NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER),
IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.
|
|
Right to Purchase ________ shares of Common
Stock of Neonode Inc. (subject to adjustment as provided
herein)
|
COMMON STOCK PURCHASE
WARRANT
No. 2009-[
insert warrant designation code ]
|
Issue Date: September __,
2009
|
NEONODE INC., a corporation organized under the
laws of the State of Delaware (the “Company”), hereby
certifies that, for value received, [fill-in name of
investor] , or its assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from
the Company at any time commencing six (6) months after the Issue
Date until 5:00 p.m., E.S.T on September __, 2012, the third
(3 rd
) anniversary of the Issue Date (the
“Expiration Date”), up to [fill-in amount of
Common Stock that can be issued] fully paid and
nonassessable shares of Common Stock at a per share purchase price
of $0.04. The purchase price per share, as adjusted from
time to time as herein provided, is referred to herein as the
"Purchase Price." The number and character of such
shares of Common Stock and the Purchase Price are subject to
adjustment as provided herein. Capitalized terms used
and not otherwise defined herein shall have the meanings set forth
in that certain Convertible Note Agreement (the “Convertible
Note Agreement”), dated as of September __, 2009, entered
into by the Company and certain of the Holders.
As used herein the following terms, unless the
context otherwise requires, have the following respective
meanings:
(a) The
term “Company” shall include Neonode Inc. and any
corporation which shall succeed or assume the obligations of
Neonode Inc. hereunder.
(b) The
term “Common Stock” includes (a) the Company's
Common Stock, $0.001 par value per share, as authorized on the date
of the Convertible Note Agreement, and (b) any other securities
into which or for which any of the securities described in
(a) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The
term “Other Securities” refers to any stock (other than
Common Stock) and other securities of the Company or any other
person (corporate or otherwise) which the holder of the Warrant at
any time shall be entitled to receive, or shall have received, on
the exercise of the Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 3 or otherwise.
(d) The
term “Warrant Shares” shall mean the Common Stock
issuable upon exercise of this Warrant.
1.
Exercise of Warrant .
1.1.
Number of Shares Issuable upon Exercise . From
and after the Issue Date through and including the Expiration Date,
the Holder hereof shall be entitled to receive, upon exercise of
this Warrant in whole in accordance with the terms of
subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3, shares of Common Stock of the
Company, subject to adjustment pursuant to Section 3.
1.2.
Full Exercise . This Warrant may be exercised in
full by the Holder hereof by delivery of an original or facsimile
copy of the form of subscription attached as Exhibit A hereto
(the “Subscription Form”) duly executed by such Holder
and delivery within two days thereafter of payment, in cash, wire
transfer or by certified or official bank check payable to the
order of the Company, in the amount obtained by multiplying the
number of shares of Common Stock for which this Warrant is then
exercisable by the Purchase Price then in effect. The
original Warrant is not required to be surrendered to the Company
until it has been fully exercised.
1.3.
Partial Exercise . This Warrant may be exercised
in part (but not for a fractional share) by delivery of a
Subscription Form in the manner and at the place provided in
subsection 1.2 except that the amount payable by the Holder on
such partial exercise shall be the amount obtained by multiplying
(a) the number of whole shares of Common Stock designated
by the Holder in the Subscription Form by (b) the Purchase
Price then in effect. On any such partial exercise
provided the Holder has surrendered the original Warrant, the
Company, at its expense, will forthwith issue and deliver to or
upon the order of the Holder hereof a new Warrant of like tenor, in
the name of the Holder hereof or as such Holder (upon payment by
such Holder of any applicable transfer taxes) may request, the
whole number of shares of Common Stock for which such Warrant may
still be exercised for the balance of.
1.4.
Fair Market Value . Fair Market Value of a share of Common
Stock as of a particular date (the "Determination Date") shall
mean:
(a) If
the Company's Common Stock is traded on an exchange or is quoted on
the NASDAQ Global Market, Nasdaq Global Select Market, the NASDAQ
Capital Market, the New York Stock Exchange or the American Stock
Exchange, LLC, then the average of the closing or last sale prices,
respectively, reported for the ten trading days immediately
preceding the Determination Date;
(b) If
the Company's Common Stock is not traded on an exchange or on the
NASDAQ Global Market, Nasdaq Global Select Market, the NASDAQ
Capital Market, the New York Stock Exchange or the American Stock
Exchange, LLC, but is traded in the over-the-counter market, then
the average of the closing bid price reported for the ten trading
days immediately preceding the Determination Date;
(c) Except
as provided in clause (d) below and Section 2.1, if the
Company's Common Stock is not publicly traded, then as the Holder
and the Company agree, or in the absence of such an agreement, by
arbitration in accordance with the rules then standing of the
American Arbitration Association, before a single arbitrator to be
chosen from a panel of persons qualified by education and training
to pass on the matter to be decided; or
(d) If
the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or
winding up pursuant to the Company's charter, then all amounts to
be payable per share to holders of the Common Stock pursuant to the
charter in the event of such liquidation, dissolution or winding
up, plus all other amounts to be payable per share in respect of
the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common
Stock then issuable upon exercise of all of the Warrants are
outstanding at the Determination Date.
1.5.
Company Acknowledgment . The Company will, at the time of
the exercise of the Warrant, upon the request of the Holder hereof
acknowledge in writing its continuing obligation to afford to such
Holder any rights to which such Holder shall continue to be
entitled after such exercise in accordance with the provisions of
this Warrant. If the Holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.
1.6.
Trustee for Warrant Holders . In the event that a bank or
trust company shall have been appointed as trustee for the Holder
of the Warrants pursuant to Subsection 3.2, such bank or trust
company shall have all the powers and duties of a warrant agent (as
hereinafter described) and shall accept, in its own name for the
account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant
to this Section 1.
1.7
Delivery of Stock Certificates, etc. on Exercise . The
Company agrees that the shares of Common Stock purchased upon
exercise of this Warrant shall be deemed to be issued to the Holder
hereof as the record owner of such shares as of the close of
business on the date on which delivery of a Subscription Form shall
have occurred and payment made for such shares as aforesaid. As
soon as practicable after the exercise of this Warrant in full or
in part, and in any event within three (3) business days thereafter
(“Warrant Share Delivery Date”), the Company at its
expense (including the payment by it of any applicable issue taxes)
will cause to be issued in the name of and delivered to the Holder
hereof, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct in compliance with applicable
securities laws, a certificate or certificates for the number of
duly and validly issued, fully paid and non-assessable shares of
Common Stock (or Other Securities) to which such Holder shall be
entitled on such exercise, plus, in lieu of any fractional share to
which such Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then Fair Market Value of one full share
of Common Stock, together with any other stock or other securities
and property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or
otherwise.
2.
Cashless Exercise .
(a) Commencing
six months after the Issue Date, payment upon exercise may be made
at the option of the Holder either in (i) cash, wire transfer
or by certified or official bank check payable to the order of the
Company equal to the applicable aggregate Purchase Price, (ii) by
delivery of Common Stock issuable upon exercise of the Warrants in
accordance with Section (b) below or (iii) by a
combination of any of the foregoing methods, for the number of
Common Stock specified in such form (as such exercise number shall
be adjusted to reflect any adjustment in the total number of shares
of Common Stock issuable to the holder per the terms of this
Warrant) and the holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities)
determined as provided herein.
(b) Subject
to the provisions herein to the contrary, if the Fair Market Value
of one share of Common Stock is greater than the Purchase Price (at
the date of calculation as set forth below), in lieu of exercising
this Warrant for cash, the holder may elect to receive shares equal
to the value (as determined below) of this Warrant (or the portion
thereof being cancelled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed
Subscription Form in which event the Company shall issue to the
holder a number of shares of Common Stock computed using the
following formula:
X= Y
(A-B)
A
|
Where
|
|
the number of
shares of Common Stock to be issued to the holder
|
|
|
|
the number of
shares of Common Stock purchasable under the Warrant or, if only a
portion of the Warrant is being exercised, the portion of the
Warrant being exercised (at the date of such
calculation)
|
|
|
|
the average of
the closing sale prices of the Common Stock for the five (5)
Trading Days immediately prior to (but not including) the Exercise
Date, or Fair Market Value, whichever is less
|
|
|
|
Purchase Price
(as adjusted to the date of such calculation)
|
For purposes of Rule 144 promulgated under the
1933 Act, it is intended, understood and acknowledged that the
Warrant Shares issued in a cashless exercise transaction shall be
deemed to have been acquired by the Holder, and the holding period
for the Warrant Shares shall be deemed to have commenced, on the
date this Warrant was originally issued pursuant to the Convertible
Note Agreement.
3.
Adjustment for Reorganization, Consolidation, Merger,
etc.
3.1. Fundamental Transaction . If, at any
time while this Warrant is outstanding, (A) the Company effects any
merger or consolidation of the Company with or into another entity,
(B) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (C) any tender
offer or exchange offer (whether by the Company or another entity)
is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities,
cash or property, (D) the Company consummates a stock purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with one or more persons or entities whereby such
other persons or entities acq
