EXHIBIT 10.3 WARRANT TO PURCHASE COMMON STOCK

 

THE   SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT   OF 1933 OR THE SECURITIES LAWS OF ANY STATE (COLLECTIVELY, THE "LAWS"). THE

SECURITIES   MAY   NOT   BE   OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE

ABSENCE   OF   EITHER   (I)   AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES

UNDER   THE   APPLICABLE LAWS OR (II) AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND

SCOPE   REASONABLY ACCEPTABLE TO THE ISSUER, TO THE EFFECT THAT SUCH REGISTRATION

IS NOT REQUIRED DUE TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS

OF   THE   APPLICABLE   LAWS.

 

 

                                 RAPIDTRON, INC.

 

                        WARRANT TO PURCHASE COMMON STOCK

 

               Warrant No. 1                        Number of Shares: 800,000

 

                       Date of Issuance: December 1, 2004

 

     Rapidtron,   Inc.,   a   Nevada   corporation (the "Company"), hereby certifies

that,   for   value received, Oceanus Value Fund, L.P., and permitted assigns, the

registered holder hereof ("Holder"), is entitled, subject to the terms set forth

below,   to   purchase from the Company upon surrender of this Warrant to Purchase

Common   Stock   (the "Warrant"), at any time after the date hereof, but not after

5:00   P.M.   California   time   on the Expiration Date (as defined herein) 800,000

fully   paid   and nonassessable shares of Common Stock (as defined herein) of the

Company   (each   a   "Warrant   Share"   and collectively the "Warrant Shares") at a

purchase   price   (the   "Warrant   Exercise   Price")   equal   to   $0.33   per share;

provided,   however,   that   one (1) time prior to the Expiration Date, the Holder

shall   have   the   right,   upon   written notice to the Company (the "Notice"), to

reset the Warrant Exercise Price to an amount equal to   the closing price of the

Common Stock on the trading day immediately preceding the date of the Notice (as

specified   in   the   Notice) as quoted on the OTC Bulletin Board or such national

securities   exchange or other market on which the Common Stock is then listed or

quoted.   The   Warrant Exercise Price shall be paid in lawful money of the United

States.   Both the number of Warrant Shares purchasable hereunder and the Warrant

Exercise   Price   are   subject   to   adjustment   as   provided   in Section 9 below.

 

      Section   1.   Definitions.

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     (a)   The   following   words   and   terms   used in this Warrant shall have the

following   meanings:

 

     "Common   Stock"   means   (i) the Company's $0.001 par value common stock and

(ii)   any   capital stock into which such Common Stock shall have been changed or

any   capital   stock   resulting   from   a   reclassification   of such Common Stock.

 

 

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     "Expiration   Date"   means the date which is five (5) years from the date of

this   Warrant or, if such date falls on a Saturday, Sunday or other day on which

banks   are   required   or   authorized   to be closed in the State of California (a

"Holiday"),   the   next   preceding   date   that   is   not   a   Holiday.

 

     "Market Price" means the average of the closing stock prices for the Common

Stock   for   the   ten   (10) trading days immediately prior to the date on which a

Notice   of   Exercise   is delivered to the Company, as quoted on the OTC Bulletin

Board   or   such national securities exchange or other market on which the Common

Stock   may   then   be   listed   or   quoted.

 

     "Securities   Act"   means   the   Securities   Act   of   1933,   as   amended.

 

     "Securities   Purchase   Agreement"   shall   mean   the   Securities   Purchase

Agreement   between   the   Holder (or its predecessor in interest) and the Company

for   the   purchase   of   this Warrant and the other Securities (as defined in the

Securities   Purchase   Agreement).

 

     (b)   Other   definitional   provisions:

 

      (i)      Except   as otherwise specified herein, all references herein (A) to

the   Company   shall be deemed to include the Company's successors and (B) to any

applicable law shall be deemed references to such applicable law as the same may

be   amended   or   supplemented   from   time   to   time.

 

     (ii)      When   used   in   this   Warrant,   unless   otherwise   specified   in a

particular instance, the words "herein," "hereof," and "hereunder," and words of

similar   import, shall refer to this Warrant as a whole and not to any provision

of   this   Warrant, and the words "Section" and "Exhibit" shall refer to Sections

of,   and   Exhibits   to,   this   Warrant   unless   otherwise   specified.

 

     (iii)     Whenever   the   context so requires, the neuter gender includes the

masculine   or   feminine,   and   the singular number includes the plural, and vice

versa.

 

     (iv)      When   used   in   this   Warrant,   "transfer"   shall   include   any

disposition   of this Warrant or any Warrant Shares, or of any interest in either

thereof,   which   would   constitute   a   sale   thereof   within   the meaning of the

Securities   Act   or   applicable   state   securities   laws.

 

     Section   2.    Exercise   of   Warrant.

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     (a)      Subject   to   the   terms   and conditions hereof, this Warrant may be

exercised   by   the Holder, as a whole or in part (except that this Warrant shall

not   be   exercisable   as   to a fractional share), at any time prior to 5:00 p.m.

California   time on the Expiration Date.   The rights represented by this Warrant

shall   be   exercised   by   the   Holder by (i) delivery of a written notice in the

form   attached   as   Exhibit   I   hereto   (a "Notice of Exercise") of the Holder's

election   to   exercise   this   Warrant,   which notice shall specify the number of

Warrant   Shares   to be purchased, (ii) payment to the Company of an amount equal

to   the   Warrant Exercise Price multiplied by the number of Warrant Shares as to

which   the   Warrant is being exercised, plus any applicable issuance or transfer

taxes, in immediately available funds (either by wire transfer or a certified or

cashier's   check   drawn on a United States bank) and (iii) the surrender of this

Warrant,   properly

 

 

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endorsed,   at   the   principal   office of the Company (or at such other agency or

office   of   the   Company   as the Company may designate by notice to the Holder).

 

     (b)      In addition, and notwithstanding anything to the contrary contained

in   this Warrant, at such time as the Market Price per share of the Common Stock

exceeds   the   Warrant   Exercise   Price,   this   Warrant   may   be   exercised   by

presentation   and   surrender   of   this   Warrant   to   the   Company   in a cashless

exercise,   including a written calculation of the number of Warrant Shares to be

issued   upon   such   exercise   in   accordance   with the terms hereof (a "Cashless

Exercise").   In   the event of a Cashless Exercise, in lieu of paying the Warrant

Exercise   Price,   the   Holder   shall surrender this Warrant for, and the Company

shall   issue   in   respect   thereof,   the   number of Warrant Shares determined by

multiplying   the number of Warrant Shares to which the Holder would otherwise be

entitled   by   a   fraction,   the   numerator   of   which   shall   be   determined   by

subtracting   the   Warrant   Exercise Price from the then current Market Price per

share   of   Common   Stock, and the denominator of which shall be the then current

Market   Price   per   share   of   Common   Stock.

 

     (c)      Any   Warrant   Shares   shall be deemed to be issued to the Holder or

Holder's designee, as the record owner of such Warrant Shares, as of the date on

which this Warrant shall have been surrendered, the completed Notice of Exercise

shall   have   been   delivered,   and payment (or notice of an election to effect a

Cashless   Exercise)   shall   have   been made for such Warrant Shares as set forth

above,   irrespective   of   the date of delivery of such share certificate, except

that,   if   the   date   of   such   surrender   and   payment is a date when the stock

transfer   books   of the Company are properly closed, such person shall be deemed

to   have   become the holder of such Warrant Shares at the opening of business on

the   next   succeeding date on which the stock transfer books are open.   For each

exercise   of   the   rights   represented   by   this Warrant in compliance with this

Section   2,   a   certificate or certificates for the Warrant Shares so purchased,

registered in the name of, or as directed by, the Holder, shall be delivered to,

or   as   directed by, the Holder within three (3) business days after such rights

shall   have   been   so   exercised.

 

     (d)      Unless   this   Warrant   shall   have expired or shall have been fully

exercised,   the   Company   shall issue a new Warrant identical in all respects to

the   Warrant   exercised   except   that   it shall represent rights to purchase the

number   of   Warrant   Shares purchasable immediately prior to such exercise under

the   Warrant   exercised, less the number of Warrant Shares with respect to which

such Warrant is exercised (or, in the case of a Cashless Exercise, the number of

shares   to   which   the   Holder   would   otherwise   have   been   entitled).

 

     (e)      In the case of any dispute with respect to an exercise, the Company

shall   promptly   issue   such   number   of   Warrant   Shares as are not disputed in

accordance   with   this   Section.   If   such   dispute   only involves the number of

Warrant   Shares   receivable by the Holder under a Cashless Exercise, the Company

shall   submit   the   disp