EXHIBIT 4.3
[FORM OF SERIES [A] [B-1][B-2] WARRANT]
[INSERT IN SERIES A AND SERIES B-2 WARRANTS: 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 SELECTED BY THE
HOLDER AND
REASONABLY ACCEPTABLE TO THE ISSUER, 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.]
INKSURE TECHNOLOGIES, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No.: __________
Number of Shares of Common Stock:_____________
Date of Issuance: April 8, 2008 ("ISSUANCE DATE")
InkSure Technologies, Inc., a Delaware corporation (the
"COMPANY"), hereby
certifies that, for good and valuable consideration, the receipt
and sufficiency
of which are hereby acknowledged, [SMITHFIELD FIDUCIARY LLC] [OTHER
BUYERS], the
registered holder hereof or its permitted assigns (the "HOLDER"),
is entitled,
subject to the terms set forth below, to purchase from the Company,
at the
Exercise Price (as defined below) then in effect, upon surrender of
this Warrant
to Purchase Common Stock (including any Warrants to Purchase Common
Stock issued
in exchange, transfer or replacement hereof, the "WARRANT"), at any
time or
times on or after the date hereof, but not after 11:59 p.m., New
York time, on
the Expiration Date (as defined below), ______________
(_____________)(1) fully
paid nonassessable shares of Common Stock (as defined below) (the
"WARRANT
SHARES"). Except as otherwise defined herein, capitalized terms in
this Warrant
shall have the meanings set forth in Section 16. This Warrant is
one of the
Warrants to purchase Common Stock (the "SPA WARRANTS") issued
pursuant to
Section 1 of those certain Amendment, Exchange and Purchase
Agreements, dated as
of April __, 2008 (the "SUBSCRIPTION DATE"), by and among the
Company and the
investors (the "BUYERS") referred to therein (individually, with
respect to any
Buyer (as defined in the Securities Purchase Agreement), the
"AMENDMENT,
EXCHANGE AND PURCHASE AGREEMENt" and collectively, with respect to
all Buyers,
the "AMENDMENT, EXCHANGE AND PURCHASE AGREEMENTS").
----------
(1) [INSERT IN SERIES A WARRANT] [Insert a number of shares
equal to 10% of
the number of fully-diluted shares of Common Stock of the Company]
[INSERT IN SERIES B-1 WARRANT] [Insert number of shares equal to
100% of the
number of Conversion Shares (as defined in the SPA Securities)
issuable upon
conversion of the Amended and Restated Notes issued to the Holder
pursuant to
the Amendment and Exchange Agreement on the Issuance Date.]
[INSERT IN SERIES B-2 WARRANT] [Insert number of shares equal to
100% of the
number of Conversion Shares (as defined in the SPA Securities)
issuable upon
conversion of the New Notes issued to the Holder pursuant to the
Amendment and
Exchange Agreement on the Issuance Date.]
1. EXERCISE OF WARRANT.
(a) MECHANICS OF EXERCISE. Subject to the terms and
conditions hereof
(including, without limitation, the limitations set forth in
Section 1(f)),
this Warrant may be exercised by the Holder on any day on or
after the date
hereof, in whole or in part, by (i) delivery of a written
notice, in the
form attached hereto as EXHIBIT A (the "EXERCISE NOTICE"), of
the Holder's
election to exercise this Warrant and (ii) (A) payment to the
Company of an
amount equal to the applicable Exercise Price multiplied by
the number of
Warrant Shares as to which this Warrant is being exercised
(the "AGGREGATE
EXERCISE PRICE") in cash or by wire transfer of immediately
available funds
or (B) by notifying the Company that this Warrant is being
exercised
pursuant to a Cashless Exercise (as defined in Section 1(d)).
The Holder
shall not be required to deliver the original Warrant in order
to effect an
exercise hereunder. Execution and delivery of the Exercise
Notice with
respect to less than all of the Warrant Shares shall have the
same effect
as cancellation of the original Warrant and issuance of a new
Warrant
evidencing the right to purchase the remaining number of
Warrant Shares. On
or before the first (1st) Business Day following the date on
which the
Company has received each of the Exercise Notice and the
Aggregate Exercise
Price (or notice of a Cashless Exercise) (the "EXERCISE
DELIVERY
DOCUMENTS"), the Company shall transmit by facsimile an
acknowledgment of
confirmation of receipt of the Exercise Delivery Documents to
the Holder
and the Company's transfer agent (the "TRANSFER AGENT"). On or
before the
third (3rd) Business Day following the date on which the
Company has
received all of the Exercise Delivery Documents (the "SHARE
DELIVERY
DATE"), the Company shall (X) provided that the Transfer Agent
is
participating in The Depository Trust Company ("DTC") Fast
Automated
Securities Transfer Program and the Warrant Shares are
eligible for resale
pursuant to Rule 144, upon the request of the Holder, credit
such aggregate
number of Warrant Shares to which the Holder is entitled
pursuant to such
exercise to the Holder's or its designee's balance account
with DTC through
its Deposit Withdrawal Agent Commission system, or (Y) if the
Transfer
Agent is not participating in the DTC Fast Automated
Securities Transfer
Program, issue and dispatch by overnight courier to the
address as
specified in the Exercise Notice, a certificate, registered in
the
Company's share register in the name of the Holder or its
designee, for the
number of shares of Common Stock to which the Holder is
entitled pursuant
to such exercise. Upon delivery of the Exercise Delivery
Documents, the
Holder shall be deemed for all corporate purposes to have
become the holder
of record of the Warrant Shares with respect to which this
Warrant has been
exercised, irrespective of the date such Warrant Shares are
credited to the
Holder's DTC account or the date of delivery of the
certificates evidencing
such Warrant Shares, as the case may be. If this Warrant is
submitted in
connection with any exercise pursuant to this Section 1(a) and
the number
of Warrant Shares represented by this Warrant submitted for
exercise is
greater than the number of Warrant Shares being acquired upon
an exercise,
then the Company shall as soon as practicable and in no event
later than
three (3) Business Days after any exercise and at its own
expense, issue a
new Warrant (in accordance with Section 7(d)) representing the
right to
purchase the number of Warrant Shares purchasable immediately
prior to such
exercise under this Warrant, less the number of Warrant Shares
with respect
to which this Warrant is exercised. No fractional shares of
Common Stock
are to be issued upon the exercise of this Warrant, but rather
the number
of shares of Common Stock to be issued shall be rounded up to
the nearest
whole number. The Company shall pay any and all taxes which
may be payable
with respect to the issuance and delivery of Warrant Shares
upon exercise
of this Warrant. [INSERT IN SERIES B-1 AND SERIES B-2 WARRANT
ONLY]
[NOTWITHSTANDING ANY PROVISION OF THIS WARRANT TO THE
CONTRARY, NO MORE
THAN THE MAXIMUM ELIGIBILITY NUMBER OF WARRANT SHARES SHALL BE
EXERCISABLE
HEREUNDER.]
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(b) EXERCISE PRICE. For purposes of this Warrant,
"EXERCISE PRICE"
means $0.60, subject to adjustment as provided herein.
(c) COMPANY'S FAILURE TO TIMELY DELIVER SECURITIES. If
the Company
shall fail for any reason or for no reason to issue to the
Holder within
three (3) Business Days of receipt of the Exercise Delivery
Documents, a
certificate for the number of shares of Common Stock to which
the Holder is
entitled and register such shares of Common Stock on the
Company's share
register or to credit the Holder's balance account with DTC
for such number
of shares of Common Stock to which the Holder is entitled upon
the Holder's
exercise of this Warrant, then, in addition to all other
remedies available
to the Holder, the Company shall pay in cash to the Holder on
each day
after such third (3rd) Business Day that the issuance of such
shares of
Common Stock is not timely effected an amount equal to one
percent (1.0%)
of the product of (A) the sum of the number of shares of
Common Stock not
issued to the Holder on a timely basis and to which the Holder
is entitled
and (B) the Closing Sale Price of the shares of Common Stock
on the Trading
Day immediately preceding the last possible date which the
Company could
have issued such shares of Common Stock to the Holder without
violating
Section 1(a). In addition to the foregoing, if within three
(3) Trading
Days after the Company's receipt of the facsimile copy of a
Exercise Notice
the Company shall fail to issue and deliver a certificate to
the Holder and
register such shares of Common Stock on the Company's share
register or
credit the Holder's balance account with DTC for the number of
shares of
Common Stock to which the Holder is entitled upon the Holder's
exercise
hereunder, and if on or after such Trading Day the Holder
purchases (in an
open market transaction or otherwise) shares of Common Stock
to deliver in
satisfaction of a sale by the Holder of shares of Common Stock
issuable
upon such exercise that the Holder anticipated receiving from
the Company
(a "BUY-IN"), then the Company shall, within three (3)
Business Days after
the Holder's request and in the Holder's discretion, either
(i) pay cash to
the Holder in an amount equal to the Holder's total purchase
price
(including brokerage commissions, if any) for the shares of
Common Stock so
purchased (the "BUY-IN PRICE"), at which point the Company's
obligation to
deliver such certificate (and to issue such shares of Common
Stock) or
credit such Holder's balance account with DTC shall terminate,
or (ii)
promptly honor its obligation to deliver to the Holder a
certificate or
certificates representing such shares of Common Stock or
credit such
Holder's balance account with DTC and pay cash to the Holder
in an amount
equal to the excess (if any) of the Buy-In Price over the
product of (A)
such number of shares of Common Stock, times (B) the Closing
Bid Price on
the date of exercise.
- 3 -
(d) CASHLESS EXERCISE. Notwithstanding anything contained
herein to
the contrary, if a registration statement covering the resale
of the
Warrant Shares that are the subject of the Exercise Notice
pursuant to the
1933 Act (the "UNAVAILABLE WARRANT SHARES") is not available
for the resale
of such Unavailable Warrant Shares, the Holder may, in its
sole discretion,
exercise this Warrant in whole or in part and, in lieu of
making the cash
payment otherwise contemplated to be made to the Company upon
such exercise
in payment of the Aggregate Exercise Price, elect instead to
receive upon
such exercise the "Net Number" of shares of Common Stock
determined
according to the following formula (a "CASHLESS EXERCISE"):
Net Number = (A X B) - (A X C)
-----------------
B
For purposes of the foregoing formula:
A= the total number of shares with respect to
which this
Warrant is then being exercised.
B= the Weighted Average Price of the shares of
Common
Stock (as reported by Bloomberg) for the
five (5)
consecutive Trading Days ending on the date
immediately
preceding the date of the Exercise Notice.
C= the Exercise Price then in effect for the
applicable
Warrant Shares at the time of such exercise.
(e) DISPUTES. In the case of a dispute as to the
determination of the
Exercise Price or the arithmetic calculation of the Warrant
Shares, the
Company shall promptly issue to the Holder the number of
Warrant Shares
that are not disputed and resolve such dispute in accordance
with Section
12.
(f) LIMITATIONS ON EXERCISES. The Company shall not
effect the
exercise of this Warrant, and the Holder shall not have the
right to
exercise this Warrant, to the extent that after giving effect
to such
exercise, such Person (together with such Person's affiliates)
would
beneficially own in excess of 4.99% (the "MAXIMUM PERCENTAGE")
of the
shares of Common Stock outstanding immediately after giving
effect to such
exercise. For purposes of the foregoing sentence, the
aggregate number of
shares of Common Stock beneficially owned by such Person and
its affiliates
shall include the number of shares of Common Stock issuable
upon exercise
of this Warrant with respect to which the determination of
such sentence is
being made, but shall exclude shares of Common Stock which
would be
issuable upon (i) exercise of the remaining, unexercised
portion of this
Warrant beneficially owned by such Person and its affiliates
and (ii)
exercise or conversion of the unexercised or unconverted
portion of any
other securities of the Company beneficially owned by such
Person and its
affiliates (including, without limitation, any convertible
notes or
convertible preferred stock or warrants) subject to a
limitation on
conversion or exercise analogous to the limitation contained
herein. Except
as set forth in the preceding sentence, for purposes of this
paragraph,
beneficial ownership shall be calculated in accordance with
Section 13(d)
of the Securities Exchange Act of 1934, as amended. For
purposes of this
Warrant, in determining the number of outstanding shares of
Common Stock,
the Holder may rely on the number of outstanding shares of
Common Stock as
reflected in (1) the Company's most recent Form 10-K, Form
10-KSB, Form
10-Q, Form 10-QSB, Current Report on Form 8-K or other public
filing with
the Securities and Exchange Commission, as the case may be,
(2) a more
recent public announcement by the Company or (3) any other
notice by the
Company or the Transfer Agent setting forth the number of
shares of Common
Stock outstanding. For any reason at any time, upon the
written or oral
request of the Holder, the Company shall within one Business
Day confirm
orally and in writing to the Holder the number of shares of
Common Stock
then outstanding. In any case, the number of outstanding
shares of Common
Stock shall be determined after giving effect to the
conversion or exercise
of securities of the Company, including the SPA Securities and
the SPA
Warrants, by the Holder and its affiliates since the date as
of which such
number of outstanding shares of Common Stock was reported. By
written
notice to the Company, the Holder may from time to time
increase or
decrease the Maximum Percentage to any other percentage not in
excess of
9.99% specified in such notice; provided that (i) any such
increase will
not be effective until the sixty-first (61st) day after such
notice is
delivered to the Company, and (ii) any such increase or
decrease will apply
only to the Holder and not to any other holder of SPA
Warrants. The
provisions of this paragraph shall be construed and
implemented in a manner
otherwise than in strict conformity with the terms of this
Section 1(f) to
correct this paragraph (or any portion hereof) which may be
defective or
inconsistent with the intended beneficial ownership limitation
herein
contained or to make changes or supplements necessary or
desirable to
properly give effect to such limitation.
- 4 -
(g) INSUFFICIENT AUTHORIZED SHARES. If at any time while
this Warrant
remain outstanding the Company does not have a sufficient
number of
authorized and unreserved shares of Common Stock to satisfy
its obligation
to reserve for issuance upon exercise of this Warrant at least
a number of
shares of Common Stock equal to 130% (the "REQUIRED RESERVE
AMOUNT") of the
number of shares of Common Stock as shall from time to time be
necessary to
effect the exercise of all of this Warrant then outstanding
(an "AUTHORIZED
SHARE FAILURE"), then the Company shall immediately take all
action
necessary to increase the Company's authorized shares of
Common Stock to an
amount sufficient to allow the Company to reserve the Required
Reserve
Amount for this Warrant then outstanding. Without limiting the
generality
of the foregoing sentence, as soon as practicable after the
date of the
occurrence of an Authorized Share Failure, but in no event
later than sixty
(60) days after the occurrence of such Authorized Share
Failure, the
Company shall hold a meeting of its stockholders for the
approval of an
increase in the number of authorized shares of Common Stock.
In connection
with such meeting, the Company shall provide each stockholder
with a proxy
statement and shall use its best efforts to solicit its
stockholders'
approval of such increase in authorized shares of Common Stock
and to cause
its board of directors to recommend to the stockholders that
they approve
such proposal.
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
The Exercise
Price and the number of Warrant Shares shall be adjusted from time
to time as
follows:
(a) ADJUSTMENT UPON ISSUANCE OF SHARES OF COMMON STOCK.
If and
whenever on or after the Subscription Date the Company issues
or sells, or
in accordance with this Section 2 is deemed to have issued or
sold, any
shares of Common Stock (including the issuance or sale of
shares of Common
Stock owned or held by or for the account of the Company, but
excluding
shares of Common Stock deemed to have been issued by the
Company in
connection with any Excluded Securities (as defined in the SPA
Securities)
for a consideration per share (the "NEW ISSUANCE PRICE") less
than a price
(the "APPLICABLE PRICE") equal to the Exercise Price in effect
immediately
prior to such issue or sale or deemed issuance or sale (the
foregoing a
"DILUTIVE ISSUANCE"), then immediately after such Dilutive
Issuance, the
Exercise Price then in effect shall be reduced to an amount
equal to the
New Issuance Price. Upon each such adjustment of the Exercise
Price
hereunder, the number of Warrant Shares shall be adjusted to
the number of
shares of Common Stock determined by multiplying the Exercise
Price in
effect immediately prior to such adjustment by the number of
Warrant Shares
acquirable upon exercise of this Warrant immediately prior to
such
adjustment and dividing the product thereof by the Exercise
Price resulting
from such adjustment. For purposes of determining the adjusted
Exercise
Price under this Section 2(a), the following shall be
applicable:
- 5 -
(i) ISSUANCE OF OPTIONS. If the Company in any
manner grants any
Options and the lowest price per share for which one
share of Common
Stock is issuable upon the exercise of any such Option or
upon
conversion, exercise or exchange of any Convertible
Securities
issuable upon exercise of any such Option is less than
the Applicable
Price, then such share of Common Stock shall be deemed to
be
outstanding and to have been issued and sold by the
Company at the
time of the granting or sale of such Option for such
price per share.
For purposes of this Section 2(a)(i), the "lowest price
per share for
which one share of Common Stock is issuable upon exercise
of such
Options or upon conversion, exercise or exchange of such
Convertible
Securities issuable upon exercise of any such Option"
shall be equal
to the sum of the lowest amounts of consideration (if
any) received or
receivable by the Company with respect to any one share
of Common
Stock upon the granting or sale of the Option, upon
exercise of the
Option and upon conversion, exercise or exchange of any
Convertible
Security issuable upon exercise of such Option. No
further adjustment
of the Exercise Price or number of Warrant Shares shall
be made upon
the actual issuance of such shares of Common Stock or of
such
Convertible Securities upon the exercise of such Options
or upon the
actual issuance of such shares of Common Stock upon
conversion,
exercise or exchange of such Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the
Company in any
manner issues or sells any Convertible Securities and the
lowest price
per share for which one share of Common Stock is issuable
upon the
conversion, exercise or exchange thereof is less than the
Applicable
Price, then such share of Common Stock shall be deemed to
be
outstanding and to have been issued and sold by the
Company at the
time of the issuance or sale of such Convertible
Securities for such
price per share. For the purposes of this Section
2(a)(ii), the
"lowest price per share for which one share of Common
Stock is
issuable upon the conversion, exercise or exchange
thereof" shall be
equal to the sum of the lowest amounts of consideration
(if any)
received or receivable by the Company with respect to one
share of
Common Stock upon the issuance or sale of the Convertible
Security and
upon conversion, exercise or exchange of such Convertible
Security. No
further adjustment of the Exercise Price or number of
Warrant Shares
shall be made upon the actual issuance of such shares of
Common Stock
upon conversion, exercise or exchange of such Convertible
Securities,
and if any such issue or sale of such Convertible
Securities is made
upon exercise of any Options for which adjustment of this
Warrant has
been or is to be made pursuant to other provisions of
this Section
2(a), no further adjustment of the Exercise Price or
number of Warrant
Shares shall be made by reason of such issue or sale.
- 6 -
(iii) CHANGE IN OPTION PRICE OR RATE OF CONVERSION.
If the
purchase price provided for in any Options, the
additional
consideration, if any, payable upon the issue,
conversion, exercise or
exchange of any Convertible Securities, or the rate at
which any
Convertible Securities are convertible into or
exercisable or
exchangeable for shares of Common Stock increases or
decreases at any
time, the Exercise Price and the number of Warrant Shares
in effect at
the time of such increase or decrease shall be adjusted
to the
Exercise Price and the number of Warrant Shares which
would have been
in effect at such time had such Options or Convertible
Securities
provided for such increased or decreased purchase price,
additional
consideration or increased or decreased conversion rate,
as the case
may be, at the time initially granted, issued or sold.
For purposes of
this Section 2(a)(iii), if the terms of any Option or
Convertible
Security that was outstanding as of the date of issuance
of this
Warrant are increased or decreased in the manner
described in the
immediately preceding sentence, then such Option or
Convertible
Security and the shares of Common Stock deemed issuable
upon exercise,
conversion or exchange thereof shall be deemed to have
been issued as
of the date of such increase or decrease. No adjustment
pursuant to
this Section 2(a) shall be made if such adjustment would
result in an
increase of the Exercise Price then in effect or a
decrease in the
number of Warrant Shares.
(iv) CALCULATION OF CONSIDERATION RECEIVED. In case
any Option is
issued in connection with the issue or sale of other
securities of the
Company, together comprising one integrated transaction
in which no
specific consideration is allocated to such Options by
the parties
thereto, the Options will be deemed to have been issued
for a
consideration of $0.01. If any shares of Common Stock,
Options or
Convertible Securities are issued or sold or deemed to
have been
issued or sold for cash, the consideration received
therefor will be
deemed to be the net amount received by the Company
therefor. If any
shares of Common Stock, Options or Convertible Securities
are issued
or sold for a consideration other than cash, the amount
of such
consideration received by the Company will be the fair
value of such
consideration, except where such consideration consists
of securities,
in which case the amount of consideration received by the
Company will
be the Closing Sale Price of such security on the date of
receipt. If
any shares of Common Stock, Options or Convertible
Securities are
issued to the owners of the non-surviving entity in
connection with
any merger in whic
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