and the number of
shares of Common Stock or other securities at the time issuable upon exercise of
this Warrant shall be appropriately adjusted to reflect any stock dividend,
stock split, combination of shares, reclassification, recapitalization or other
similar event affecting the number of outstanding shares of stock or securities.
b. Adjustment for Reorganization, Consolidation, Merger, Etc.
In case of any consolidation or merger of the Company with or into any other
corporation, entity or person, or any other corporate reorganization, in which
the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (any such transaction being hereinafter
referred to as a "Reorganization"), then, in each case, the holder of this
Warrant, on exercise hereof at any time after the consummation or effective date
of such Reorganization (the "Effective Date"), shall receive, in lieu of the
shares of stock or other securities at any time issuable upon the exercise of
the Warrant issuable on such exercise prior to the Effective Date, the stock and
other securities and property (including cash) to which such holder would have
been entitled upon the Effective Date if such holder had exercised this Warrant
immediately prior thereto (all subject to further adjustment as provided in this
Warrant).
c. Certificate as to Adjustments. In case of any adjustment or
readjustment in the price or kind of securities issuable on the exercise of this
Warrant, the Company will promptly give written notice thereof to the holder of
this Warrant in the form of a certificate, certified and confirmed by the Board
of Directors of the Company, setting forth such adjustment or readjustment and
showing in reasonable detail the facts upon which such adjustment or
readjustment is based.
COMMON STOCK PURCHASE WARRANT
PAGE 5 OF 9
d. Adjustments due to certain EBITDA projections In the event
the Company earns less than nineteen cents ($.19) per share EBITDA on a per
share basis which calculation is based upon primary shares outstanding on
December 31, 2004 as reported for the fiscal year ended December 31, 2004,
(hereafter the "2004 EBITDA"), the warrant Exercise Price per Share shall be
reduced proportionately by 0% if the 0000 XXXXXX are nineteen cents ($.19) per
share and by up to 99% if the 0000 XXXXXX are less than $.001 per share.
Likewise, the warrant price shall be proportionately increased as the 2004
EBITDA exceeds nineteen cents ($.19); the limit of said increase shall be two
(2) times the Exercise Price per Share. . For example, if the Company earns
seventeen point one cents ($.171) per share EBITDA, then the per share warrant
exercise price shall be reduced by 10%. Likewise, if the Company earns twenty
point nine cents ($.209) EBITDA per share than the warrant exercise price shall
be increased by 10%. Any such reduction or increase shall be made at the time
the December 31, 2004 financial results are reported and shall be made, starting
from the exercise price of the warrants being exercised at that time, and shall
be cumulative upon any other changes to the exercise price of the warrant that
may already have been made.
7. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares that shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrants
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 8, be issuable
on the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price multiplied by such fraction or (ii)
round the number of Warrant Shares issuable, up to the next whole number.
8. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially received if
delivered by facsimile transmission followed by registered or certified mail
confirmation; (iii) on the date delivered by an overnight courier service; or
(iv) on the third business day after it is mailed by registered or certified
mail, return receipt requested with postage and other fees prepaid as follows:
If to the Company:
------------------
WindsorTech, Inc.
00 Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
With a copy to:
COMMON STOCK PURCHASE WARRANT
PAGE 6 OF 9
Xxxx X. Xxxxxx, Esq.
Burger, Trailor & Xxxxxx, P.A.
0000 Xxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Facsimile Number: (000) 000-0000
If to the Warrant Holder:
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9. Miscellaneous.
a. This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
This Warrant may be amended only in writing and signed by the Company and the
Warrant Holder.
b. Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the Warrant Holder any legal or
equitable right, remedy or cause of action under this Warrant; this Warrant
shall be for the sole and exclusive benefit of the Company and the Warrant
Holder.
c. This Warrant shall be governed by, construed and enforced
in accordance with the internal laws of the State of New York without regard to
the principles of conflicts of law thereof.
d. The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
e. In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceablilty of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonably substitute therefore, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
f. The Warrant Holder shall not, by virtue hereof, be entitled
to any voting or other rights of a shareholder of the Company, either at law or
equity, and the rights of the Warrant Holder are limited to those expressed in
this Warrant.
COMMON STOCK PURCHASE WARRANT
PAGE 7 OF 9
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by the authorized officer as of the date first above stated.
WindsorTech, Inc.
By:
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Name:
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Title:
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COMMON STOCK PURCHASE WARRANT
PAGE 8 OF 9
FORM OF ELECTION TO PURCHASE
(To be executed by the Warrant Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)
To: WindsorTech, Inc.
In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase ______________ shares of
Common Stock ("Common Stock"), $0.001 par value, of WindsorTech, Inc. and
encloses one warrant and $__________________ for each Warrant Share being
purchased or an aggregate of $________________ in cash or certified or official
bank check or checks, which sum represents the aggregate Exercise Price (as
defined in the Warrant) together with any applicable taxes payable by the
undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------
(Please insert Social Security or Tax Identification Number)
If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
(Please print name and address)
Dated: Name of Warrant Holder:
-----------------
(Print)
---------------------------------
(By:)
-----------------------------------
(Name:)
---------------------------------
(Title:)
--------------------------------
Signature must conform in all respects to name of
Warrant Holder as specified on the face of the
Warrant
COMMON STOCK PURCHASE WARRANT
PAGE 9 OF 9
