WARRANT

 

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THIS WARRANT AND THE SECURITIES RECEIVABLE UPON EXERCISE HEREOF HAVE NOT BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),

OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE

TRANSFERRED OR DISPOSED OF UNLESS AND UNTIL SUCH SECURITIES ARE REGISTERED UNDER

THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF LEGAL

COUNSEL IS DELIVERED TO THE COMPANY STATING THAT AN EXEMPTION FROM SUCH

REGISTRATION IS AVAILABLE.

 

                                      WARRANT

 

                                  WARRANT NO. W-0305-1-CRII-SASCO Business Trust

 

         THIS CERTIFIES THAT, for value received in the amount of one hundred

sixty thousand dollars (US $160,000.00) (the "Purchase Price"), CRII-SASCO

BUSINESS TRUST (the "Holder") is entitled at any time during the Exercise Period

(as such term and other capitalized terms are defined in Article 1 hereof),

subject to the terms and conditions set forth herein, to purchase from CELL

ROBOTICS INTERNATIONAL, INC., a Colorado corporation (the "Company"), sixteen

million (16,000,000) shares of Common Stock (subject to adjustment as provided

herein) at the Warrant Price, all on the terms and conditions and pursuant to

the provisions hereinafter set forth. The Purchase Price shall be paid by Holder

in immediately available funds within five business days of the Effective Date

(as defined below).

 

1.        DEFINITIONS.

 

         As used in this Warrant, the following terms have the respective

meanings set forth below:

 

         "Applicable Law" shall mean all laws, rules and regulations applicable

to the Person, conduct, action or covenant in question, including, but not

limited to, all applicable common law and equitable principles, all provisions

of all applicable state and federal constitutions, statutes, rules, regulations

and orders of governmental body, and all orders, judgments and decrees of all

courts and arbitrators.

 

         "Commission" shall mean the Securities and Exchange Commission or any

other federal agency then administering the Securities Act and other federal

securities laws.

 

         "Common Stock" shall mean the common stock, par value $.004 per share,

of the Company and any capital stock into which such common stock shall have

been changed and any other stock resulting from any reclassification of such

stock which is not preferred as to dividends or assets over any other class of

stock which shall be in effect from time to time.

 

         "Designated Office" shall have the meaning set forth in Article 7.

 

         "Exercise Period" shall mean, subject to the terms and conditions of

Section 2.7, a period of six (6) months commencing on April 11, 2005 and ending

at 5:00 p.m., local time, at the Designated Office on October 11, 2005.

 

 

 

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         "Exercise Price" shall mean twenty-five cents ($0.25), subject to

adjustment as provided in Article 3 and Section 2.7.

 

         "Notice of Exercise" shall mean the form of Notice of Exercise attached

hereto as Exhibit A.

 

          "Person" shall mean any natural person, corporation, unincorporated

organization, trust, joint-stock company, joint venture, association, company,

limited or general partnership, any government or any agency or political

subdivision of any government.

 

         "Restricted Common Stock" shall mean shares of Common Stock which are,

or which upon their issuance on the exercise of this Warrant would be, evidenced

by a certificate bearing the restrictive legend set forth in Section 4.3.

 

         "Securities Act" shall mean the Securities Act of 1933, as amended, or

any similar federal statute, and the rules and regulations of the Commission

thereunder, all as the same shall be in effect at the time.

 

         "Transfer" shall mean any disposition of the Warrant Stock or of any

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

the Securities Act.

 

         "Trading Price" shall mean (a) if the Common Stock is actively traded

on any national securities exchange or any Nasdaq quotation or market system,

then the closing price at which sales of Common Stock shall have been sold and

(b) if the shares of Common Stock are not actively traded on any such exchange

or system, then the arithmetic mean of the bid and asked prices of a share of

the Common Stock.

 

         "Warrant" shall mean this Warrant and all warrants issued upon

transfer, division or combination of, or in substitution for, this Warrant.

 

         "Warrant Price" shall mean an amount equal to (a) the number of shares

of Common Stock being purchased upon exercise of this Warrant pursuant to

Section 2.2, multiplied by (b) the Exercise Price as of the date of such

exercise.

 

         "Warrant Stock" shall mean the shares of Common Stock issued, issuable

or both (as the context may require) to the Holder of this Warrant upon the

exercise thereof.

 

2.        RIGHTS GRANTED EXERCISE OF WARRANT.

 

         2.1. Right of Exercise. Subject to Section 9.1, the Holder shall be

entitled to exercise this Warrant at any time and from time to time during the

Exercise Period.

 

         2.2. Manner of Exercise. Subject to the terms and conditions of this

Warrant, the Holder shall have the right to exercise this Warrant during

Exercise Period, in whole or in part, by delivering to the Company at the

Designated Office (a) a Notice of Exercise, duly executed by the Holder,

specifying the number of shares of Common Stock to be purchased, (b) payment of

the Warrant Price by certified or official bank check, (c) this Warrant and (d)

in the event this Warrant is being exercised by any Person other than the Holder

pursuant to this Section 2.2, it shall be accompanied by proof acceptable to the

Company of the right of such Person or Persons

 

 

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to exercise this Warrant. Upon receipt thereof, the Company shall, as promptly

as practicable, execute (or cause to be executed) and deliver (or cause to be

delivered) to the Holder a certificate or certificates representing the

aggregate number of full shares of Common Stock issuable upon such exercise. The

certificate or certificates so delivered shall be, to the extent possible, in

such denomination or denominations as the Holder shall request in the Notice of

Exercise and shall be registered in the name of the Holder or, subject to the

terms of this Warrant, such other name as shall be designated in the Notice of

Exercise. This Warrant shall be deemed to have been exercised and such

certificate or certificates shall be deemed to have been issued, and the Holder

and/or any other Person so designated to be named therein shall be deemed to

have become a holder of record of such shares for all purposes, as of the date

the items specified in clauses (a) through (d) above are received by the

Company. If this Warrant shall have been exercised in part, the Company shall,

at the time of delivery of the certificate or certificates representing the

shares of Common Stock being issued, deliver to the Holder a new warrant

evidencing the rights of the Holder to purchase the unpurchased shares of Common

Stock called for by this Warrant, which new warrant shall in all other respects

be identical with this Warrant, or, at the request of the Holder, appropriate

notation may be made on this Warrant and the same returned to the Holder.

Notwithstanding any provision herein to the contrary, the Company shall not be

required to register shares in the name of any Person who acquires this Warrant

(or part hereof) or any Warrant Stock otherwise than in accordance with this

Warrant.

 

         2.3. Exercise Increments. Notwithstanding anything contained herein to

the contrary Holder agrees to exercise this Warrant by delivery of the Notice of

Exercise, payment of the Warrant Price and other documents and instruments

required by Section 2.2 as follows:

 

         (a) The Holder shall exercise this Warrant for not less than 4,000,000

shares of Warrant Stock upon the Company's satisfaction of the matters described

under the column entitled "Covenant" on Exhibit B attached hereto set forth

opposite the column designated as "Exercise I";

 

         (b) The Holder shall exercise this Warrant for not less than 4,000,000

shares of Warrant Stock upon the Company's satisfaction of the matters described

under the column entitled "Covenant" on Exhibit B attached hereto set forth

opposite the column designated as "Exercise II";

 

         (c) The Holder shall exercise this Warrant for not less than 4,000,000

shares of Warrant Stock upon the Company's satisfaction of the matters described

under the column entitled "Covenant" on Exhibit B attached hereto set forth

opposite the column designated as "Exercise III"; and

 

         (d) The Holder shall exercise this Warrant for not less than 4,000,000

shares of Warrant Stock upon the Company's satisfaction of the matters described

under the column entitled "Covenant" on Exhibit B attached hereto set forth

opposite the column designated as "Exercise IV."

 

         2.4. Payment of Taxes. The issuance of a certificate or certificates

for shares of Common Stock upon exercise of this Warrant shall be made without

charge for any stamp or other similar tax in respect of such issuance. However,

if any such certificate is to be issued in a name other than that of the Holder,

the Person or Persons requesting the issuance thereof shall pay to the Company

the amount of any tax which may be payable in respect of any transfer

 

 

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involved in such issuance or shall establish to the satisfaction of the Company

that such tax has been paid.

 

         2.5. Fractional Shares. The Company shall not be required to issue

fractions of shares of Common Stock upon exercise of this Warrant or to

distribute certificates which evidence fractional shares of Common Stock. If the

exercise of this Warrant would result in a fractional share of Common Stock or

the right to acquire a fractional share of Common Stock, such fractional share

shall be disregarded and the number of shares of Common Stock issuable upon the

exercise of this Warrant shall be rounded up or down to the nearest whole share.

The Holder expressly waives his right to receive any fractional shares upon

exercise of this Warrant.

 

         2.6. Compliance with Law and Regulations. This Warrant and the

obligation of the Company to sell and deliver the shares of Warrant Stock

hereunder shall be subject to all Applicable Laws and to such approvals by any

government or regulatory agency as may be required. Notwithstanding any other

provision of this Warrant, this Warrant may not be exercised if its exercise, or

the receipt of the shares of Warrant Stock pursuant thereto, would be contrary

to Applicable Law.

 

         2.7. General Covenants. The Company agrees to perform the agreements

and covenants set forth on Exhibit C attached hereto.

 

3.        ADJUSTMENTS AND ANTI-DILUTION PROVISIONS.

 

         3.1. Adjustment for Change in Capital Stock. In the event of any change

in the Common Stock of the Company by reason of any combination, subdivision,

split, reclassification, stock dividend or any similar change affecting the

Common Stock, then in any such event the number and kind of shares of Common

Stock subject to this Warrant and the Exercise Price shall be adjusted, in such

manner as the Board of Directors deems equitable to prevent substantial dilution

or enlargement of the rights granted to the Holder. The adjustment shall become

effective immediately after the record date in the case of a dividend or

distribution and immediately after the effective date in the case of a

subdivision, combination or reclassification. Such adjustment shall be made

successively whenever any event listed above shall occur.

 

         3.2. Reorganization of Company. If at any time while this Warrant is

outstanding and unexpired there shall be (a) a reorganization of the Company,

(b) a merger or consolidation of the Company with or into another entity in

which the Company is not the surviving entity, or a reverse triangular merger in

which the Company is the surviving entity but the shares of the Company's

capital stock outstanding immediately prior to the merger are converted by

virtue of the merger into other property, whether in the form of securities,

cash or otherwise, or (c) a sale or transfer of the Company's properties and

assets as, or substantially as, an entirety to any other Person, then lawful and

adequate provision will be made whereby the Holder will thereafter have the

right to purchase and receive upon the basis and upon the terms and conditions

specified in this Warrant and in lieu of the shares of Common Stock of the

Company immediately theretofore purchasable and receivable upon the exercise of

this Warrant, the kind and amount of stock and other securities and assets

(including, without limitation, cash) receivable upon such merger, consolidation

or sale by a holder of the number of shares of Common Stock of the Company

deliverable upon the exercise of this Warrant immediately prior to such merger,

consolidation or sale. In any such case, appropriate provisions will be made

with respect to the rights and

 

 

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interests of the Holder to the end that the provisions hereof (including,

without limitation, provisions for adjustments of the Exercise Price and of the

number of shares of Common Stock purchasable upon the exercise of this Warrant)

will thereafter be applicable, as nearly as may be, in relation to any shares of

stock, securities or assets thereafter deliverable upon the exercise hereof. The

foregoing provisions of this Section 3.2 shall similarly apply to successive

reorganizations, mergers, consolidations and sales and to the stock or

securities of any other corporation that are at the time receivable upon the

exercise of this Warrant. If this Section 3.2 applies to a transaction, Section

3.1 shall not apply to such transaction.

 

         3.3. Notice of Adjustment. Whenever the Exercise Price is adjusted, the

Company shall promptly mail to the Holder a notice setting forth the Exercise

Price after such adjustment and setting forth a brief statement of the facts

requiring such adjustment. Such certificate prepared in good faith shall be

conclusive evidence of the correctness of such adjustment absent manifest error.

 

         3.4. Company Determination Final. Any determination that the Company or

the Board of Directors must make pursuant to this Warrant is conclusive absent

manifest error.

 

         3.5. When No Adjustment Required. No adjustment need be made for any

transaction referred to in Section 3.2 if the Holder is entitled to participate

in the transaction on a basis and with notice that the Board of Directors

determines to be fair and appropriate in light of the basis and notice on which

holders of Common Stock participate in the transaction. No adjustment need be

made for a change in the par value or no par value of the Common Stock.

 

4.        RESTRICTIONS ON TRANSFER AND COMPLIANCE WITH SECURITIES ACT AND

         REGISTRATION.

 

          4.1 Agreement to Be Bound. The Holder, by acceptance of this Warrant,

agrees to be bound by the provisions of this Article 4. The Holder further

agrees that all shares of Warrant Stock will be disposed of only in accordance

with the Securities Act and the rules and regulations of the Commission

promulgated thereunder.

 

         4.2. Compliance with the Securities Act. This Warrant and the Warrant

Stock have not been registered under the Securities Act or any applicable state

securities law. The Holder hereof, by acceptance hereof, agrees that this

Warrant and all shares purchased upon exercise hereof will be disposed of only

in accordance with the Securities Act and the rules and regulations of the

Commission promulgated thereunder or of any applicable state securities law. The

Holder represents and warrants that (a) he, she or it is an "accredited

investor," as that term is defined in Rule 501(a) of Regulation D under the

Securities Act, and is acquiring the Common Stock for his, her or its own

account, for investment and not with a view to any "distribution" within the

meaning of the Securities Act; (b) he, she or it has been furnished with all

information which he, she or it deems necessary to evaluate the merits and risks

of this Warrant and the purchase of the Common Stock upon exercise thereof; (c)

he, she or it has had the opportunity to ask questions concerning the Common

Stock and the Company and all questions posed have been answered to his, her or

its satisfaction; (d) he, she or it has been given the opportunity to obtain any

additional information he, she or it deems necessary to verify the accuracy of

any information obtained concerning the Common Stock and the Company; and (e)

he, she or it has such knowledge and experience in financial and business

matters that he, she or it is able to evaluate the merits and risks of

purchasing the Common Stock and to make an informed investment decision relating

thereto.

 

 

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         4.3. Restrictive Legends. Except as otherwise provided in this Article

4, each certificate for Warrant Stock initially issued upon the exercise of this

Warrant, and each certificate for Warrant Stock issued to any subsequent

transferee of any such certificate, shall be stamped or otherwise imprinted with

a legend in substantially the following form:

 

         "THE SHARES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED

         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR

         ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR

         OTHERWISE TRANSFERRED OR DISPOSED OF UNLESS AND UNTIL SUCH SECURITIES

         ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES

         LAWS OR AN OPINION OF LEGAL COUNSEL IS DELIVERED TO THE COMPANY STATING

         THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."

 

         4.4. Transfers. No shares of Restricted Common Stock issued upon the

exercise hereof shall be Transferred other than pursuant to an effective

registration statement under the Securities Act or, if required by the Company,

an opinion of counsel is