Exhibit 10.2
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT"), OR APPLICABLE STATE LAW. THIS WARRANT AND THE SECURITIES UNDERLYING IT
MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
VOID AFTER 5:00 P.M. EASTERN TIME, OCTOBER ____, 2010
WARRANT
For the Purchase of
_________ Shares of Common Stock
of
IONATRON, INC.
1. Warrant.
THIS CERTIFIES THAT, for good and valuable consideration, duly paid by or
on behalf of X Xxxxxxxx Securities Group ("Holder" or "Xxxxxxxx"), as registered
owner of this Warrant, to Ionatron, Inc., a Delaware corporation ("Company"),
Holder is entitled, at any time or from time to time through 5:00 p.m., Eastern
Time on October, 2010 ("Expiration Date"), but not thereafter, to subscribe for,
purchase and receive, in whole or in part, up to __________ (_______) shares
("Warrant Shares") of the Company's common stock ("Common Stock"). If the
Expiration Date is a day on which banking institutions are authorized by law to
close, then this Warrant may be exercised on the next succeeding day that is not
such a day in accordance with the terms herein. During the period ending on the
Expiration Date, the Company agrees not to take any action that would terminate
the Warrant. This Warrant is being issued in connection with the issuance and
sale by the Company of up to 920,000 shares of its Preferred Stock at a
per-share price of $25.00 in a private placement offering ("Offering") for which
Xxxxxxxx has acted as Placement Agent.
2. Exercise.
Exercise Price. This Warrant is initially exercisable at $12.00 per
Warrant Share ("Exercise Price"). The term "Exercise Price" shall mean the
initial exercise price or the adjusted exercise price, depending on the context,
to purchase one Warrant Share.
2.1 Exercise Notice; Payment for Shares. In order to exercise this
Warrant, the exercise notice form attached hereto must be duly executed and
completed and delivered to the Company, together with this Warrant and payment
of the Exercise Price multiplied by the number of Warrant Shares for which this
Warrant is being exercised (except as provided in Section 2.4 hereof) in cash or
by certified check or official bank check for the shares being purchased. If
this Warrant has not been wholly exercised at or before 5:00 p.m., Eastern time,
on the Expiration Date, this Warrant shall become and be void at such date and
time without further force or effect, and all rights represented hereby shall
cease and expire.
2.2 Legend. Each certificate for Warrant Shares purchased under this
Warrant shall bear the following legend:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended ("Act") or applicable
state law. The shares may not be pledged, sold, assigned or
transferred in the absence of an effective registration statement
with respect thereto under the Act and any applicable state
securities law, or unless the Company receives an opinion of
counsel, satisfactory to the Company, that such registration is not
required."
2.3 Conversion Right.
2.3.1 Determination of Amount. In lieu of the payment of the
Exercise Price multiplied by the number of Warrant Shares for which the Warrant
is being exercised in the manner required by Section 2.2, the Holder shall have
the right (but not the obligation) to convert any exercisable but unexercised
portion of this Warrant into securities ("Conversion Right") as follows: Upon
exercise of the Conversion Right, the Company will deliver to the Holder
(without payment by the Holder of any of the Exercise Price in cash) that number
of shares equal to the quotient obtained by dividing (x) the "Value" (as defined
below) of the portion of the Warrants being converted by (y) the "Market Price"
(as defined below). The "Value" of the portion of the Warrants being converted
will equal the remainder derived from subtracting (a) the Exercise Price
multiplied by the number of shares underlying the portion of the Warrants being
converted from (b) the Market Price multiplied by the number of shares
underlying the portion of the Warrants being converted. As used herein, the term
"Market Price" is deemed to be the last reported sale price of the Common Stock
on the date prior to the date the Conversion Right is exercised, or, in case no
such reported sale takes place on such day, the average of the last reported
sale prices for the immediately preceding three trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or if any such exchange
on which the Common Stock is listed is not its principal trading market, the
last reported sale price as furnished by the National Association Securities
Dealers, Inc. through the Nasdaq National Market or SmallCap Market, or, if
applicable, the OTC Bulletin Board, or if the Common Stock is not listed or
admitted to trading on any of the foregoing markets, or similar organization, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
2.4 Mechanics of Conversion Right. The Conversion Right may be exercised
by the Holder on any business day on or after the Commencement Date and not
later than the Expiration Date, except as otherwise provided in Section 2.1
hereof, by delivering to the Company the Warrants with a duly executed exercise
form attached hereto with the conversion section completed exercising the
Conversion Right.
3. Transfer Restrictions. The registered Holder of this Warrant, by its
acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Warrant to anyone except upon compliance with, or pursuant to
exemptions from, applicable securities laws. In order to make any permitted
assignment, the Holder must deliver to the Company the assignment form attached
hereto duly executed and completed, together with this Warrant and payment of
all transfer taxes, if any, payable in connection therewith. The Company shall
promptly transfer this Warrant on the books of the Company and shall execute and
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deliver a new Warrant or Warrants of like tenor to the appropriate assignee(s)
expressly evidencing the right to purchase the aggregate number of Warrant
Shares purchasable hereunder or such portion of such number as shall be
contemplated by any such assignment; provided that there is then an effective
registration statement with respect thereto under the Act and any applicable
state securities laws, or the Company receives an opinion of counsel,
satisfactory to the Company, that such registration is not required
4. New Warrants to be Issued.
4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3
hereof, this Warrant may be exercised or assigned in whole or in part. In the
event of the exercise or assignment hereof in part only, upon surrender of this
Warrant for cancellation, together with the duly executed exercise or assignment
form and funds (or conversion equivalent) sufficient to pay any Exercise Price
multiplied by the number of Warrant Shares for which this Warrant is exercised
and/or transfer tax, the Company shall cause to be delivered to the Holder
without charge a new Warrant of like tenor to this Warrant in the name of the
Holder evidencing the right of the Holder to purchase the aggregate number of
Warrant Shares as to which this Warrant has not then been exercised or assigned.
4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant and of
reasonably satisfactory indemnification, the Company shall execute and deliver a
new Warrant of like tenor and date. Any such new Warrant executed and delivered
as a result of such loss, theft, mutilation or destruction shall constitute a
substitute contractual obligation on the part of the Company.
5. Registration Rights.
5.1 Registration Obligation. The Holder shall be entitled to the same
registration rights, to the extent applicable, with respect to the Warrant
Shares issuable upon exercise of this Warrant as the Company has granted to
investors in the Offering as described in the Offering Memorandum, Purchase
Agreement and Registration Rights Agreement entered into by the Company and each
such investor in the Offering; provided, that any penalties described therein
for Registration Defaults (as defined in the Registration Rights Agreement)
shall not apply.
5.2 Successors and Assigns. The registration rights granted to the Holder
inure to the benefit of all the Holder's successors, heirs, pledgees, assignees,
transferees and purchasers of this Warrant or the Warrant Shares.
6. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 6.
6.1 Stock Dividends and Splits. If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.
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6.2 Pro Rata Distributions. If the Company, at any time while this Warrant
is outstanding, distributes to all holders of Common Stock (i) evidence of its
indebtedness, (ii) any security (other than a distribution of Common Stock
covered by the preceding paragraph), (iii) rights or warrants to subscribe for
or purchase any security, or (iv) any other asset (in each case, "Distributed
Property"), then, at the request of any Holder delivered before the 30th day
after the record date fixed for determination of stockholders entitled to
receive such distribution, the Company will deliver to such Holder, within seven
days after such request (or, if later, on the effective date of such
distribution), the Distributed Property that such Holder would have been
entitled to receive in respect of the Warrant Shares for which such Xxxxxx's
Warrant could have been exercised immediately prior to such record date. If such
Distributed Property is not delivered to a Holder pursuant to the preceding
sentence, then upon any exercise of the Warrant that occurs after such record
date, such Holder shall be entitled to receive, in addition to the Warrant
Shares otherwise issuable upon such conversion, the Distributed Property that
such Holder would have been entitled to receive in respect of such number of
Warrant Shares had the Holder been the record holder of such Warrant Shares
immediately prior to such record date.
6.3 Number of Warrant Shares. Simultaneously with any adjustment to the
Exercise Price pursuant this Section 6, the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased proportionately, so
that after such adjustment the aggregate Exercise Price payable hereunder for
the increased number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.
6.4 Calculations. All calculations under this Section 6 shall be made to
the nearest cent or the nearest 1/100th of a share, as applicable. The number of
shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common Stock.
6.5 Notice of Adjustments. Upon the occurrence of each adjustment pursuant
to this Section 6, the Company at its expense will promptly compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Warrant Shares or other securities
issuable upon exercise of this Warrant (as applicable), describing the
transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company's Transfer Agent.
6.6 Notice of Corporate Events. If the Company (i) declares a dividend or
any other distribution of cash, securities or other property in respect of its
Common Stock, including without limitation any granting of rights or warrants to
subscribe for or purchase any capital stock of the Company or any Subsidiary,
(ii) authorizes or approves, enters into any agreement contemplating or solicits
stockholder approval for any Fundamental Transaction or (iii) authorizes the
voluntary dissolution, liquidation or winding up of the affairs of the Company,
then the Company shall deliver to the Holder a notice describing the material
terms and conditions of such transaction, at least 10 days prior to the
applicable record or effective date on which a Person would need to hold Common
Stock in order to participate in or vote with respect to such transaction, and
the Company will take all steps reasonably necessary in order to ensure that the
Holder is given the practical opportunity to exercise this Warrant prior to such
time so as to participate in or vote with respect to such transaction; provided,
however, that the failure to deliver such notice or any defect therein shall not
affect the validity of the corporate action required to be described in such
notice.
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7. Reservation and Listing. The Company shall at all times reserve and
keep available out of its authorized shares of Common Stock, solely for the
purpose of issuance upon exercise of this Warrant, such number of Warrant Shares
or other securities, properties or rights as shall be issuable upon the exercise
thereof. The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all Warrant Shares and other
securities issuable upon such exercise, conversion or dividend payment shall be
duly and validly issued, fully paid and non-assessable and not subject to
preemptive rights of any stockholder. As long as the Warrants shall be
outstanding, the Company shall use its best efforts to cause all Warrant Shares
issuable upon exercise of the Warrants to be listed (subject to official notice
of issuance) on the OTC Bulletin Board and/or one or more securities exchanges
and to cause its Common Stock to be listed on the NASDAQ National Marketing
and/or one or more securities exchanges.
8. Investment Representations of Holder. The Holder of this Warrant hereby
represents and warrants to the Company that it is an "Accredited Investor"
within the meaning of the Securities Act and is acquiring this Warrant for its
own account and not with a view to, or for sale in connection with, any
distribution thereof, nor with any present intention of distributing or selling
the same. The Holder further represents that it does not have any contract,
agreement, understanding or arrangement with any person to sell, transfer or
grant the Warrant or the securities issuable under the Warrant. The Holder
understands that the Warrant Shares it will receive upon exercise of this
Warrant will be "restricted securities" under Federal securities laws inasmuch
as they are being acquired from the Company in transactions not including any
public offering and that under such laws such shares may be sold without
registration under the Securities Act only in limited circumstances. The Holder
is familiar with Rule 144 promulgated under the Securities Act, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. The Holder is a resident of or has its principal place of
business and executive offices located in the State of Connecticut. The Holder
understands and acknowledges that the Company will rely on the accuracy of these
representations and warranties in issuing the securities underlying the Warrant.
9. Certain Notice Requirements.
9.1 Holder's Right to Receive Notice. Nothing herein shall be construed as
conferring upon the Holder the right to vote or consent or to receive notice as
a stockholder for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the
Company shall use its best efforts to give written notice of such event at least
fifteen days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to such
dividend, rights offering, merger or reorganization, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale (or such lesser number of
days as may be practicable (but in no event less than five business days) based
on the date on which the Board of Directors acts to set such record date or
transfer book closing). Such notice shall specify such record date or the date
of the closing of the transfer books, as the case may be.
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9.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 9 upon one or more of the following events: (i)
any notice is given or otherwise required to be given under contract or law to
holders of the outstanding Common Stock, (ii) if the Company shall take a record
of the holders of its shares of Common Stock for the purpose of entitling them
to receive a dividend or distribution, (iii) the Company shall offer to all the
holders of its Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for shares of capital
stock of the Company, or any option, right or warrant to subscribe therefor,
(iv) a merger or reorganization in which the Company is not the surviving party
or (v) a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially all
of its property, assets and business shall be proposed.
9.3 Transmittal of Notices. All notices, requests, consents and other
communications under this Warrant must be in writing and are sufficiently given
if delivered to the addressees in person, facsimile, by overnight courier
service (such as federal express), or, if mailed, postage prepaid, by certified
mail (return receipt requested), and will be effective three days after being
placed in the mail if mailed, or upon receipt or refusal of receipt, if
delivered personally or by overnight courier service, courier or confirmed
telecopy, in each case addressed as follows: (i) if to the registered Holder of
this Warrant, to the address of such Holder as shown on the books of the
Company, or (ii) if to the Company, to its principal executive office,
attention: Chief Financial Officer.
10. Miscellaneous.
10.1 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Warrant.
10.2 Entire Agreement. This Warrant (together with the other agreements
and documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
10.3 Binding Effect. This Warrant shall inure solely to the benefit of and
shall be binding upon, the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein contained.
10.4 Governing Law; Submission to Jurisdiction. This Warrant will be
deemed to have been made and delivered in New York City and will be governed as
to validity, interpretation, construction, effect and in all other respects by
the internal laws of the State of New York. Each of the Company and the Holder
hereby (i) agrees that any legal suit, action or proceeding arising out of or
relating to this Warrant will be instituted exclusively in New York State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, (ii) waives any objection to the venue of any
such suit, action or proceeding and the right to assert that such forum is not a
convenient forum for such suit, action or proceeding, (iii) irrevocably consents
to the jurisdiction of the New York State Supreme Court, County of New York, and
the United States District Court for the Southern District of New York in any
such suit, action or proceeding, (iv) agrees to accept and acknowledge service
of any and all process that may be served in any such suit, action or proceeding
in New York State Supreme Court, County of New York or in the United States
District Court for the Southern District of New York and (v) agrees that service
of process upon it mailed by certified mail to its address set forth on the
signature page of this Warrant will be deemed in every respect effective service
of process upon it in any suit, action or proceeding.
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10.5 Waiver, Etc. The failure of the Company or the Holder to at any time
enforce any of the provisions of this Warrant shall not be deemed or construed
to be a waiver of any such provision, nor to in any way affect the validity of
this Warrant or any provision hereof or the right of the Company or any Holder
to thereafter enforce each and every provision of this Warrant. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Warrant shall be effective unless set forth in a written instrument executed by
the party or parties against whom or which enforcement of such waiver is sought;
and no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the _____ day of October, 2005.
IONATRON, INC.
By:_________________________________
Name:
Title:
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Form to be used to exercise Warrant:
-----------------------------------
-----------------------------------
-----------------------------------
Date: _____________________, 200___
The undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase ________ shares of Common Stock of Ionatron, Inc. and hereby
makes payment of $____________ (at the rate of $_________ per share of Common
Stock) in payment of the Exercise Price pursuant thereto. Please issue the
Common Stock as to which this Warrant is exercised in accordance with the
instructions given below.
or
The undersigned hereby elects irrevocably to exercise the within Warrant
to purchase __________ shares of Common Stock of Ionatron, Inc. by surrender of
the unexercised portion of the within Warrant. Please issue the shares of Common
Stock in accordance with the instructions given below.
and
As of the date of exercise of this Warrant, the undersigned hereby
represents and warrants to the Company that it is an "Accredited Investor"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and is acquiring these securities for its own account and not with a view
to, or for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling the same. The undersigned further
represents that it does not have any contract, agreement, understanding or
arrangement with any person to sell, transfer or grant the securities issuable
under the Warrant. The undersigned understands that the shares it will be
receiving are "restricted securities" under Federal securities laws inasmuch as
they are being acquired from Ionatron, Inc., in transactions not including any
public offering and that under such laws such shares may be sold without
registration under the Securities Act only in limited circumstances. The
undersigned is familiar with Rule 144 promulgated under the Securities Act, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act. The undersigned is a resident of or has its principal
place of business and executive offices located in the State of Connecticut. The
undersigned understands and acknowledges that the Company will rely on the
accuracy of these representations and warranties in issuing the securities
underlying the Warrant.
--------------------------------
Signature
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Signature Guaranteed
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NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name ________________________________________________________
(Print in Block Letters)
Address ________________________________________________________
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Form to be used to assign Warrant:
ASSIGNMENT
(To be executed by the registered Holder to affect a transfer of the
within Warrant):
FOR VALUE RECEIVED, ________________________________ does hereby sell,
assign and transfer unto _________________________________ the right to purchase
_____________________ shares of Common Stock of Ionatron, Inc. ("Company")
evidenced by the within Warrant and does hereby authorize the Company to
transfer such right on the books of the Company.
Dated:____________________, 200___
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Signature
NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
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