10.39
THIS WARRANT AND THE STOCK ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND CAN BE
TRANSFERRED ONLY IN COMPLIANCE WITH THE ACT AND APPLICABLE STATE SECURITIES
LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT, UNLESS, IN THE OPINION OF
COUNSEL FOR THE COMPANY OR COUNSEL FOR THE REGISTERED HOLDER (WHICH SHALL BE IN
FORM AND FROM SUCH COUNSEL AS SHALL BE REASONABLY SATISFACTORY TO THE COMPANY),
SUCH REGISTRATION IS NOT THEN REQUIRED.
IQ BIOMETRIX
COMMON STOCK PURCHASE WARRANT
1. Issuance. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by IQ Biometrix,
Inc., a Delaware corporation (the "Company"), the undersigned holder (the
"Holder") is hereby granted the right to purchase at any time until 5:00 P.M.,
Pacific Coast time, on October 4, 2005 (the "Expiration Date"), Eighty Thousand
(80,000) fully paid and nonassessable shares of the Company's Common Stock, no
par value per share (the "Common Stock") at an exercise price of $1.25 per share
(the "Exercise Price") subject to further adjustment as set forth in Section 6
hereof.
2. Exercise of Warrants. This Warrant is exercisable in whole
or in part for whole shares of the Company's Common Stock at the Exercise Price
per share of Common Stock payable hereunder, payable in cash or by certified or
official bank check. Upon surrender of this Warrant Certificate with the annexed
Notice of Exercise Form duly executed, together with payment of the Exercise
Price for the shares of Common Stock purchased, the Holder shall be entitled to
receive a certificate or certificates for the shares of Common Stock so
purchased. For the purposes of this Section 2, "Market Value" shall be an amount
equal to the average closing bid price of a share of Common Stock for the five
(5) business days immediately preceding the Company's receipt of the Notice of
Exercise Form duly executed.
3. Reservation of Shares. The Company hereby agrees that at
all times during the term of this Warrant there shall be reserved for issuance
upon exercise of this Warrant such number of shares of its Common Stock as shall
be required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company
of evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.
6. Adjustments to Exercise Terms.
If the Company at any time prior to the full
execution of this Warrant shall, by
subdivision, combination, merger, spin-off, re-classification or like capital
adjustment of the securities, change any of the securities to which purchase
rights under this Warrant exist into the same or different number of securities
of any class or classes, this Warrant shall thereafter entitle the Holder to
acquire such number and kind of securities as would have been issuable as a
result of such change with respect to the securities acquirable immediately
prior to such transaction. If shares of the securities acquirable upon exercise
of this Warrant are subdivided into a greater number of securities, including
any stock dividend, or if such securities are combined into a lesser number of
securities, then the purchase price for the securities acquirable upon exercise
of this Warrant and the securities acquirable pursuant to this Warrant shall be
proportionately and equitably adjusted.
7. Miscellaneous.
(a) This Warrant has not been registered under the Securities
Act of 1933, as amended, (the "Act") and has been issued to the Holder for
investment and not with a view to the distribution of either the Warrant or the
Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any other
security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement under the Act and applicable state securities laws relating to such
security, unless in the opinion of counsel satisfactory to the Company, such
registrations are not required under the Act. Each certificate for the Warrant,
the Warrant Shares and any other security issued or issuable upon exercise of
this Warrant shall contain a legend on the face thereof, in form and substance
satisfactory to counsel for the Company, setting forth the restrictions on
transfer contained in this Section.
(b) Company currently has on file with the SEC form SB-2.
Prior to the effective date of the SB-2, the SB-2 shall be amended to provide
that the shares underlying this warrant, and each of them, shall be registered
in such filing.
(c) At any time after the effective date of the SB-2, the
Company will have the option, but not the obligation, to "Call" this Warrant
should the Company's closing stock price equal or exceed $3.00 per share at any
time during the term hereof ("Call Trigger"). If the Call Trigger occurs, the
Investor will have ten (10) business days to deliver the necessary funds to
exercise the warrant. Upon receipt of the funds, the Company will issue to the
Investor the corresponding number of shares from the warrant exercise. In the
event of a Call Trigger, should the Holder fail to deliver payment within the
time allotted, this Warrant shall be immediately terminated and of no further
force and effected.
(d) Holder covenants and agrees from the date of this
Agreement onward, that it shall not offer to sell, contract to sell or otherwise
sell, dispose of, loan, pledge or grant any rights with respect to the shares of
Common Stock that will be received as a result of the exercise of the Warrants,
for the period commencing on the date of this Agreement through the earlier of
(i) the date the Registration Statement is declared effective, or (ii) the one
year anniversary of the date of this Agreement (the "Lock-Up Period"). This
restriction is expressly agreed to by Holder in order to preclude Holder from
engaging in any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a disposition of the shares of Common Stock
during the Lock-Up Period even if said shares of Common Stock would be disposed
of by someone other than Holder. Such prohibited hedging or other transactions
would include, without limitation, any short sale (whether or not against the
"box") or any purchase, sale or grant of any right (including without limitation
any put or call option) with respect to any shares of Common Stock or with
respect to any security (other than a broad based market basket or index) that
includes, relates to or derives any significant part of its value from shares of
Common Stock.
(e) Holder hereby covenants and agrees that upon the
effectiveness of the Registration Statement that it will limit its aggregate
daily sales of shares of Common Stock to 5% of the current day's trading volume
for the shares of Common Stock on the OTC - Bulletin Board (or an exchange if
the shares of Common Stock or then trading on an exchange). This volume
restriction is expressly agreed to by Holder in order to preclude Holder from
engaging in any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a disposition of the shares of Common Stock in
excess of said 5% of daily trading volume even if said shares of Common Stock
would be disposed of by someone other than Holder. Such prohibited hedging or
other transactions would include, without limitation, any short sale (whether or
not against the "box") or any purchase, sale or grant of any right (including
without limitation any put or call option) with respect to any shares of Common
Stock or with respect to any security (other than a broad based market basket or
index) that includes, relates to or derives any significant part of its value
from shares of Common Stock. Upon written request of Company, Holder shall
deliver to Company its trading records reflecting sales of the shares of Common
Stock within three (3) business days of receipt of such request. This covenant
contained in this Section 10.1.6 shall only be effective provided Company has
obtained a covenant of the same substance and nature from Forte Capital Partners
LLC and The ▇▇▇▇▇ family and their affiliated entities.
8. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage pre-paid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission, or, if mailed, two days after the date of deposit in the United
States mails, as follows:
(i) if the to Company, to: IQ BIOMETRIX, INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ATTN: CEO Telephone No.:
(▇▇▇) ▇▇▇-▇▇▇▇ Telecopier No.: (559)
272-5121
(ii) if to the Holder, to the address on the
signature page hereof.
Any party may give notice in accordance with this Section to the other parties
designating another address or person for receipt of notices hereunder.
9. Supplements and Amendments; Whole Agreement. This Warrant
may be amended or supplemented only by an instrument in writing signed by the
parties hereto. This Warrant contains the full understanding of the parties
hereto with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
10. Governing Law. This Warrant shall be governed by and
interpreted in accordance with the laws of the State of California for contracts
to be wholly performed in such state and without giving effect to the principles
thereof regarding the conflict of laws. Any litigation based thereon, or arising
out of, under, or in connection with, this Warrant shall be brought and
maintained exclusively in the state or Federal courts of the State of
California, sitting in the City of Los Angeles. The parties hereto hereby
expressly and irrevocably submit to the jurisdiction of the state and federal
Courts of the State of California for the purpose of any such litigation as set
forth above and irrevocably agree to be bound by any final judgment rendered
thereby in connection with such litigation. The parties further irrevocably
consent to the service of process by registered mail, postage prepaid, or by
personal service within or without the State of California. The parties hereby
expressly and irrevocably waive, to the fullest extent permitted by law, any
objection which they may have or hereafter may have to the laying of venue of
any such litigation brought in any such court referred to above and any claim
that any such litigation has been brought in any inconvenient forum. To the
extent that any party hereto has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution or
otherwise) with respect to itself or its property, such party hereby irrevocably
waives such immunity in respect of its obligations under this Warrant.
(The Remainder of this page left intentionally blank)
11. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
___ October, 2003.
IQ BIOMETRIX, INC., a Delaware corporation
By:_________________________________
Name:
Title:
Holder: ▇▇▇▇▇ ▇▇▇▇▇
Address:
▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇.▇▇▇.▇▇▇▇▇▇▇▇
Fax:_________________________________
