FORM OF WARRANT
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF THESE SHARES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE
OR HYPOTHECATION IS IN COMPLIANCE THEREWITH OR IS OTHERWISE IN
COMPLIANCE WITH
THE PROVISIONS OF SECTION 7 OF THIS
WARRANT.
Void after August 4, 2010
DETTO TECHNOLOGIES, INC.
WARRANT
THIS CERTIFIES THAT, for value received, XXXXX XXX (the "Holder"), is
entitled to purchase up to one hundred thousand (100,000) shares of Detto
Technologies, Inc. Common Stock. The holder of
this Warrant will have the right
to exercise this Warrant for fully paid
nonassessable shares
of Common Stock of
the Company. The exercise price for the Warrant shall be
$1.00 (the
"Exercise
Price"). As used herein, (a) the term "Common Stock" shall mean the
Company's
presently authorized Common Stock, and any stock into
or for which such Common
Stock may hereafter be exchanged, (b) the
term "Date of Grant" shall mean August
4, 2005 (c) the term "Shares" shall include any shares of Common Stock
issued
upon conversion, and (d) "Warrant Price"
exercise price described above.
1.
Expiration of Warrant. This Warrant shall expire and shall no
longer be
exercisable upon the earlier of: (i) 5:00
p.m., Seattle,
Washington local time,
on the void date written above.
2. Method
of Exercise; Payment.
Subject to Section 1 hereof, the purchase
right represented by this Warrant may be exercised
by the holder
hereof, in
whole or in part, at any time after the Exercise Date, by either, at the
election of the holder hereof, (a) the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A duly
executed) at the
principal office of the Company and by the
payment to the Company, by check or
wire transfer to an account designated by
the Company, of an amount equal to the
then applicable Exercise Price multiplied by the number of Shares
then being
purchased, or (b) pursuant to the provisions
of Section 9 hereof. The person in
whose name any certificate representing Shares shall be issuable upon
exercise
of this Warrant shall be deemed to have
become the holder of record of, and
shall be treated for all purposes as the record holder of, the shares
represented thereby (and such shares shall be deemed to have been issued)
immediately prior to the close of business on
the date or dates upon which this
Warrant is exercised. In the event of any exercise of
the rights represented by
this Warrant, certificates for the shares of stock so purchased shall be
delivered to the holder hereof as soon as reasonably practicable and in any
event within thirty (30) days after such
exercise.
3. Stock
Fully Paid;
Registration
Rights; Reservation of Shares. All
Shares that may be issued upon the
exercise of the rights
represented
by this
Warrant will, upon issuance pursuant to the terms and
conditions
herein, be
fully paid and nonassessable, and free from all taxes,
liens and charges
with
respect to the issue thereof. All Shares
that may be issued upon the exercise of
the rights represented by this Warrant
will, upon issuance pursuant to the terms
and conditions herein, will contain what is commonly called "piggyback
registration rights" similar to other
Common Stock issued by the Company. During
the period within which the rights
represented by this Warrant may be exercised,
the Company will at all times have
authorized,
and reserved for the
purpose of
the issue upon exercise of the purchase
rights evidenced by this Warrant, a
sufficient number of shares of its Common
Stock to provide for
the exercise of
the rights represented by this Warrant.
<PAGE>
4.
Adjustment
of Exercise Price and Number of Shares. Subject to the
provisions of Section 1 hereof,
the number and kind of
securities
purchasable
upon the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the
occurrence of certain events, as follows:
(a) Reclassification.
In case of any
reclassification,
change or
conversion of securities of the class issuable upon exercise of this
Warrant
(other than a change in par value, or from
par value to no par value, or from no
par value to par value, or as a result of a subdivision
or combination), the
Company shall duly execute and deliver to the holder of this Warrant a new
Warrant (in form and substance reasonably satisfactory to the holder of this
Warrant), so that the holder of this
Warrant shall have the right to receive, at
a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the Shares theretofore
issuable upon exercise of this Warrant, the kind and amount of Shares
stock,
other securities, money and property receivable upon such reclassification or
change by a holder of the number of Shares
then purchasable under
this Warrant.
Such new Warrant shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the
adjustments provided for in this Section
4. The provisions of this subparagraph (a) shall similarly apply to
successive
reclassifications, changes and
transfers.
(b) Subdivision or Combination of Shares. If the Company at any
time
while this Warrant remains outstanding and unexpired shall
subdivide or combine
its outstanding shares of securities of the
class issuable upon exercise of this
Warrant, the Exercise Price shall be
proportionately
decreased in the case of a
subdivision or increased in the case of a
combination, effective at the close of
business on the date the subdivision or
combination becomes effective. When any
adjustment is required to be made to the
Exercise Price,
the number of
shares
issuable upon the exercise of this Warrant shall be changed to the number
determined by dividing (i) an amount equal
to the number of shares issuable upon
the exercise of this Warrant immediately
prior to such adjustment, multiplied by
the Exercise Price in effect immediately prior to such
adjustment, by (ii)
the
Exercise Price in effect immediately after such adjustment, such that the
aggregate purchase price payable for the total number of shares purchasable
under this Warrant (as adjusted) shall
remain the same.
(c)
Stock Dividends and Other Distributions. If the Company at any
time while this Warrant is outstanding and unexpired shall (i) pay a dividend
with respect to the securities of the class issuable upon exercise of this
Warrant payable in such securities, or (ii) make any other
distribution
with
respect to the securities of the class issuable upon exercise of this
Warrant
(except any distribution specifically provided for in the foregoing
subparagraphs (a) and (b)) then the Exercise
Price shall be adjusted, from and
after the date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by
multiplying the Exercise
Price in effect immediately prior to such date of determination by a fraction
(i) the numerator of which shall be the
total number of shares of the securities
of the class issuable upon exercise of this Warrant
outstanding
immediately
prior to such dividend or distribution,
and (ii) the
denominator of which shall
be the total number of shares of the
securities
of the class
issuable upon
exercise of this Warrant outstanding immediately after such dividend or
distribution. When any adjustment is required to
be made to the Exercise Price,
the number of shares issuable upon the
exercise of this Warrant shall be changed
to the number determined by dividing (i) an
amount equal to the number of shares
issuable upon the exercise of this Warrant
immediately prior to such adjustment,
multiplied by the Exercise Price in effect
immediately prior to such adjustment,
by (ii) the Exercise Price in effect
immediately
after such
adjustment,
such
that the aggregate purchase price payable for the total number of shares
purchasable under this Warrant (as
adjusted) shall remain the same.
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<PAGE>
5. Notice
of Adjustments.
Whenever the
Exercise Price or the number of
Shares purchasable hereunder shall be
adjusted pursuant to Section 4 hereof, the
Company shall make a certificate
setting forth, in
reasonable detail, the event
requiring the adjustment, the amount of the
adjustment, the method by which such
adjustment was calculated, and the Exercise Price and the number of Shares
purchasable hereunder after giving effect to such
adjustment,
which shall be
mailed (without regard to Section 12 hereof, by first class mail, postage
prepaid) to the holder of this Warrant.
6.
Fractional Shares. No
fractional shares of the securities of the class
issuable upon exercise of this Warrant will be
issued in connection
with any
exercise hereunder, but in lieu of such fractional
shares, the Company shall
make a cash payment therefore based on the fair market value of
the securities
of the class issuable upon exercise of this Warrant on
the date of exercise as
reasonably determined in good faith by the
Company's Board of Directors.
7.
Compliance with Securities Act; Disposition of Warrant or
Shares.
(a) Compliance with
Securities Act. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the Shares to be
issued upon
exercise hereof are being acquired for
investment and that such holder will not
offer, sell or otherwise dispose of this
Warrant or any Shares to be issued upon
exercise hereof except under circumstances which will not
result in a violation
of the Securities Act of 1933, as amended (the "Act"). This Warrant and all
Shares issued upon exercise of this Warrant
(unless registered under the Act)
shall be stamped or imprinted with a legend
in substantially the following form:
"THE
SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN
REGISTERED UNDER
THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD
OR
OTHERWISE TRANSFERRED,
PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL
REGISTERED
UNDER THE ACT OR, IN
THE OPINION OF CORPORATION COUNSEL
SATISFACTORY TO THE
ISSUER OF THESE
SHARES, SUCH
OFFER, SALE OR
TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH."
In
addition, in
connection with the issuance of this Warrant, the holder
specifically represents to the Company by
acceptance of this Warrant as follows:
(1) The holder
is aware of the Company's business affairs and
financial condition, and has acquired information about
the Company sufficient
to reach an informed and knowledgeable decision to acquire this
Warrant. The
holder is acquiring this Warrant for its own account
for investment
purposes
only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the
Act.
(2) The holder
understands that this
Warrant and any securities
issuable upon the exercise hereof have not been registered under the Act in
reliance upon a specific exemption there from, which exemption depends upon,
among other things, the bona fide nature of the
holder's investment
intent as
expressed herein. In this connection,
the holder
understands that, in
the view
of the Securities and Exchange Commission (the "SEC"),
the statutory basis
for
such exemption may be unavailable if the
holder's
representation was predicated
solely upon a present intention to hold the Warrant for the minimum capital
gains period specified under tax statutes,
for a deferred sale,
for or until an
increase or decrease in the market price of
the Warrant, or for a
period of one
year or any other fixed period in the
future.
(3)
The holder further understands that this Warrant and any
securities issuable upon the exercise hereof
must be held
indefinitely
unless
subsequently registered under the Act and any
applicable state securities laws,
or unless exemptions from registration are
otherwise available.
Moreover, the
holder understands that the Company is under no
obligation
to register
this
Warrant and any securities issuable upon
the exercise hereof.
-3-
<PAGE>
(4) The holder is aware of the provisions of Rule 144,
promulgated
under the Act, which, in substance,
permit limited public
resale of "restricted
securities" acquired, directly or indirectly,
from the issuer
thereof (or from
an affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions, if applicable, including, among other
things: The availability of certain public
information about the
Company, the
resale occurring not less than one (1) year after
the party has
purchased and
paid for the securities to be sold;
the sale being made
through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities
being sold during any
three-month period
not exceeding the specified limitations stated therein. The holder further
understands that the exemption under Rule
144 is not currently available and may
not be available at the time holder wishes to sell this Warrant and any
securities issuable upon exercise
hereof.
(5) The holder
further understands that at the time it wishes to
sell this Warrant and any securities
issuable upon the exercise hereof there may
be no public market upon which to make such a sale,
and that, even if such a
public market then exists, the Company may not be satisfying
the current public
information requirements of Rule 144, and
that, in such event, the holder may be
precluded from selling this Warrant and any securities issuable upon the
exercise hereof under Rule 144 even if the
one-year minimum
holding period had
been satisfied.
(b)
Disposition of Warrant or Shares. With respect to any offer,
sale or
other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant, in each case prior to registration
of such Warrant or
Shares, the holder hereof and each
subsequent holder of
this Warrant agrees to
give written notice to the Company prior thereto, describing in sufficient
detail the manner thereof, together with a written opinion of such holder's
counsel, if reasonably requested by the Company, to the
effect that such offer,
sale or other disposition may be effected
without registration
or qualification
(under the Act as then in effect or any
federal or state law
then in effect) of
this Warrant or such Shares and indicating whether or not under the Act
certificates for this Warrant or such
Shares to be sold or otherwise disposed of
require any restrictive legend as to
applicable
restrictions on transferability
in order to ensure compliance with such laws. Promptly upon receiving such
written notice and reasonably satisfactory opinion, if so requested, the
Company, as promptly as practicable,
shall notify such
holder that such holder
may sell or otherwise dispose of this
Warrant or such Shares, all in accordance
with the terms of the notice delivered to the Company. Notwithstanding the
foregoing, at any time that the Shares are
publicly traded, such Shares may, as
to such federal laws, be offered, sold or otherwise disposed of in accordance
with Rule 144 under the Act, provided that
the Company shall have been furnished
with such information as the Company and its
counsel may reasonably
request to
provide assurance that the provisions of Rule 144 have been
satisfied.
Each
certificate representing this Warrant or the Shares
transferred
shall bear a
legend as to the applicable restrictions on transferability in order to
ensure
compliance with such laws, unless in the aforesaid
opinion of counsel for
the
holder, such legend is not required in order to ensure
compliance
with such
laws. The Company may issue stop transfer
instructions to its
transfer agent in
connection with such restrictions.
8. No
Rights as a Shareholder. No holder of this Warrant,
as such, shall
be entitled to vote or receive
dividends or be deemed the holder of Shares
or
any other securities of the Company which may at any time be issuable
on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this
Warrant, as such, any
of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any
meeting thereof,
or to receive notice of meetings, or to
receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall
have become deliverable, as provided
herein.
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<PAGE>
9.
Conversion Right.
(a) Right to Convert
Warrant; Net
Issuance. In addition to and
without limiting the rights of the holder
under the terms of this Warrant, but
only to the extent this Warrant has not
otherwise been exercised, the holder
shall have the right to convert this Warrant or any portion thereof (the
"Conversion Right") into Shares as provided in this Section 9 at any time or
fr
