EXHIBIT 10.2
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE AFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
PATRON SYSTEMS, INC.
WARRANT TO PURCHASE
____________ SHARES
OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
(Void after March __, 2011)
NO: ____
This certifies that for value, _______________________________, or
registered assigns (the "HOLDER"), is entitled, subject to the terms set forth
below, at any time from and after March __, 2006 (the "ORIGINAL ISSUANCE DATE")
and before 5:00 p.m., Eastern Time, on March __, 2011 (the "EXPIRATION DATE"),
to purchase from PATRON SYSTEMS, INC., a Delaware corporation (the "COMPANY"),
__________________________ (______) shares (subject to adjustment as described
herein), of common stock, par value $0.01 per share, of the Company (the "COMMON
STOCK"), upon surrender hereof, at the administrative office of the Company
referred to below, with a duly executed subscription form in the form attached
hereto as EXHIBIT A and simultaneous payment therefor in lawful, immediately
available money of the United States or otherwise as hereinafter provided, at an
initial exercise price per share of $0.10 (the "PURCHASE PRICE"). The Holder
agrees not to exercise this Warrant until such time as an amendment to the
Company's Certificate of Incorporation, as amended, which provides for a
sufficient number of authorized but unissued and unreserved shares of Common
Stock to permit the exercise of all Warrants (as hereinafter defined) becomes
effective.
The Purchase Price is subject to further adjustment as provided below,
and the term "COMMON STOCK" shall include, unless the context otherwise
requires, the stock and other securities and property at the time receivable
upon the exercise of this Warrant. The term "WARRANTS," as used herein, shall
mean this Warrant and any other Warrants delivered in substitution or exchange
therefor as provided herein.
This Warrant was issued in connection with the Company's private
placement offering (the "OFFERING") of units ("UNITS"), each Unit consisting of
(i) twenty (20) shares of the Company's Series A Convertible Preferred Stock
(the "PREFERRED STOCK") and (ii) a Warrant to purchase 416,667 shares of Common
Stock, on a thirty (30) Unit ($3,000,000) minimum amount and a fifty-four (54)
Unit ($5,400,000) maximum amount basis, as described in greater detail in the
Company's Confidential Information Memorandum, dated January 23, 2006, as
amended or supplemented from time to time (the "MEMORANDUM"). Xxxxxxx & Company
(UK) Ltd. acted as placement agent for the Offering. In the Offering, the
Company sold the Units to "accredited investors" pursuant to Subscription
Agreements.
1. EXERCISE.
A. This Warrant may be exercised at any time or from time to time
from and after the Original Issuance Date and before 5:00 p.m., Eastern Time, on
the Expiration Date, on any business day, for the full number of shares of
Common Stock called for hereby, by surrendering it at the administrative office
of the Company, at 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000,
with the subscription form duly executed, together with payment in an amount
equal to (a) the number of shares of Common Stock called for on the face of this
Warrant, as adjusted in accordance with the terms of this Warrant, multiplied
(b) by the Purchase Price. Payment of the Purchase Price shall be made by
payment in immediately available funds. This Warrant may be exercised for less
than the full number of shares of Common Stock at the time called for hereby,
except that the number of shares of Common Stock receivable upon the exercise of
this Warrant as a whole, and the sum payable upon the exercise of this Warrant
as a whole, shall be proportionately reduced. Upon a partial exercise of this
Warrant in accordance with the terms hereof, this Warrant shall be surrendered,
and a new Warrant of the same tenor and for the purchase of the number of such
shares not purchased upon such exercise shall be issued by the Company to Holder
without any charge therefor. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Common Stock issuable upon such exercise shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date.
Within two (2) business days after such date, the Company shall issue and
deliver to the person or persons entitled to receive the same a certificate or
certificates for the number of full shares of Common Stock issuable upon such
exercise, together with cash, in lieu of any fraction of a share, equal to such
fraction of the then Fair Market Value (as defined below) on the date of
exercise of one full share of Common Stock.
B. NET ISSUE EXERCISE. If the Fair Market Value of one share of
Common Stock is greater than the Purchase Price (at the date of calculation set
forth below), in lieu of exercising this Warrant for cash pursuant to SECTION
1(A) above, the Holder may elect to satisfy the Purchase Price by exchanging the
Warrant for a number of shares of Common Stock computed using the following
formula (such election being referred to herein as a "NET ISSUE EXERCISE
ELECTION"):
X = Y(A-B)
------
A
2
Where X = the number of shares of Common Stock to be issued to
the Holder pursuant to this SECTION 1.
Y = the number of shares of Common Stock purchasable
under this Warrant or, if only a portion of this
Warrant is being exercised, the portion of this
Warrant being exercised (at the date of such
calculation).
A = the Fair Market Value of one share of Common Stock
(at the date of such calculation).
B = the Exercise Price per share of Common Stock (as
adjusted to the date of such calculation).
In the event that the Holder makes a Net Issue Exercise Election pursuant to
this SECTION 1(B), the provisions of SECTION 1(A) regarding partial exercise and
delivery obligations of the Holder and the Company, shall be fully applicable
upon such election.
C. "FAIR MARKET VALUE" shall mean, as of any date: (i) if shares
of the Common Stock are listed on a national securities exchange, the average of
the closing prices as reported for composite transactions during the twenty (20)
consecutive trading days preceding the trading day immediately prior to such
date or, if no sale occurred on a trading day, then the mean between the closing
bid and asked prices on such exchange on such trading day; (ii) if shares of the
Common Stock are not so listed but are traded on the NASDAQ National Market
("NNM"), the average of the closing prices as reported on the NNM during the
twenty (20) consecutive trading days preceding the trading day immediately prior
to such date or, if no sale occurred on a trading day, then the mean between the
highest bid and lowest asked prices as of the close of business on such trading
day, as reported on the NNM; or if applicable, the Nasdaq Capital Market
("NCM"), or if not then included for quotation on the NNM or the NCM, the
average of the highest reported bid and lowest reported asked prices as reported
by the OTC Bulletin Board of the National Quotation Bureau, as the case may be;
or (iii) if the shares of the Common Stock are not then publicly traded, the
fair market price of the Common Stock as determined in good faith by at least a
majority of the Board of Directors of the Company (the "BOARD").
2. SHARES FULLY PAID; PAYMENT OF TAXES. All shares of Common Stock issued
upon the exercise of a Warrant shall be validly issued, fully paid and
non-assessable, and the Company shall pay all taxes and other governmental
charges (other than income taxes to the holder) that may be imposed in respect
of the issue or delivery thereof.
3. TRANSFER AND EXCHANGE. This Warrant and all rights hereunder are
transferable, in whole or in part, on the books of the Company maintained for
such purpose at its principal office referred to above by Holder in person or by
duly authorized attorney, upon surrender of this Warrant together with a
completed and executed assignment form in the form attached as EXHIBIT B,
payment of any necessary transfer tax or other governmental charge imposed upon
such transfer and an opinion of counsel reasonably acceptable to the Company
stating that such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended
3
(the "1933 ACT"). Upon any partial transfer, the Company will issue and deliver
to Holder a new Warrant or Warrants with respect to the shares of Common Stock
not so transferred. Each taker and holder of this Warrant, by taking or holding
the same, consents and agrees that this Warrant when endorsed in blank shall be
deemed negotiable and that when this Warrant shall have been so endorsed, the
holder hereof may be treated by the Company and all other persons dealing with
this Warrant as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented hereby, or to the transfer hereof on
the books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered Holder hereof
as the owner for all purposes.
This Warrant is exchangeable at such office for Warrants for the same
aggregate number of shares of Common Stock, each new Warrant to represent the
right to purchase such number of shares as the Holder shall designate at the
time of such exchange.
4. ANTI-DILUTION PROVISIONS. The Purchase Price in effect at any time and
the number and kind of securities issuable upon exercise of this Warrant shall
be subject to adjustment from time to time upon the happening of certain events
as follows:
A. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company
at any time or from time to time on or after the Original Issuance Date effects
a subdivision of the outstanding Common Stock, the Purchase Price then in effect
immediately before that subdivision shall be proportionately decreased, and
conversely, if the Company at any time or from time to time on or after the
Original Issuance Date combines the outstanding shares of Common Stock into a
smaller number of shares, the Purchase Price then in effect immediately before
the combination shall be proportionately increased. Any adjustment under this
SECTION 4(A) shall become effective at the close of business on the date the
subdivision or combination becomes effective.
B. ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. If the
Company at any time or from time to time on or after the Original Issuance Date
makes or fixes a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in additional
shares of Common Stock, then and in each such event the Purchase Price then in
effect shall be decreased as of the time of such issuance or, in the event such
record date is fixed, as of the close of business on such record date, by
multiplying the Purchase Price then in effect by a fraction (1) the numerator of
which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date and (2) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution; PROVIDED,
HOWEVER, that if such record date is fixed and such dividend is not fully paid
or if such distribution is not fully made on the date fixed therefor, the
Purchase Price shall be recomputed accordingly as of the close of business on
such record date and thereafter the Purchase Price shall be adjusted pursuant to
this SECTION 4(B) as of the time of actual payment of such dividends or
distributions.
C. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the
event the Company at any time or from time to time on or after the Original
Issuance Date makes, or fixes
4
a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the Company
other than shares of Common Stock, then and in each such event provision shall
be made so that the Holders of Warrants shall receive upon exercise thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Company which they would have received had their
Warrants been exercised to purchase Common Stock on the date of such event and
had they thereafter, during the period from the date of such event to and
including the exercise date, retained such securities receivable by them as
aforesaid during such period, subject to all other adjustments called for during
such period under this SECTION 4 with respect to the rights of the Holders of
the Warrants.
D. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. In
the event that at any time or from time to time on or after the Original
Issuance Date, the Common Stock issuable upon the exercise of the Warrants is
changed into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this SECTION
4), then and in any such event each Holder of Warrants shall have the right
thereafter to exercise such Warrants to purchase the kind and amount of stock
and other securities and property receivable upon such recapitalization,
reclassification or other change, by holders of the maximum number of shares of
Common Stock for which such Warrants could have been exercised immediately prior
to such recapitalization, reclassification or change, all subject to further
adjustment as provided herein.
E. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS.
If at any time or from time to time on or after the Original Issuance Date there
is a capital reorganization of the Common Stock (other than a recapitalization,
subdivision, combination, reclassification or exchange of shares provided for
elsewhere in this SECTION 4) or a merger or consolidation of the Company with or
into another corporation, or the sale of all or substantially all of the
Company's properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, provision shall be made so that
the Holders of the Warrants shall thereafter be entitled to receive upon
exercise of the Warrants the number of shares of stock or other securities or
property to which a holder of the number of shares of Common Stock deliverable
upon exercise would have been entitled on such capital reorganization, merger,
consolidation, or sale. In any such case, appropriate adjustment shall be made
in the application of the provisions of this SECTION 4 with respect to the
rights of the Holders of the Warrants after the reorganization, merger,
consolidation or sale to the end that the provisions of this SECTION 4
(including adjustment of the Purchase Price then in effect and the number of
shares purchasable upon exercise of the Warrants) shall be applicable after that
event and be as nearly equivalent as may be practicable.
F. SALE OF SHARES BELOW CONVERSION PRICE:
(1) If at any time or from time to time following the
Original Issuance Date, the Company issues or sells, or is deemed by the express
provisions of this SECTION 4(F) to have issued or sold, Additional Shares of
Common Stock (as hereinafter defined), other than as a dividend or other
distribution on any class of stock and other than upon a subdivision or
combination of shares of Common Stock, in either case as provided in SECTION
4(A) above, for
5
an Effective Price (as hereinafter defined) less than the then existing
Conversion Price (as hereinafter defined), then and in each such case the then
existing Purchase Price shall be reduced, as of the opening of business on the
date of such issue or sale, to a price equal to one hundred twenty-five percent
(125%) of the Conversion Price as adjusted pursuant to Section 3(e) of the
Company's Certificate of Designation of Preferences, Rights and Limitations of
Series A Convertible Preferred Stock and Series A-1 Convertible Preferred Stock
designating the rights, preferences and privileges of the Preferred Stock
("CERTIFICATE OF DESIGNATION").
(2) For the purpose of making any adjustment required
under SECTION 4(F), the consideration received by the Company for any issue or
sale of securities shall (I) to the extent it consists of cash be computed at
the amount of cash received by the Company, (II) to the extent it consists of
property other than cash, be computed at the fair value of that property as
determined in good faith by the Board, (III) if Additional Shares of Common
Stock, Convertible Securities (as hereinafter defined) or rights or options to
purchase either Additional Shares of Common Stock or Convertible Securities are
issued or sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be computed as the portion of the
consideration so received that may be reasonably determined in good faith by the
Board to be allocable to such Additional Shares of Common Stock, Convertible
Securities or rights or options, and (IV) be computed after reduction for all
expenses payable by the Company in connection with such issue or sale.
(3) For the purpose of the adjustment required under
SECTION 4(F), if the Company issues or sells any rights, warrants or options for
the purchase of, or stock or other securities convertible into or exchangeable
for, Additional Shares of Common Stock (such convertible or exchangeable stock
or securities being hereinafter referred to as "CONVERTIBLE SECURITIES") and if
the Effective Price of such Additional Shares of Common Stock is less than the
Conversion Price then in effect, then in each case the Company shall be deemed
to have issued at the time of the issuance of such rights, warrants, options or
Convertible Securities the maximum number of Additional Shares of Common Stock
issuable upon exercise, conversion or exchange thereof and to have received as
consideration for the issuance of such shares an amount equal to the total
amount of the consideration, if any, received by the Company for the issuance of
such rights, warrants, options or Convertible Securities, plus, in the case of
such rights, warrants or options, the minimum amounts of consideration, if any,
payable to the Company upon the exercise of such rights, warrants or options,
plus, in the case of Convertible Securities, the minimum amounts of
consideration, if any, payable to the Company (other than by cancellation of
liabilities or obligations evidenced by such Convertible Securities) upon the
conversion or exchange thereof. No further adjustment of the Purchase Price,
adjusted upon the issuance of such rights, warrants, options or Convertible
Securities, shall be made as a result of the actual issuance of Additional
Shares of Common Stock on the exercise of any such rights, warrants or options
or the conversion or exchange of any such Convertible Securities. If any such
rights or options or the conversion or exchange privilege represented by any
such Convertible Securities shall expire without having been exercised, the
Purchase Price adjusted upon the issuance of such rights, warrants, options or
Convertible Securities shall be readjusted to the Purchase Price which would
have been in effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares of
6
Common Stock, if any, actually issued or sold on the exercise of such rights,
warrants, or options or rights of conversion or exchange of such Convertible
Securities, and such Additional Shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Company upon such exercise,
plus the consideration, if any, actually received by the Company for the
granting of all such rights, warrants, or options, whether or not exercised,
plus the consideration received for issuing or selling the Convertible
Securities actually converted or exchanged, plus the consideration, if any,
actually received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion or
exchange of such Convertible Securities.
(4) For the purpose of the adjustment required under
SECTION 4(F), if the Company issues or sells, or is deemed by the express
provisions of this SECTION 4 to have issued or sold, any rights or options for
the purchase of Convertible Securities and if the Effective Price of the
Additional Shares of Common Stock underlying such Convertible Securities is less
than the Conversion Price then in effect, then in each such case the Company
shall be deemed to have issued at the time of the issuance of such rights or
options the maximum number of Additional Shares of Common Stock issuable upon
conversion or exchange of the total amount of Convertible Securities covered by
such rights or options and to have received as consideration for the issuance of
such Additional Shares of Common Stock an amount equal to the amount of
consideration, if any, received by the Company for the issuance of such rights,
warrants or options, plus the minimum amounts of consideration, if any, payable
to the Company upon the exercise of such rights, warrants or options, plus the
minimum amount of consideration, if any, payable to the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion or exchange of such Convertible Securities. No
further adjustment of the Purchase Price, adjusted upon the issuance of such
rights, warrants or options, shall be made as a result of the actual issuance of
the Convertible Securities upon the exercise of such rights, warrants or options
or upon the actual issuance of Additional Shares of Common Stock upon the
conversion or exchange of such Convertible Securities. The provisions of
paragraph (3) above for the readjustment of the Purchase Price upon the
expiration of rights, warrants or options or the rights of conversion or
exchange of Convertible Securities shall apply MUTATIS mutandis to the rights,
warrants options and Convertible Securities referred to in this paragraph (4).
(5) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all
shares of Common Stock issued by the Company on or after the Original Issuance
Date, whether or not subsequently reacquired or retired by the Company, other
than (I) shares of Common Stock issuable upon conversion of the Preferred Stock,
(II) shares of Common Stock issuable upon exercise of the Warrants ("WARRANT
SHARES"), (III) shares of Common Stock issuable upon exercise of warrants,
options and convertible securities outstanding as of the Original Issuance Date
(provided that the terms of such warrants, options and convertible securities
are not modified after the Original Issuance Date to adjust the exercise price
other than pursuant to anti-dilution provisions), (IV) shares of Common Stock
issued in connection with BONA FIDE acquisitions, mergers, joint ventures and
other similar transactions approved by the Board, (V) shares of Common Stock
issued pursuant to any event for which adjustment is made to the Purchase Price
under SECTION 4 hereof or to the exercise price under the anti-dilution
provisions of any warrants outstanding as of the Original Issuance Date or the
Agent Warrants, and (VI) shares of Common Stock issued or issuable to banks,
equipment lessors or other financial institutions pursuant to a commercial
leasing or non-convertible debt financing transaction approved by the Board. The
"EFFECTIVE PRICE" of Additional Shares of Common Stock shall
7
mean the quotient determined by dividing the total number of Additional Shares
of Common Stock issued or sold, or deemed to have been issued or sold by the
Company under this SECTION 4(F), into the aggregate consideration received, or
deemed to have been received, by the Company for such issue under this SECTION
4(F), for such Additional Shares of Common Stock.
(6) Other than a reduction pursuant to its applicable
anti-dilution provisions, any reduction in the conversion price of any
Convertible Security, whether outstanding on the Original Issuance Date or
thereafter, or the price of any option, warrant or right to purchase Common
Stock or any Convertible Security (whether such option, warrant or right is
outstanding on the Original Issuance Date or thereafter), to an Effective Price
less than the current Conversion Price, shall be deemed to be an issuance of
such Convertible Security and all such options, warrants or rights at such
Effective Price, and the provisions of SECTIONS 4(F)(3), (4) and (5) shall apply
thereto MUTATIS MUTANDIS.
(7) Any time an adjustment is made to the Purchase Price
pursuant to SECTION 4(F), a corresponding proportionate change shall be made to
the number of shares of Common Stock issuable upon exercise of this Warrant.
(8) "CONVERSION PRICE" shall mean the conversion price of
the Preferred Stock, as determined and adjusted pursuant to the terms of Section
3(e) of the Certificate of Designation, in effect immediately prior to the
Company's issuance or sale of Additional Shares of Common Stock.
G. NO ADJUSTMENTS IN CERTAIN CIRCUMSTANCES. No adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one ($0.01) cent in such price; PROVIDED,
HOWEVER, that any adjustments which by reason of this SECTION 4(G) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment required to be made hereunder. All calculations under this
SECTION 4(G) shall be made to the nearest cent or to the nearest one-hundredth
of a share, as the case may be.
5. NOTICES OF RECORD DATE. In case:
A. the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the exercise of
the Warrants) for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities, or to receive any other right, or
B. of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation, or
C. of any voluntary dissolution, liquidation or winding-up of the
Company, then, and in each such case, the Company will mail or cause to be
mailed to each holder of a Warrant at the time outstanding a notice specifying,
as the case may be, (a) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (b) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or
8
winding-up is expected to take place, and the time, if any is to be fixed, as of
which the holders of record of Common Stock (or such stock or securities at the
time receivable upon the exercise of the Warrants) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up, such
notice shall be mailed at least ten (10) days prior to the date therein
specified.
6. LOSS OR MUTILATION. Upon receipt by the Company of evidence
satisfactory to it (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant and (in the
case of loss, theft or destruction) of indemnity satisfactory to it (in the
exercise of reasonable discretion), and (in the case of mutilation) upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.
7. RESERVATION OF COMMON STOCK. The Company shall at all times reserve and
keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All of the shares of Commons
Stock issuable upon the exercise of the rights represented by this Warrant will,
upon issuance and receipt of the Purchase Price therefor, be fully paid and
nonassessable, and free from all preemptive rights, rights of first refusal or
first offer, taxes, liens and charges of whatever nature, with respect to the
issuance thereof.
8. REGISTRATION RIGHTS AGREEMENT. The Holder of this Warrant is entitled
to have the Warrant Shares registered for resale under the 1933 Act, pursuant to
and in accordance with the Registration Rights Agreement dated as of the date
hereof by and between the Holder and the Company.
9. NOTICES. All notices and other communications from the Company to the
Holder of this Warrant shall be mailed by first class, registered or certified
mail, postage prepaid, to the address furnished to the Company in writing by the
Holder.
10. CHANGE; MODIFICATIONS; WAIVER. No terms of this Warrant may be amended,
waived or modified except by the express written consent of the Company and the
holders of not less than 50.1% of the then outstanding Warrants issued in
connection with the Offering.
11. HEADINGS. The headings in this Warrant are for purposes of convenience
in reference only, and shall not be deemed to constitute a part hereof.
12. GOVERNING LAW, ETC. This Agreement shall be governed by and construed
exclusively in accordance with the internal laws of the State of New York
without regard to the conflicts of laws principles thereof. The parties hereto
hereby irrevocably agree that any suit or proceeding arising directly and/or
indirectly pursuant to or under this Agreement, shall be brought solely and
exclusively in a federal or state court located in the City, County and State of
New York. By its execution hereof, the parties hereby covenant and irrevocably
submit to the IN PERSONAM jurisdiction of the federal and state courts located
in the City, County and State of New York and agree that any process in any such
action may be served upon any of them personally, or by certified mail or
registered mail upon them or their agent, return receipt
9
requested, with the same full force and effect as if personally served upon them
in New York City. The parties hereto waive any claim that any such jurisdiction
is not a convenient forum for any such suit or proceeding and any defense or
lack of IN PERSONAM jurisdiction with respect thereto. In the event of any such
action or proceeding, the party prevailing therein shall be entitled to payment
from the other party hereto of all of its reasonable legal fees and expenses.
Dated:
-------------------------------------
PATRON SYSTEMS, INC.
By:
--------------------------------
Name:
Title:
10
EXHIBIT A
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):
|_| ________ shares of the Common Stock covered by such Warrant;
or
|_| the maximum number of shares of Common Stock covered by such
Warrant pursuant to the net issue exercise procedure set forth
in Section 1(B).
The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):
|_| $__________ in lawful money of the United States; and/or
|_| the cancellation of such portion of the attached Warrant as is
exercisable for a total of _______ shares of Common Stock
(using a Fair Market Value of $_______ per share for purposes
of this calculation); and/or
|_| the cancellation of such number of shares of Common Stock as
is necessary, in accordance with the formula set forth in
Section 1(B), to exercise this Warrant with respect to the
maximum number of shares of Common Stock purchasable pursuant
to the net issue exercise procedure set forth in Section 1(B).
The undersigned requests that the certificates for such shares of
Common Stock be issued in the name of, and be delivered to,
, whose address is .
-------------------------- ---------------------------
Dated:
-------------------------------
(Signature of Registered Owner
-------------------------------------------
(Street Address)
-------------------------------------------
(City / State / Zip Code)
-------------------------------------------
11
EXHIBIT B
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Common Stock set forth below:
NAME OF ASSIGNEE ADDRESS NUMBER OF SHARES
---------------- ------- ----------------
and does hereby irrevocably constitute and appoint __________________________
Attorney to make such transfer on the books of Patron Systems, Inc., maintained
for the purpose, with full power of substitution in the premises.
Dated:
-------------------------------
---------------------------------------
(Signature)
---------------------------------------
(Witness)
The undersigned Assignee of the Warrant hereby makes to Patron Systems,
Inc., as of the date hereof, with respect to the Assignee, all of the
representations and warranties made by the Holder, and the undersigned Assignee
agrees to be bound by all the terms and conditions of the Warrant and the Patron
Systems, Inc. Registration Rights Agreement, dated as of ________ __, 2006, by
and between Patron Systems, Inc. and the Holder.
Dated:
-------------------------------
---------------------------------------
(Signature)
12
