FP TECHNOLOGY, INC. Warrant To Purchase Common Stock
EXHIBIT
99.3
NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER
LOAN SECURED BY SUCH SECURITIES.
Warrant
To Purchase Common Stock
Warrant
No.:
Initial
Number of Shares of Common Stock: _________________________
Date
of
Issuance: January 24, 2007 (“Issuance
Date”)
FP
Technology, Inc., a Delaware corporation (the “Company”),
hereby certifies that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, [___________________], the
registered holder hereof or its permitted assigns (the “Holder”),
is
entitled, subject to the terms set forth below, to purchase from the Company,
at
the Exercise Price then in effect, upon surrender of this Warrant to Purchase
Common Stock (including any Warrants to Purchase Common Stock issued in
exchange, transfer or replacement hereof, the “Warrant”),
at
any time or times on or after the Issuance Date, but not after 11:59 P.M.,
New
York City time, on January 24, 2012 (the “Expiration
Date”),
such
number of fully paid non-assessable shares of Common Stock as are specified
above (the “Warrant
Shares”).
This
Warrant is one of the Warrants to purchase an aggregate of 1,285,714 shares
of
Common Stock (the “Exchange
Warrants”)
issued
pursuant to Section 2.2(a)(iv) of that certain Master Exchange Agreement, dated
as of January 24, 2007, by and among the Company and the purchasers (the
“Purchasers”)
referred to therein (the “Master
Exchange Agreement”).
Unless otherwise defined herein, capitalized terms used in this Warrant shall
have the meanings set forth therefore in the Master Exchange Agreement.
1. EXERCISE
OF WARRANT.
(a)
Mechanics
of Exercise.
Subject
to the terms and conditions hereof (including, without limitation, the
limitations set forth in Section 1(f)), this Warrant may be exercised by the
Holder on any day on or after the Issuance Date in whole or in part, by
(i) delivery of a written notice, in the form attached hereto as
Exhibit
A
(the
“Exercise
Notice”),
of
the Holder’s election to exercise this Warrant and (ii) (A) payment to the
Company of an amount equal to the applicable Exercise Price multiplied by the
number of Warrant Shares as to which this Warrant is being exercised (the
“Aggregate
Exercise Price”)
in
cash or by wire transfer of immediately available funds or (B) by notifying
the
Company that this Warrant is being exercised pursuant to a Cashless Exercise
(as
defined in Section 1(d)). The Holder shall not be required to deliver the
original Warrant in order to effect an exercise hereunder. Execution and
delivery of the Exercise Notice with respect to less than all of the Warrant
Shares shall have the same effect as cancellation of the original Warrant and
issuance of a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares. On or before the first Business Day following the date on
which the Company has received each of the Exercise Notice and the Aggregate
Exercise Price (or notice of a Cashless Exercise) (the “Exercise
Delivery Documents”),
the
Company shall transmit by facsimile an acknowledgment of confirmation of receipt
of the Exercise Delivery Documents to the Holder and the Company’s transfer
agent (the “Transfer
Agent”).
On or
before the third Business Day following the date on which the Company has
received all of the Exercise Delivery Documents (the “Share
Delivery Date”),
the
Company shall (X) provided that the Transfer Agent is participating in The
Depository Trust Company (“DTC”)
Fast
Automated Securities Transfer Program, upon the request of the Holder, credit
such aggregate number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with
DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
Transfer Agent is not participating in the DTC Fast Automated Securities
Transfer Program, issue and dispatch by overnight courier to the address as
specified in the Exercise Notice, a certificate, registered in the Company’s
share register in the name of the Holder or its designee, for the number of
shares of Common Stock to which the Holder is entitled pursuant to such
exercise. Upon delivery of the Exercise Delivery Documents or notification
to
the Company of a Cashless Exercise referred to in Section 1(d), the Holder
shall
be deemed for all corporate purposes to have become the holder of record of
the
Warrant Shares in respect of which this Warrant has been exercised, irrespective
of the date of delivery of the certificates evidencing such Warrant Shares.
If
this Warrant is submitted in connection with any exercise pursuant to this
Section 1(a) and the number of Warrant Shares represented by this Warrant
submitted for exercise is greater than the number of Warrant Shares being
acquired upon an exercise, then the Company shall as soon as practicable and
in
no event later than three (3) Business Days after any exercise and at its own
expense, issue a new Warrant (in accordance with Section 7(d)) representing
the
right to purchase the number of Warrant Shares purchasable immediately prior
to
such exercise under this Warrant, less the number of Warrant Shares in respect
of which this Warrant is exercised. No fractional shares of Common Stock are
to
be issued upon the exercise of this Warrant, but rather the Company shall in
lieu thereof make payment to the Holder of cash in the amount of such fraction
multiplied by the Closing Sale Price of one (1) share of Common Stock on the
date of exercise. The Company shall pay any and all taxes, including without
limitation, all documentary stamp, transfer or similar taxes, or other
incidental expense that may be payable with respect to the issuance and delivery
of Warrant Shares upon exercise of this Warrant.
(b)
Exercise
Price.
For
purposes of this Warrant, “Exercise
Price”
means
Seven Dollars ($7.00), subject to any and all adjustment as expressly provided
herein.
(c)
Company’s
Failure to Timely Deliver Securities.
If
within three (3) Trading Days after the Company’s receipt of the facsimile copy
of Exercise Delivery Documents, the Company fails to issue and deliver a
certificate for that number of shares of Common Stock to which the Holder is
entitled and register such shares of Common Stock on the Company’s share
register or credit the Holder’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon such Holder’s
exercise hereunder, and if on or after such Trading Day the Holder purchases
(in
an open market transaction or otherwise) shares of Common Stock to deliver
in
satisfaction of a sale by the Holder of shares of Common Stock issuable upon
such exercise that the Holder anticipated receiving from the Company (a
“Buy-In”),
then
the Company shall, within three (3) Business Days after the Holder’s request and
in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal
to the Holder’s total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased (the “Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate (and to issue
such shares of Common Stock) shall terminate, or (ii) promptly honor its
obligation to deliver to the Holder a certificate or certificates representing
such shares of Common Stock and pay cash to the Holder in an amount equal to
the
excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.
(d)
Cashless
Exercise.
Notwithstanding
anything contained herein to the contrary, the Holder may, 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) - (A x C)
B
For
purposes of the foregoing formula:
A=
the
total number of shares in respect of which this Warrant is then being
exercised.
B=
the
Closing Sale Price of the shares of Common Stock (as reported by Bloomberg)
on
the date immediately preceding the date of the Exercise Notice.
C=
the
Exercise Price then in effect for the applicable Warrant Shares at the time
of
such exercise.
(e)
Disputes.
In the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall promptly issue
to the Holder the number of Warrant Shares that are not disputed and resolve
such dispute in accordance with Section 12.
(f)
Beneficial
Ownership; Limitations on Exercises.
The
Company shall not effect the exercise of this Warrant, and the Holder shall
not
have the right to exercise this Warrant, to the extent that after giving effect
to such exercise, such Person (together with such Person’s affiliates) would
beneficially own in excess of 4.99% (the “Maximum
Percentage”)
of the
number of shares of Common Stock outstanding immediately after giving effect
to
such exercise. For purposes of the foregoing sentence, the aggregate number
of
shares of Common Stock beneficially owned by such Person and its affiliates
shall include the number of shares of Common Stock issuable upon exercise of
this Warrant with respect to which the determination of such sentence is being
made, but shall exclude the number of shares of Common Stock which would be
issuable upon (i) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by such Person and its affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other securities
of
the Company beneficially owned by such Person and its affiliates (including,
without limitation, any convertible notes or convertible preferred stock or
warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the preceding sentence,
for
purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Warrant, in determining the number of outstanding
shares of Common Stock, the Holder may rely on the number of outstanding shares
of Common Stock as reflected in (1) the Company’s most recent Form 10-K, Form
10-Q, Current Report on Form 8-K or other public filing with the Securities
and
Exchange Commission, as the case may be, (2) a more recent public announcement
by the Company or (3) any other notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding. For any reason
at any time, upon the written or oral request of the Holder, the Company shall
within one Business Day confirm orally and in writing to the Holder the number
of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect
to
the conversion or exercise of securities of the Company, including the
Convertible Notes and the Exchange Warrants, by the Holder and its affiliates
since the date as of which such number of outstanding shares of Common Stock
was
reported. By written notice to the Company, the Holder may from time to time
increase or decrease the Maximum Percentage to any other percentage not in
excess of 9.99% specified in such notice; provided that (i) any such increase
will not be effective until the sixty-first (61st)
day
after such notice is delivered to the Company, and (ii) any such increase or
decrease will apply only to the Holder and not to any other holder of Exchange
Warrants.
(g)
Insufficient
Authorized Shares.
If at
any time while any of the Exchange Warrants remain outstanding the Company
does
not have a sufficient number of authorized and unreserved shares of Common
Stock
to satisfy its obligation to reserve for issuance upon exercise of the Exchange
Warrants at least a number of shares of Common Stock equal to 130% of the number
of shares of Common Stock as shall from time to time be necessary to effect
the
exercise of all of the Exchange Warrants then outstanding (the “Required
Reserve Amount”)
(an
“Authorized
Share Failure”),
then
the Company shall immediately take all action necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for the Exchange Warrants then
outstanding. Without limiting the generality of the foregoing sentence, as
soon
as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than sixty (60) days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common
Stock. In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its best efforts to solicit
its
stockholders’ approval of such increase in authorized shares of Common Stock and
to cause its board of directors to recommend to the stockholders that they
approve such proposal.
2. ADJUSTMENT
OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
The
Exercise Price and the number of Warrant Shares shall be adjusted from time
to
time as follows:
(a)
Adjustment
upon Issuance of Shares of Common Stock.
If and
whenever on or after the Issuance Date the Company issues or sells, or in
accordance with this Section 2 is deemed to have issued or sold, any shares
of
Common Stock (including the issuance or sale of shares of Common Stock owned
or
held by or for the account of the Company, but excluding any Excluded Securities
or shares of Common Stock issued or deemed to have been issued by the Company
in
connection with any Excluded Securities) for a consideration per share less
than
a price (the “Applicable
Price”)
equal
to the Exercise Price in effect immediately prior to such issue or sale or
deemed issuance or sale (the foregoing a “Dilutive
Issuance”),
then
immediately after such Dilutive Issuance, the Exercise Price then in effect
shall be reduced to an amount equal to the product
of (A) the Exercise Price in effect immediately prior to such Dilutive
Issuance and (B) the quotient determined by dividing (1) the sum of
(I) the product derived by multiplying the Exercise Price in effect immediately
prior to such Dilutive Issuance and the number of shares of Common Stock Deemed
Outstanding immediately prior to such Dilutive Issuance plus (II) the
consideration, if any, received by the Company upon such Dilutive Issuance,
by
(2) the product derived by multiplying (I) the Exercise Price in effect
immediately prior to such Dilutive Issuance by (II) the number of shares of
Common Stock Deemed Outstanding immediately after such Dilutive
Issuance.
Upon
each such adjustment of the Exercise Price hereunder, the number of Warrant
Shares shall be adjusted to the number of shares of Common Stock determined
by
multiplying the Exercise Price in effect immediately prior to such adjustment
by
the number of Warrant Shares acquirable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment. For purposes of determining
the
adjusted Exercise Price under this Section 2(a), the following shall be
applicable:
(i)
Issuance
of Options.
If the
Company in any manner grants any Options and the lowest price per share for
which one share of Common Stock is issuable upon the exercise of any such Option
or upon conversion, exercise or exchange of any Convertible Securities issuable
upon exercise of any such Option is less than the Applicable Price, then such
share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting or sale of such Option
for
such price per share. For purposes of this Section 2(a)(i), the “lowest price
per share for which one share of Common Stock is issuable upon the exercise
of
any such Options or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option” shall be equal to the sum
of the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon the granting or
sale
of the Option, upon exercise of the Option and upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such Option.
No
further adjustment of the Exercise Price or number of Warrant Shares shall
be
made upon the actual issuance of such shares of Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the actual
issuance of such shares of Common Stock upon conversion, exercise or exchange
of
such Convertible Securities.
(ii)
Issuance
of Convertible Securities.
If the
Company in any manner issues or sells any Convertible Securities and the lowest
price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof is less than the Applicable Price,
then
such share of Common Stock shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such
Convertible Securities for such price per share. For the purposes of this
Section 2(a)(ii), the “lowest price per share for which one share of Common
Stock is issuable upon the conversion, exercise or exchange thereof” shall be
equal to the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to one share of Common Stock upon the
issuance or sale of the Convertible Security and upon conversion, exercise
or
exchange of such Convertible Security. No further adjustment of the Exercise
Price or number of Warrant Shares shall be made upon the actual issuance of
such
shares of Common Stock upon conversion, exercise or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible Securities is
made
upon exercise of any Options for which adjustment of this Warrant has been
or is
to be made pursuant to other provisions of this Section 2(a), no further
adjustment of the Exercise Price or number of Warrant Shares shall be made
by
reason of such issue or sale.
(iii)
Change
in Option Price or Rate of Conversion.
If the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible
into
or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time, the Exercise Price and the number of Warrant Shares in effect
at
the time of such increase or decrease shall be adjusted to the Exercise Price
and the number of Warrant Shares which would have been in effect at such time
had such Options or Convertible Securities provided for such increased or
decreased purchase price, additional consideration or increased or decreased
conversion rate, as the case may be, at the time initially granted, issued
or
sold. For purposes of this Section 2(a)(iii), if the terms of any Option or
Convertible Security that was outstanding as of the date of issuance of this
Warrant are increased or decreased in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the shares
of
Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall
be deemed to have been issued as of the date of such increase or decrease.
No
adjustment pursuant to this Section 2(a) shall be made if such adjustment would
result in an increase of the Exercise Price then in effect or a decrease in
the
number of Warrant Shares.
(iv)
Calculation
of Consideration Received.
In case
any Option is issued in connection with the issue or sale of other securities
of
the Company, together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the Options
will be deemed to have been issued for a consideration of $0.01. If any shares
of Common Stock, Options or Convertible Securities are issued or sold or deemed
to have been issued or sold for cash, the consideration received therefor will
be deemed to be the net amount received by the Company therefor. If any shares
of Common Stock, Options or Convertible Securities are issued or sold for a
consideration other than cash, the amount of such consideration received by
the
Company will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company will be the Closing Sale Price of such security on
the
date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of
consideration therefor will be deemed to be the fair value of such portion
of
the net assets and business of the non-surviving entity as is attributable
to
such shares of Common Stock, Options or Convertible Securities, as the case
may
be. The fair value of any consideration other than cash or securities will
be
determined jointly by the Company and the Required Holders. If such parties
are
unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation
Event”),
the
fair value of such consideration will be determined within five (5) Business
Days after the tenth day following the Valuation Event by an independent,
reputable appraiser jointly selected by the Company and the Required Holders.
The determination of such appraiser shall be final and binding upon all parties
absent manifest error and the fees and expenses of such appraiser shall be
borne
by the Company.
(v)
Record
Date.
If the
Company takes a record of the holders of shares of Common Stock for the purpose
of entitling them (A) to receive a dividend or other distribution payable
in shares of Common Stock, Options or in Convertible Securities or (B) to
subscribe for or purchase shares of Common Stock, Options or Convertible
Securities, then such record date will be deemed to be the date of the issue
or
sale of the shares of Common Stock deemed to have been issued or sold upon
the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case
may
be.
(b)
Adjustment
upon Subdivision or Combination of Common Stock.
If the
Company at any time on or after the Issuance Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of
its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased.
If
the Company at any time on or after the Issuance Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately increased and
the
number of Warrant Shares will be proportionately decreased. Any adjustment
under
this Section 2(b) shall become effective at the close of business on the date
the subdivision or combination becomes effective.
(c)
Adjustment
upon Tender Offer.
In case
the Company or any of its Subsidiaries shall purchase any shares of the
Company’s Common Stock by means of a tender offer, then, effective immediately
prior to the opening of business on the day after the last date (the
“Tender
Offer Expiration Date”)
tenders could have been made pursuant to such tender offer (as it may be
amended) (the last time at which such tenders could have been made on the Tender
Offer Expiration Date is hereinafter sometimes called the “Tender
Offer Expiration Time”):
(i) the
Exercise Price shall be adjusted so that the same shall equal the price
determined by multiplying the Exercise Price in effect immediately prior to
the
close of business on the Tender Offer Expiration Date by a fraction of which:
(A) the numerator shall be the product of the number of shares of Common Stock
outstanding (including Purchased Shares but excluding any shares held in the
treasury of the Company) immediately prior to the Tender Offer Expiration Time
multiplied by the Current Market Price per share of the Common Stock; and (B)
the denominator shall be the sum of (x) the aggregate consideration (determined
as set forth below) payable to stockholders of the Company based on the
acceptance (up to any maximum specified in the terms of the tender offer) of
all
shares validly tendered and not withdrawn as of the Tender Offer Expiration
Time
(the shares deemed so accepted, up to any such maximum, being referred to as
the
“Purchased
Shares”)
and
(y) the product of the number of shares of Common Stock outstanding (less any
Purchased Shares and excluding any shares held in the treasury of the Company)
immediately prior to the Tender Offer Expiration Time and the Current Market
Price per share of Common Stock; and
(ii) the
number of Warrant shares shall be adjusted so that the same shall equal the
number of Warrant Shares in effect immediately prior to the closing of business
on the Tender Offer Expiration Date multiplied by the reciprocal of the fraction
described in the preceding paragraph (i).
For
purposes of this clause (c) of Section 2, the aggregate consideration in any
such tender offer shall equal the sum of the aggregate amount of cash
consideration and the aggregate fair market value (as determined by the Board
of
Directors, whose determination shall be conclusive evidence thereof and which
shall be evidenced by an Officers’ Certificate delivered to Holder) of any other
consideration payable in such tender offer. In the event that the Company is
obligated to purchase shares pursuant to any such tender offer, but the Company
is permanently prevented by applicable law from effecting any or all such
purchases or any or all such purchases are rescinded, the Exercise Price and
number of Warrant Shares shall again be adjusted to be the Exercise Price and
number of Warrant Shares which would have been in effect based upon the number
of shares actually purchased. If the application of this clause (c) of Section
2
to any tender offer would result in an increase in the Exercise Price or a
decrease in the number of Warrant Shares, no adjustment shall be made for such
tender offer under this Section 2. For purposes of this clause (c) of Section
2,
the term “tender offer” shall mean and include both tender offers and exchange
offers, all references to “purchases” of shares in tender offers (and all
similar references) shall mean and include both the purchase of shares in tender
offers and the acquisition of shares pursuant to exchange offers, and all
references to “tendered shares” (and all similar references) shall mean and
include shares tendered in both tender offers and exchange offers.
(d)
Other
Events.
If any
event occurs of the type contemplated by the provisions of this Section 2 but
not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights
with equity features), then the Company’s Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of Warrant Shares
so
as to protect the rights of the Holder; provided that no such adjustment
pursuant to this Section 2(c) will increase the Exercise Price or decrease
the
number of Warrant Shares as otherwise determined pursuant to this Section
2.
3. RIGHTS
UPON DISTRIBUTION OF ASSETS.
If the
Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of shares of Common Stock, by
way
of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way
of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”),
at
any time after the issuance of this Warrant, then, in each such
case:
(a)
any
Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of shares of Common Stock
entitled to receive the Distribution shall be reduced, effective as of the
close
of business on such record date, to a price determined by multiplying such
Exercise Price by a fraction of which (i) the numerator shall be the Closing
Bid
Price of the shares of Common Stock on the trading day immediately preceding
such record date minus the value of the Distribution (as determined in good
faith by the Company’s Board of Directors) applicable to one share of Common
Stock, and (ii) the denominator shall be the Closing Bid Price of the shares
of
Common Stock on the trading day immediately preceding such record date;
and
(b)
the
number of Warrant Shares shall be increased to a number of shares equal to
the
number of shares of Common Stock obtainable immediately prior to the close
of
business on the record date fixed for the determination of holders of shares
of
Common Stock entitled to receive the Distribution multiplied by the reciprocal
of the fraction set forth in the immediately preceding paragraph (a); provided
that in the event that the Distribution is of shares of Common Stock (or common
stock) (“Other
Shares of Common Stock”)
of a
company whose common shares are traded on a national securities exchange or
a
national automated quotation system, then the Holder may elect to receive a
warrant to purchase Other Shares of Common Stock in lieu of an increase in
the
number of Warrant Shares, the terms of which shall be identical to those of
this
Warrant, except that such warrant shall be exercisable into the number of shares
of Other Shares of Common Stock that would have been payable to the Holder
pursuant to the Distribution had the Holder exercised this Warrant immediately
prior to such record date and with an aggregate exercise price equal to the
product of the amount by which the exercise price of this Warrant was decreased
with respect to the Distribution pursuant to the terms of the immediately
preceding paragraph (a) and the number of Warrant Shares calculated in
accordance with the first part of this paragraph (b).
4. PURCHASE
RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a)
Purchase
Rights.
In
addition to any adjustments pursuant to Section 2 above, if at any time the
Company grants, issues or sells any Options, Convertible Securities or rights
to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase
Rights”),
then
the Holder will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on
the
exercise of this Warrant) immediately before the date on which a record is
taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record
is taken, the date as of which the record holders of shares of Common Stock
are
to be determined for the grant, issue or sale of such Purchase
Rights.
(b)
Fundamental
Transactions.
If, at
any time while this Warrant is outstanding there is a Fundamental Transaction,
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the “Alternate
Consideration”).
For
purposes of any such exercise, the determination of the Exercise Price shall
be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration
it
receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder’s option and request made prior to the consummation
of a Fundamental Transaction, any successor to the Company or surviving entity
in such Fundamental Transaction shall, either (1) issue to the Holder a new
warrant substantially in the form of this Warrant and consistent with the
foregoing provisions and evidencing the Holder’s right to purchase the Alternate
Consideration for the aggregate Exercise Price upon exercise thereof, or (2)
purchase the Warrant from the Holder for a purchase price, payable in cash
within five Trading Days after such request (or, if later, on the effective
date
of the Fundamental Transaction), equal to the Black Scholes value of the
remaining unexercised portion of this Warrant on the date of such request.
The
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this paragraph (b) and insuring that the Warrant (or
any
such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
5. NONCIRCUMVENTION.
The
Company hereby covenants and agrees that the Company will not, by amendment
of
its Certificate of Incorporation, Bylaws or through any reorganization, transfer
of assets, consolidation, merger, scheme of arrangement, dissolution, issue
or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, and will at
all
times in good faith carry out all the provisions of this Warrant and take all
action as may be reasonably required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the Company (i) shall not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect,
(ii) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(iii) shall, so long as any of the Exchange Warrants are outstanding, take
all
action necessary to reserve and keep available out of its authorized and
unissued shares of Common Stock, solely for the purpose of effecting the
exercise of the Exchange Warrants, 130% of the number of shares of Common Stock
as shall from time to time be necessary to effect the exercise of the Exchange
Warrants then outstanding (without regard to any limitations on
exercise).
6. WARRANT
HOLDER NOT DEEMED A STOCKHOLDER.
Except
as otherwise specifically provided herein, the Holder, solely in such Person’s
capacity as a holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
any of the rights of a stockholder of the Company or any right to vote, give
or
withhold consent to any corporate action (whether any reorganization, issue
of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which such Person is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed
as
imposing any liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 6, the Company shall provide the Holder with copies
of the same notices and other information given to the stockholders of the
Company generally, contemporaneously with the giving thereof to the
stockholders.
7. REISSUANCE
OF WARRANTS.
(a)
Transfer
of Warrant.
If this
Warrant is to be transferred, the Holder shall surrender this Warrant to the
Company, whereupon the Company will forthwith issue and deliver upon the order
of the Holder a new Warrant (in accordance with Section 7(d)), registered as
the
Holder may request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less then the total number of
Warrant Shares then underlying this Warrant is being transferred, a new Warrant
(in accordance with Section 7(d)) to the Holder representing the right to
purchase the number of Warrant Shares not being transferred.
(b)
Lost,
Stolen or Mutilated Warrant.
Upon
receipt by the Company 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, of any indemnification undertaking by the Holder
to
the Company in customary form and, in the case of mutilation, upon surrender
and
cancellation of this Warrant, the Company shall execute and deliver to the
Holder a new Warrant (in accordance with Section 7(d)) representing the right
to
purchase the Warrant Shares then underlying this Warrant.
(c)
Exchangeable
for Multiple Warrants.
This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance
with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant
will represent the right to purchase such portion of such Warrant Shares as
is
designated by the Holder at the time of such surrender; provided, however,
that
no Warrants for fractional shares of Common Stock shall be given.
(d)
Issuance
of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to the terms
of
this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
(ii) shall represent, as indicated on the face of such new Warrant, the right
to
purchase the Warrant Shares then underlying this Warrant (or in the case of
a
new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant
Shares designated by the Holder which, when added to the number of shares of
Common Stock underlying the other new Warrants issued in connection with such
issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such
new Warrant which is the same as the Issuance Date, and (iv) shall have the
same
rights and conditions as this Warrant.
8. NOTICES.
Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given pursuant to the notice provisions
of
the Master Exchange Agreement. The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Warrant, including in
reasonable detail a description of such action and the reason therefor. Without
limiting the generality of the foregoing, the Company will give written notice
to the Holder (i) immediately upon any adjustment of the Exercise Price, setting
forth in reasonable detail, and certifying, the calculation of such adjustment
and (ii) at least fifteen (15) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend or
distribution upon the shares of Common Stock, (B) with respect to any grants,
issuances or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property to holders of shares of Common
Stock, other than any grant, issuance or sale of any Excluded Securities (C)
for
determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall
be
made known to the public prior to or in conjunction with such notice being
provided to the Holder.
9. AMENDMENT
AND WAIVER.
Except
as otherwise provided herein, the provisions of this Warrant may be amended
and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
written consent of the Required Holders; provided that no such action may
increase the exercise price of any Exchange Warrant or decrease the number
of
shares or class of stock obtainable upon exercise of any Exchange Warrant
without the written consent of the Holder. No such amendment shall be effective
to the extent that it applies to less than all of the holders of the Exchange
Warrants then outstanding.
10. GOVERNING
LAW.
This
Warrant shall be governed by and construed and enforced in accordance with,
and
all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the
State
of New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than
the
State of New York.
11. CONSTRUCTION;
HEADINGS.
This
Warrant shall be deemed to be jointly drafted by the Company and all the
Purchasers and shall not be construed against any person as the drafter hereof.
The headings of this Warrant are for convenience of reference and shall not
form
part of, or affect the interpretation of, this Warrant.
12. DISPUTE
RESOLUTION.
In the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within two
Business Days of receipt of the Exercise Notice giving rise to such dispute,
as
the case may be, to the Holder. If the Holder and the Company are unable to
agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within three Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within two (2) Business Days submit via facsimile (a) the disputed determination
of the Exercise Price to an independent, reputable investment bank selected
by
the Company and approved by the Holder or (b) the disputed arithmetic
calculation of the Warrant Shares to the Company’s independent, outside
accountant. The Company shall cause at its expense the investment bank or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the Holder of the results no later than ten Business
Days from the time it receives the disputed determinations or calculations.
Such
investment bank’s or accountant’s determination or calculation, as the case may
be, shall be binding upon all parties absent demonstrable error.
13. REMEDIES,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
The
remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and the other Transaction Documents
or held at law or in equity (including a decree of specific performance and/or
other injunctive relief), and nothing herein shall limit the right of the Holder
right to pursue actual damages for any failure by the Company to comply with
the
terms of this Warrant. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder
of
this Warrant shall be entitled, in addition to all other available remedies,
to
an injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.
14. TRANSFER.This
Warrant may be offered for sale, sold, transferred or assigned without the
consent of the Company, except as may otherwise be required under the Master
Exchange Agreement.
15. CERTAIN
DEFINITIONS.
For
purposes of this Warrant, the following terms shall have the following
meanings:
(a)
“Approved
Stock Plan”
means
any equity incentive plan or arrangement which has been approved by the Board
of
Directors of the Company, pursuant to which the Company’s securities may be
issued to employees, officers, directors or consultants for services provided
to
the Company or any Subsidiaries thereof.
(b)
“Black
Scholes Value”
means
the value of this Warrant based on the Black and Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg determined as of the day
immediately following the public announcement of the applicable Fundamental
Transaction and reflecting (i) a risk-free interest rate corresponding to the
U.S. Treasury rate for a period equal to the remaining term of this Warrant
as
of such date of request and (ii) an expected volatility equal to the greater
of
60% and the 100 day volatility obtained from the HVT function on
Bloomberg.
(c)
“Bloomberg”
means
Bloomberg Financial Markets.
(d)
“Business
Day”
means
any day other than Saturday, Sunday or other day on which commercial banks
in
The City of New York are authorized or required by law to remain
closed.
(e)
“Closing
Bid Price”
and
“Closing
Sale Price”
means,
for any security as of any date, the last closing bid price and last closing
trade price, respectively, for such security on the Principal Market, as
reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the closing
trade price, as the case may be, then the last bid price or last trade price,
respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or
last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or
last
trade price, respectively, of such security in the over-the-counter market
on
the electronic bulletin board for such security as reported by Bloomberg, or,
if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant
to
Section 12. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during
the
applicable calculation period.
(f)
“Common
Stock”
means
(i) the Company’s shares of Common Stock, par value $0.001 per share, and
(ii) any share capital into which such Common Stock shall have been changed
or any share capital resulting from a reclassification of such Common
Stock.
(g)
“Common
Stock Deemed Outstanding”
means,
at any given time, the number of shares of Common Stock actually outstanding
at
such time, plus the number of shares of Common Stock deemed to be outstanding
pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of whether the
Options or Convertible Securities are actually exercisable at such time, but
excluding any shares of Common Stock owned or held by or for the account of
the
Company or issuable upon conversion of the Convertible Notes and exercise of
the
Exchange Warrants.
(h)
“Convertible
Notes”
means
(i) the New Notes issued pursuant to the New Indenture on the Issuance Date
and
(ii) up to $5,600,000 in additional Notes which may be issued in accordance
with
Section 9.01(l) of the New Indenture.
(i)
“Convertible
Securities”
means
any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for shares of Common Stock.
(j)
“Current
Market Price”
means,
on any date, the average of the daily Closing Sale Price per Share for the
ten
(10) consecutive Trading Days commencing on the record date in respect of
distributions, issuances or other events requiring such computation.
(k)
“Excluded
Securities”
means
(i) any Common Stock issued or issuable: (A) pursuant to any Approved Stock
Plan; (B) pursuant to a bona fide firm commitment underwritten public offering
with a nationally recognized underwriter which generates gross proceeds to
the
Company in excess of $50,000,000 (other than an “at-the-market offering” as
defined in Rule 415(a)(4) under the Securities Act and “equity lines”); (C) upon
conversion of the Convertible Notes or exercise of any of the Exchange Warrants;
(D) in connection with any acquisition by the Company, whether through an
acquisition of stock or a merger of any business, assets or technologies the
primary purpose of which is not to raise equity capital in an amount not to
exceed, in the aggregate, 10% of the outstanding shares of Common Stock in
any
calendar year; or (E) upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof (provided
that the
terms of such options or warrants are not amended or modified in any manner
after the date hereof) or an option or warrant issued or granted in compliance
with this paragraph; or (ii) any Common Stock or preferred stock in a maximum
aggregate amount of up to $10,000,000 issued in connection with the issuance
of
additional Notes as contemplated by Section 3.01 of the New Indenture occurring
within 90 days of the Issuance Date; provided
that in
order to constitute an Excluded Security for purposes of this Warrant, the
per
share price paid for such Common Stock or deemed to be paid for such Common
Stock upon the conversion of the preferred stock in accordance with the terms
thereof (with such “Deemed Price Per Share” calculated in accordance with the
provisions of Section 2(a)(ii) of this Warrant) shall not be less than 80%
of
the Exercise Price in effect on the date of such issuance.
(l)
“Expiration
Date”
means
the date that is sixty (60) months after the Issuance Date as set forth in
introductory paragraph of this Warrant; provided
that if
such date falls on a day other than a Business Day or on which trading does
not
take place on the Principal Market (a “Holiday”),
the
next date that is not a Holiday.
(m)
“Fundamental
Transaction”
means
that the Company shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Person, or (ii) sell, assign, transfer,
convey or otherwise dispose of all or substantially all of the properties or
assets of the Company to another Person, or (iii) be the subject of a purchase,
tender or exchange offer by another Person that is accepted by the holders
of
more than the 50% of the outstanding shares of Common Stock (not including
any
shares of Common Stock held by the Person or Persons making or party to, or
associated or affiliated with the Persons making or party to, such purchase,
tender or exchange offer), or (iv) consummate a stock purchase agreement or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby
such other Person acquires more than the 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock purchase agreement or other business
combination), or (v) reorganize, recapitalize or reclassify its Common
Stock.
(n)
“New
Indenture”
means
that certain Indenture dated January 24, 2007, between the Company and
The Bank of New York, as trustee (as the same may be amended from time to
time).
(o)
“Options”
means
any rights, warrants or options to subscribe for or purchase shares of Common
Stock or Convertible Securities.
(p)
“Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization, any other entity and
a
government or any department or agency thereof.
(q)
“Principal
Market”
means
the OTC Bulletin Board.
(r)
“Required
Holders”
means
the holders of the Exchange Warrants representing at least a majority of shares
of Common Stock underlying the Exchange Warrants then outstanding.
(s)
“Trading
Day”
means
(a) if the applicable security is listed or admitted for trading on the New
York
Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market
or
another national security exchange, a day on which the New York Stock Exchange,
The NASDAQ Global Select Market, The NASDAQ Global Market or such other national
security exchange is open for business, (b) if the applicable security is quoted
on the American Stock Exchange, a day during which trades may be made thereon
or
(c) if the applicable security is not so listed, admitted for trading or quoted,
any Business Day.
[Signature
Page Follows]
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to Purchase Common Stock to be duly executed
as
of the Issuance Date set out above.
|
By:
Name:
Title:
|
la-893175
EXHIBIT
A
EXERCISE
NOTICE
TO
BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT
TO PURCHASE COMMON STOCK
The
undersigned holder hereby exercises the right to purchase _________________
of
the shares of Common Stock (“Warrant
Shares”)
of FP
Technology, Inc., a Delaware corporation (the “Company”),
evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
1.
Form
of Exercise Price. The Holder intends that payment of the Exercise Price shall
be made as:
___________ a
“Cash
Exercise”
in
respect of ___________ Warrant Shares; and/or
___________ a
“Cashless
Exercise”
in
respect of ____________ Warrant Shares.
2.
Payment of Exercise Price. In the event that the holder has elected a Cash
Exercise in respect of some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the
Warrant.
3.
Delivery of Warrant Shares. The Company shall deliver to the holder __________
Warrant Shares in accordance with the terms of the Warrant.
Date:
_______________ __, ______
Name
of
Registered Holder
By:
Name:
Title:
ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs Corporate
Stock Transfer to
issue
the above indicated number of shares of Common Stock in accordance with the
Transfer Agent Instructions dated ____________________ from the Company and
acknowledged and agreed to by Corporate Stock Transfer.
By:
Name:
Title:
