NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY APPLICABLE STATE SECURITIES LAWS, AND NEITHER MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (I) PURSUANT TO
REGISTRATION UNDER THE ACT OR (II) IN COMPLIANCE WITH AN EXEMPTION THEREFROM AND
ACCOMPANIED, IF REQUESTED BY THE COMPANY, WITH AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH AN
EXEMPTION THEREFROM.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SECTION 3 OF THIS WARRANT
Warrant No. A-____ Number of Shares: ________
(subject to adjustment)
Date of Issuance: July 2, 2004
UNIVERSAL DETECTION TECHNOLOGY
COMMON STOCK PURCHASE WARRANT
Universal Detection Technology, a California corporation (the "COMPANY"),
for value received, hereby certifies that [__________________], or [HIS/HER/ITS]
registered assigns (the "REGISTERED HOLDER"), is entitled, subject to the terms
and conditions set forth below, to purchase from the Company, in whole or in
part, at any time and from time to time on or after the date of issuance and,
unless earlier terminated pursuant to Section 1(d) below, on or before 5:00
p.m., Pacific Standard Time, on July 2, 2009, and shall expire thereafter (the
"EXERCISE PERIOD"), [_________] shares of Common Stock of the Company (the
"COMMON Stock"), at an exercise price of $0.50 per share. The shares purchasable
upon exercise of this warrant ("WARRANT") and the exercise price per share, each
as adjusted from time to time pursuant to the provisions of this Warrant, are
hereinafter referred to as the "WARRANT SHARES" and the "EXERCISE PRICE,"
respectively.
1. EXERCISE.
(a) This Warrant may be exercised by the Registered Holder, in whole
or in part, by surrendering this Warrant, along with the purchase
form appended hereto as EXHIBIT A duly executed and completed by
the Registered Holder or by the Registered Holder's duly
authorized attorney, at the principal office of the Company, or
at such other office or agency as the Company may designate by
notice in writing to the Registered Holder, accompanied by either
cash or certified cashier's check payable to the Company (or wire
transfer of immediately available funds), in lawful money of the
United States, of the Exercise Price payable in respect of the
number of Warrant Shares purchased upon such exercise (the
"AGGREGATE EXERCISE PRICE").
(b) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on
which this Warrant shall have been
1
surrendered to the Company as provided in subsection 1(a) above
(the "EXERCISE DATE"). At such time, the person or persons in
whose name or names any certificates for Warrant Shares shall be
issuable upon such exercise as provided in subsection 1(c) below
shall be deemed to have become the holder or holders of record of
the Warrant Shares represented by such certificates.
(c) Within fifteen (15) days after the date of exercise of this
Warrant, the Company, at its expense, will cause to be issued in
the name of, and delivered to, the Registered Holder, or as such
Holder (upon payment by such Holder of any applicable transfer
taxes) may direct: (i) a certificate or certificates for the
number of full Warrant Shares to which the Registered Holder
shall be entitled upon such exercise; and (ii) a new Warrant
representing the shares with respect to which this Warrant shall
not have been exercised (unless this Warrant has been fully
exercised or has expired); PROVIDED, HOWEVER, that the Company
shall not be required to pay any tax that may be payable in
respect of any transfer involving the issuance and delivery of
any such certificate upon exercise in a name other than that of
the Registered Holder and the Company shall not be required to
issue or deliver certificates until the person or person
requesting the issuance thereof shall have paid the Company the
amount of tax or shall have established to the Company that such
tax has been paid. Notwithstanding the foregoing, the Registered
Holder shall be solely responsible for any income taxes payable
and arising from the issuance or exercise of this Warrant, or any
AD VALOREM property or intangible tax assessed against the
Registered Holder.
(d) Notwithstanding any other provision of this Warrant, the right to
exercise this Warrant shall terminate prior to July 2, 2009, upon
the sale of all or substantially all of the capital stock, assets
or business of the Company, by merger, consolidation, sale of
assets or otherwise in which the Registered Holder would be
entitled to cash or securities traded on a national security
exchange, the Nasdaq Stock Market, or an over-the-counter market
in exchange for the Warrant Shares (other than a merger or
consolidation in which all or substantially all of the
individuals and entities who were beneficial owners of the Common
Stock immediately prior to such transaction beneficially own,
directly or indirectly, more than 50% of the outstanding
securities entitled to vote generally in the election of
directors of the resulting, surviving or acquiring corporation in
such transaction).
2. ADJUSTMENTS. In order to prevent dilution of the rights granted under
this Warrant and to grant the Registered Holder certain additional
rights, the Exercise Price shall be subject to adjustment from time to
time as provided in this Section 2 and the number of Warrant Shares
shall be subject to adjustment from time to time as provided in this
Section 2.
(a) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company
shall at any time after the date on which this Warrant was first
issued (the "ORIGINAL ISSUE DATE") effect a subdivision (by any
stock split or otherwise) of the outstanding Common Stock into a
greater number of shares, the Exercise Price in effect
immediately before that subdivision shall be proportionately
decreased and the number of shares of Common Stock obtainable
upon exercise of this Warrant shall be proportionately increased.
Conversely, if the Company shall at any time or from time to time
after the Original Issue Date combine (by reverse stock split or
otherwise) the outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately before
the combination shall be proportionately increased and the number
of
2
shares of Common Stock obtainable upon exercise of this Warrant
shall be proportionately decreased. Any adjustment under this
paragraph shall become effective at the close of business on the
date the subdivision or combination becomes effective.
(b) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event
the Company at any time, or from time to time after the Original
Issue Date shall make or issue, or fix 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 Exercise Price then
in effect immediately before such event shall be decreased as of
the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record
date, by multiplying the Exercise Price then in effect by a
fraction:
(i) the numerator 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; and
(ii) 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 shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Exercise Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Exercise Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.
(c) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If at
any time after the Original Issue Date while this Warrant remains
outstanding and unexpired, the Common Stock issuable upon
exercise of this Warrant is changed into the same or a different
number of shares of any class or classes of stock, this Warrant
will thereafter represent the right to acquire such number and
kind of securities as would have been issuable as a result of
exercise of this Warrant and the Exercise Price therefor shall be
appropriately adjusted, all subject to further adjustment in this
Section 2.
(d) ADJUSTMENT FOR MERGERS OR REORGANIZATIONS, ETC. Any
reorganization, recapitalization, reclassification,
consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction involving the Company in
which the Common Stock is converted into or exchanged for
securities, cash or other property (other than a transaction
covered by subsections 1(d), 2(a), or 2(b)) is referred to herein
as an "ORGANIC CHANGE." Prior to the consummation of any such
Organic Change, the Company shall make appropriate provision (in
form and substance reasonably satisfactory to the Registered
Holders of a majority of the Warrants then remaining outstanding)
to ensure that the Registered Holder shall have the right to
receive, in lieu of or in addition to (as the case may be) such
shares of Common Stock immediately acquirable and receivable upon
exercise of this Warrant, the kind and amount of securities, cash
or other property as may be issued or payable with respect to or
in exchange for
3
the number of shares of Common Stock immediately acquirable and
receivable upon exercise of this Warrant had such Organic Change
not taken place. In such case, appropriate adjustment (in form
and substance reasonably satisfactory to the Registered Holders
of a majority of the Warrants then remaining outstanding) shall
be made with respect to the Registered Holder's rights and
interests to ensure that the provisions of this Section 2 shall
thereafter be applicable to the Warrants.
(e) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price pursuant to this
Section 2, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof
and furnish to the Registered Holder a certificate setting forth
such adjustment or readjustment (including the kind and amount of
securities, cash or other property for which this Warrant shall
be exercisable and the Exercise Price) and showing in detail the
facts upon which such adjustment or readjustment is based. The
Company shall, upon the written request at any time of the
Registered Holder, promptly furnish or cause to be furnished to
the Registered Holder a certificate setting forth (i) the
Exercise Price then in effect and (ii) the number of shares of
Common Stock and the amount, if any, of other securities, cash or
property which then would be received upon the exercise of this
Warrant, and shall cause a copy of such certificate to be mailed
(by first-class mail, postage prepaid) to the Registered Holder.
3. REQUIREMENTS FOR TRANSFER.
(a) This Warrant and the Warrant Shares shall not be sold or
transferred unless either (i) they first shall have been
registered under the Act or (ii) the Company first shall have
been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or
transfer is exempt from the registration requirements of the Act
and that the transferee is an "accredited investor" as the term
is defined in Rule 501(a) of Regulation D.
(b) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL SUCH SECURITIES ARE REGISTERED
UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO AN EXEMPTION THEREFROM
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED
TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED."
The foregoing legend shall be removed from the certificates representing
any Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.
4. NO IMPAIRMENT. The Company will not, by amendment of its charter or
through reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or
4
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order
to protect the rights of the holder of this Warrant against
impairment.
5. NOTICES OF RECORD DATE, ETC. In the event:
(a) the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time deliverable upon
the exercise of this Warrant) for the purpose of entitling or
enabling them to receive any dividend or other distribution, or
to receive 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 Organic Change; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holders at least ten (10) days prior to the record date specified
therein (or such shorter period approved by a majority of the Registered
Holders) and at least ten (10) days prior to the effective date of such event
specified in clause (b) or (c) hereof a notice specifying, as the case may be,
(i) the record date for such dividend, distribution or right, and the amount and
character of such dividend, distribution or right, or (ii) the effective date on
which such Organic Change, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the holders of record of
Common Stock (or such other stock or securities at the time deliverable upon the
exercise of this Warrant) shall be entitled to exchange their shares of Common
Stock (or such other stock or securities) for securities or other property
deliverable upon such Organic Change, dissolution, liquidation or winding-up;
PROVIDED, HOWEVER, that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice. Nothing herein shall prohibit the
Registered Holder from exercising this Warrant during the ten (10) day period
commencing on the date of such notice.
6. RESERVATION OF STOCK. The Company covenants that for the duration of
the Exercise Period, the Company will at all times reserve and keep
available, from its authorized and unissued Common Stock solely for
issuance and delivery upon the exercise of this Warrant and free of
preemptive rights, such number of Warrant Shares and other securities,
cash and/or property, as from time to time shall be issuable upon the
exercise of this Warrant. The Company further covenants that it shall,
from time to time, take all steps necessary to increase the authorized
number of shares of its Common Stock if at any time the authorized
number of shares of Common Stock remaining unissued is insufficient to
permit the exercise of this Warrant.
7. ISSUANCE UPON EXERCISE. All shares of Common Stock issuable upon
exercise of this Warrant will be duly and validly issued, fully paid
and nonassessable and will be free of restrictions on transfer, other
than restrictions on transfer under any agreement between the Holder
and the Company and under applicable state and federal securities
laws, and will be free
5
from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein). The Company shall
take all such actions as may be necessary to ensure that all such
shares of Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any
domestic stock exchange upon which shares of Common Stock may be
listed (except for official notice of issuance which shall be
immediately delivered by the Company upon each such issuance).
8. EXCHANGE OF WARRANTS. Upon the surrender by the Registered Holder,
properly endorsed, to the Company at the principal office of the
Company, the Company will, subject to the provisions of Section 3
hereof, issue and deliver to or upon the order of such Holder, at the
Company's expense, a new Warrant or Warrants of like tenor, in the
name of the Registered Holder or as the Registered Holder (upon
payment by the Registered Holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock (or other securities, cash and/or
property) then issuable upon exercise of this Warrant.
9. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of a Registered Holder shall
be satisfactory) of the ownership and loss, theft, destruction or
mutilation of any certificate evidencing this Warrant and in the case
of loss, theft or destruction, upon delivery of an unsecured indemnity
agreement of the Registered Holder in form and amount reasonably
satisfactory to the Company, or in the case of mutilation, upon
surrender and cancellation of such certificate, the Company shall, at
the Registered Holder's expense, execute and deliver in lieu of such
certificate, a new certificate of like kind representing the same
rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate.
10. TRANSFERS, ETC.
(a) The Company shall maintain a register at its principal executive
office containing the name and address of the Registered Holder
of this Warrant. The Registered Holder may change its or his
address as shown on the warrant register by written notice to the
Company requesting such change.
(b) Subject to the provisions of Section 3 hereof, this Warrant and
all rights hereunder are transferable, in whole or in part (but
not for less than 50,000 shares at a time), upon surrender of
this Warrant with a properly executed assignment (in the form of
EXHIBIT B hereto) at the principal executive office of the
Company.
(c) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the Registered Holder as the
absolute owner hereof for all purposes; PROVIDED, however, that
if and when this Warrant is properly assigned in blank, the
Company may (but shall not be obligated to) treat the bearer
hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
(d) The Company shall not close its books against the transfer of
this Warrant or any share of Common Stock issued or issuable upon
the exercise of this Warrant in any
6
manner which interferes with the timely exercise of this Warrant.
The Company shall from time to time take all such action as may
be necessary to ensure that the par value per share of the
unissued Common Stock acquirable upon exercisable of this Warrant
is at all times equal to or less than the Exercise Price then in
effect.
11. MAILING OF NOTICES, ETC. Any notice, request, demand or other
communication required or permitted to be given to a party pursuant to
the provisions of this Agreement will be in writing and will be
effective and deemed given under this Agreement on the earliest of:
(a) the date of personal delivery, (b) the date of transmission by
facsimile, with confirmed transmission and receipt, (c) two (2) days
after deposit with a nationally-recognized courier or overnight
service such as Federal Express, or (d) five (5) days after mailing
via certified mail, return receipt requested. All notices not
delivered personally or by facsimile will be sent with postage and
other charges prepaid and properly addressed to the party to be
notified at the address set forth for such party:
If to a Registered Holder:
[INSERT ADDRESS]
Attn:_____________________________
If to the Company:
Universal Detection Technology
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxx
With a copy to (which does not constitute notice):
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxx, Esq.
Any party hereto (and such party's permitted assigns) may change such party's
address for receipt of future notices hereunder by giving written notice to the
Company and the other parties hereto.
12. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Subject to the provisions of
Sections 2 and 5 hereof, until the exercise of this Warrant, the
Registered Holder shall not have or exercise any rights by virtue
hereof as a stockholder of the Company (in its capacity as a
Registered Holder), including, without limitation, the right to vote,
to receive dividends and other
7
distributions or to receive notice of, or attend meetings of
stockholders or any other proceedings of the Company.
13. AMENDMENT OR WAIVER. This Warrant is one of a series of Warrants
issued by the Company, all dated the date hereof and of like tenor,
except as to the number of shares of Common Stock subject thereto and
the exercise price (collectively, the "COMPANY WARRANTS"). Any term of
this Warrant may be amended or waived upon the written consent of the
Company and the holders of Company Warrants representing at least a
majority of the number of shares of Common Stock issued or issuable
upon exercise of the Company Warrants then remaining outstanding;
PROVIDED that any such amendment or waiver must apply to all Company
Warrants then outstanding; and PROVIDED FURTHER that the number of
Warrant Shares subject to this Warrant, the Exercise Price of this
Warrant and the number of shares or class of stock obtainable upon
exercise of this Warrant may not be amended, and the right to exercise
this Warrant may not be waived, without the written consent of the
holder of this Warrant (it being agreed that an amendment to or waiver
under any of the provisions of Section 2 of this Warrant shall not be
considered an amendment of the number of Warrant Shares or the
Exercise Price). The Company shall promptly give notice to all holders
of the Company Warrants of any amendments effected in accordance with
this Section 13. No special consideration may be given to any holder
as inducement to waive or amend this Warrant unless such consideration
is given equally and ratably to all holders.
14. SUCCESSORS AND ASSIGNS. Subject to Section 1(d), this Warrant shall be
binding upon and inure to the benefit of the Registered Holder and its
assigns, and shall be binding upon any entity succeeding to the
Company by consolidation, merger or acquisition of all or
substantially all of the Company's assets. The Company may not assign
this Warrant or any rights or obligations hereunder without the prior
written consent of the Registered Holder. The Registered Holder may
not assign this Warrant without the Company's prior written consent.
15. REMEDIES. In the event of a breach by the Company of any of its
obligations under this Warrant, the Registered Holder, in addition to
being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages
would not provide adequate compensation for any losses incurred by
reason of its breach of any of the provisions of this Warrant and
hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
16. SECTION HEADINGS. The section headings in this Warrant are for the
convenience of the parties and in no way alter, modify, amend, limit
or restrict the contractual obligations of the parties.
17. COUNTERPARTS. This Warrant may be executed in two or more
counterparts, each of which will be deemed an original but all of
which together will constitute one and the same instrument.
18. SEVERABILITY. The provisions of this Warrant will be deemed severable
and the invalidity or unenforceability of any provision hereof will
not affect the validity or enforceability of the other provisions
hereof; provided that if any provision of this Warrant, as applied to
any
8
party or to any circumstance, is adjudged by a court not to be
enforceable in accordance with its terms, the parties agree that the
court making such determination will have the power to modify the
provision in a manner consistent with its objectives such that it is
enforceable, and/or to delete specific words or phrases, and in its
reduced form, such provision will then be enforceable and will be
enforced.
19. TITLES AND SUBTITLES. The article and section headings contained in
this Warrant are inserted for convenience only and will not affect in
any way the meaning or interpretation of this Warrant.
20. THIRD PARTIES. Nothing in this Warrant, express or implied, is
intended to confer upon any person other than the parties hereto and
their successors and assigns, any rights or remedies under or by
reason of this Warrant.
21. GOVERNING LAW. This Warrant and the performance of the transactions
and the obligations of the parties hereunder will be governed by and
construed and enforced in accordance with the laws of the State of
California, without giving effect to any choice of law principles.
[SIGNATURE PAGE FOLLOWS]
9
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
THE COMPANY:
UNIVERSAL DETECTION TECHNOLOGY,
a California corporation
By:
-------------------------------------------
Xxxxxxx Xxxxxx
Chief Executive Officer
10
EXHIBIT A
PURCHASE FORM
To:_________________ Dated:____________
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ___), hereby irrevocably elects to purchase _____ shares of
the Common Stock covered by such Warrant.
The undersigned herewith makes payment of the full exercise price for such
shares at the price per share provided for in such Warrant, which is
$________ in lawful money of the United States.
[------------------------------]
-------------------------------
Name:
Title:
Address: -----------------------
-----------------------
11
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (No. ____) with respect to the number of shares of Common Stock covered
thereby set forth below, unto:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
Dated:_____________________
[---------------------------]
-----------------------------
Name:
Title:
12
