THE SECURITIES
REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE HOLDER HEREOF FOR ITS
OWN ACCOUNT FOR INVESTMENT WITH NO INTENTION OF MAKING OR CAUSING
TO BE MADE A PUBLIC DISTRIBUTION OF ALL OR ANY PORTION THEREOF.
SUCH SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
FILED UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IRVINE
SENSORS CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
IRVINE SENSORS CORPORATION
WARRANT TO PURCHASE COMMON STOCK
Void after September 29,
2014
IRVINE SENSORS
CORPORATION , a Delaware corporation (the “
Company ”), hereby certifies that, for value received,
(including any permitted successors and assigns, the “
Holder ”), is entitled, subject to the terms set forth
below, to purchase from the Company at any time or from time to
time during the Exercise Period, defined below, and prior to 5:00
PM Central time, on September 29, 2014 (the “
Expiration Date ”), fully paid and nonassessable
shares of Common Stock (the “ Warrant Shares ”)
under the terms set forth herein.
1. Number of Warrant Shares; Exercise
Price . This Warrant shall evidence the right of the Holder to
purchase up to
Warrant Shares at an exercise price per Warrant Share of $0.55 per
share, subject to adjustment as provided in Section 6 below
(the “ Exercise Price ”).
2. Definitions . As used herein the
following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The term “ Common Stock
” shall mean the common stock, $0.01 par value per share, of
the Company.
(b) The term “ Company ”
shall include any company which shall succeed to or assume the
obligations of the Company hereunder.
(c) The term “ Corporate
Transaction ” shall mean (i) a sale, transfer or
conveyance of all or substantially all of the assets of the
Company; (ii) a consolidation of the Company with, or merger
of the Company with or into, another corporation or other business
entity in which the stockholders of the Company immediately prior
to such consolidation or merger own less than 50% of the voting
power of the surviving entity immediately after such consolidation
or merger; or (iii) any transaction or series of related
transactions to which the Company is a party in which in excess of
50% of the Company’s voting power is transferred, excluding
any consolidation or merger effected exclusively to change the
domicile of the Company and excluding any transaction for the
primary purpose of raising capital or acquiring another corporation
or business entity.
(d) The term “ Stock ”
shall mean (i) Common Stock or (ii) any other class of
stock resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value, or
from par value to no par value, or from no par value to par
value.
3. Exercise Date; Expiration .
Subject to the terms hereof, this Warrant may be exercised by the
Holder at any time or from time to time before the Expiration Date
(the “ Exercise Period ”).
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4. Exercise
of Warrant; Partial Exercise .
(a) Subject to Section 4(b) below, this
Warrant may be exercised in full by the Holder by surrender of this
Warrant, together with the Holder’s duly executed form of
subscription attached hereto as Exhibit A , to the
Company at its principal office, accompanied by payment, in cash or
by certified or official bank check payable to the order of the
Company, of the aggregate exercise price (as determined above) of
the number of Warrant Shares to be purchased hereunder. The
exercise of this Warrant pursuant to this Section 4 shall be
deemed to have been effected immediately prior to the close of
business on the business day on which this Warrant is surrendered
to the Company as provided in this Section 4, and at such time
the person in whose name any certificate for Warrant Shares shall
be issuable upon such exercise shall be deemed to be the record
holder of such Warrant Shares for all purposes. No later than seven
(7) business days after the exercise of this Warrant, the
Company at its expense will cause to be issued in the name of and
delivered to the Holder, or as the Holder may direct, a certificate
or certificates for the number of fully paid and nonassessable full
shares of Warrant Shares to which the Holder shall be entitled on
such exercise, together with cash, in lieu of any fraction of a
share, equal to such fraction of the fair market value (as defined
in Section 5(c) below) of one full Warrant Share as of the close of
business on the business day on which this Warrant is surrendered,
and, if applicable, a new warrant evidencing the balance of the
shares remaining subject to the Warrant.
(b) The Holder may not exercise that
portion of the Warrant on the deemed exercise date (the
“Exercise Amount”) in amounts that would result in the
Holder having a beneficial ownership of Common Stock which would be
in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on such
deemed exercise date, and (ii) the number of shares of Common
Stock issuable upon the exercise of the Exercise Amount with
respect to which the determination of this Section 4(b) is being
made on such deemed exercise date, which would result in beneficial
ownership by the Holder and its affiliates of more than 4.99% of
the outstanding shares of Common Stock of the Company. For the
purposes of this Section 4(b), beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder. Subject to the foregoing, the Holder shall not be
limited to successive exercises which would result in the aggregate
issuance of more than 4.99%. The Holder may revoke the exercise
limitation described in this Section 4(b), in whole or in
part, upon 61 days prior notice to the Company. The Holder may
allocate which of the equity of the Company deemed beneficially
owned by the Holder shall be included in the 4.99% amount described
above and which shall be allocated to the excess above 4.99%. The
Holder may waive the exercise limitation described in this Section
4(b) in whole or in part, upon and effective after 61 days prior
written notice to the Company to increase such percentage to up to
9.99%.
(a) Cashless Exercise . In the
event that the Company has not registered the Warrant Shares issued
or issuable upon the exercise of this Warrant for resale under the
Securities Act of 1933, as amended, on or prior to the six-month
anniversary (the “ Net Issuance Date ”) of the
issuance date of this Warrant, the Holder shall have the right to
convert this Warrant (the “ Conversion Right ”)
into Warrant Shares as provided in this Section 5 from time to
time after the Net Issuance Date until the Expiration Date. Subject
to Section 4(b), upon exercise of the Conversion Right with
respect to shares subject to the Warrant (the “ Converted
Warrant Shares ”), the Company shall deliver to the
Holder (without payment by the Holder of any exercise price or any
cash or other consideration) that number of fully paid and
nonassessable Warrant Shares computed using the following
formula:
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X =
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the number of
Warrant Shares to be delivered to the Holder;
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Y =
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the number of
Converted Warrant Shares;
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A =
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the fair market
value of one Warrant Share on the Conversion Date (as defined
below); and
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B =
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the Exercise
Price (as adjusted on the Conversion Date).
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No fractional shares shall be issuable upon
exercise of the Conversion Right, and if the number of shares to be
issued (determined in accordance with the foregoing formula) is
other than a whole number, the Company shall pay to the Holder an
amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as defined below). Shares
issued pursuant to the Conversion Right shall be treated as if they
were issued upon the exercise of the Warrant.
(b) Method of Exercise . The
Conversion Right may be exercised by the Holder by the surrender of
the Warrant at the principal office of the Company together with a
written statement specifying that the Holder thereby intends to
exercise the Conversion Right and indicating the total number of
shares under the Warrant that the Holder is exercising through the
Conversion Right. Such conversion shall be effective upon receipt
by the Company of the Warrant together with the aforesaid written
statement, or on such later date as is specified therein (the
“ Conversion Date ”). Certificates for the
shares issuable upon exercise of the Conversion Right shall be
delivered to the Holder within seven (7) business days
following the Conversion Date and, if applicable, a new warrant
evidencing the balance of the shares remaining subject to the
Warrant shall also be delivered to the Holder.
(c) Determination of Fair Market
Value . For purposes of this Section 5, fair market value
of a Warrant Share on the Conversion Date shall be determined as
follows:
(i) If the Common Stock is traded on a
national securities exchange or the Nasdaq Capital Market, the fair
market value of a Warrant Share shall be deemed to be the closing
sales price of the Common Stock on the stock exchange or market
determined by the Board to be the primary market for the Common
Stock as of the trading day immediately prior to the Conversion
Date, as such prices are officially quoted in the composite tape of
transactions on such exchange or market;
(ii) If the Common Stock is traded
over-the-counter or in the “pink sheets”, the fair
market value of a Warrant Share shall be deemed to be the closing
bid price (or, if such information is available, the closing
selling price, or, in the case of the “pink sheets,”
the most recent bid price) of the Common Stock as of the trading
day immediately prior to the Conversion Date; and
(iii) If there is no public market for the
Common Stock, then the fair market value of a Warrant Share shall
be determined by the Board of Directors of the Company in good
faith and, upon request of the Holder, the Board (or a
representative thereof) shall, as promptly as reasonably
practicable, but in any event not later than 15 days after
such request, notify the Holder of the Fair Market Value per share
of Common Stock.
6. Adjustments to Exercise Price and
Number of Warrant Shares . The number and kind of Warrant
Shares (or any shares of stock or other securities which may be)
issuable upon the exercise of this Warrant and the Exercise Price
hereunder shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
(a) Splits and Subdivisions . In
the event the Company should at any time or from time to time fix a
record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock into a greater number of shares,
then, as of such record date (or the date of such split or
subdivision if no record date is fixed), the Exercise Price shall
be appropriately decreased and the number of Warrant Shares for
which this Warrant is exercisable shall be appropriately increased
in accordance with Section 6(f) hereof.
(b) Combination of Shares . If the
number of shares of Common Stock outstanding at any time after the
date hereof is decreased by a combination of the outstanding shares
of Common Stock, the Exercise Price shall be appropriately
increased and the number of Warrant Shares for which this Warrant
is exercisable sh
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