EXHIBIT 10.44
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUED UPON EXERCISE
HEREOF HAVE NOT
BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE
OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISPOSITION MAY BE AFFECTED WITHOUT AN
EFFECTIVE REGISTRATION
STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED.
PATRON SYSTEMS, INC.
WARRANT TO PURCHASE
200,000 SHARES
OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
(Void after February 20, 2012)
This certifies
that for value, APEX INVESTMENT FUND V, L.P. or
registered assigns (the "HOLDER"), is entitled, subject to the terms set forth
below, at any time
from and after
February 20, 2007 (the
"ORIGINAL ISSUANCE
DATE") and before 5:00 p.m., Eastern Time, on February 20, 2012
(the "EXPIRATION
DATE"), to purchase
from PATRON
SYSTEMS, INC., a Delaware corporation (the
"COMPANY"), TWO
HUNDRED THOUSAND
(200,000) shares (subject to adjustment as
described herein),
of common stock,
par value $0.01 per
share, of the Company
(the "COMMON STOCK"),
upon surrender
hereof, at the principal office of the
Company referred to below, with a duly executed subscription form in the form
attached hereto as
EXHIBIT A and
simultaneous
payment therefor in lawful,
immediately available
money of the United
States or otherwise as
hereinafter
provided, at an
initial exercise price per share of $1.00 (the "PURCHASE
PRICE"). The Purchase
Price is subject to further adjustment as provided below,
and the term
"COMMON STOCK" shall include, unless the context otherwise
requires, the stock
and other securities
and property at the
time receivable
upon the exercise of this Warrant. The term "WARRANTS," as used herein,
shall
mean this Warrant and any other Warrants delivered in substitution or exchange
therefor as provided herein.
This Warrant was issued in connection with the Company's
issuance of a
convertible promissory
note in an aggregate principal amount of $200,000 to the
Holder.
1.
EXERCISE. This
Warrant may be
exercised at any time
or from
time to time from and after the Original Issuance Date and before 5:00 p.m.,
Eastern Time, on the
Expiration Date, on
any business day, for the full number
of shares of Common Stock called for hereby, by
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surrendering it at the
principal office of
the Company, at 500
North Michigan
Avenue, Suite 300,
Chicago, Illinois 60611, with the subscription form duly
executed, together
with payment in an
amount equal to (a) the number of shares
of Common Stock called for on the face of this Warrant, as adjusted in
accordance with the preceding paragraph of this Warrant
(without giving
effect
to any further adjustment herein), multiplied (b) by the Purchase
Price. Payment
of the Purchase Price shall be made by payment in immediately
available funds.
This Warrant may be exercised for less than the full number of
shares of Common
Stock at the time called for hereby, except that the number of shares
of Common
Stock receivable
upon the exercise of this Warrant as a whole, and the sum
payable upon the exercise of this Warrant as a whole, shall be proportionately
reduced. Upon a
partial exercise of
this Warrant in accordance with the terms
hereof, this Warrant
shall be surrendered,
and a new Warrant of the same tenor
and for the purchase
of the number of such shares not purchased upon such
exercise shall be issued by the Company to Holder without any
charge therefor. A
Warrant shall be deemed to have been exercised immediately prior to
the close of
business on the date of its surrender for exercise as provided
above, and the
person entitled
to receive the shares of Common Stock issuable upon such
exercise shall be
treated for all
purposes as the holder of such shares of
record as of the close of business on such date. Within two (2) business days
after such date, the
Company shall issue and deliver to the
person or persons
entitled to receive the same a certificate or certificates for the number of
full shares of Common Stock issuable upon such exercise,
together with cash,
in
lieu of any fraction of a share, equal to such fraction of the then
Fair Market
Value on the date of exercise of one full share of Common
Stock.
"FAIR MARKET VALUE"
shall mean, as of any
date: (i) if shares of
the
Common Stock are listed on a national securities exchange, the average of the
closing prices as
reported for composite transactions during the five (5)
consecutive trading
days preceding the
trading day
immediately prior to
such
date or, if no sale occurred on a trading day, then the mean
between the closing
bid and asked prices on such exchange on such trading day; (ii) if
shares of the
Common Stock are not
so listed but are
traded on the Nasdaq
SmallCap Market
("NSCM"), the average
of the closing prices
as reported on the NSCM during the
five (5) consecutive trading days preceding the trading day
immediately prior to
such date or, if no sale occurred on a trading day, then the mean between the
highest bid and lowest
asked prices as of the close of business on such trading
day, as reported on
the NSCM; or if
applicable,
the Nasdaq
National Market
("NNM"), or if not
then included for quotation on the NNM or NSCM, the average
of the highest
reported bid and lowest reported asked prices as reported by
the
OTC Bulletin Board or
the National
Quotations Bureau,
as the case may be;
or
(iii) if the shares of the Common Stock are not then publicly
traded, the fair
market price of the
Common Stock as determined in good faith by at least a
majority of the Board of Directors of the Company.
2.
SHARES FULLY
PAID; PAYMENT OF TAXES. All shares of Common
Stock issued upon the exercise of a Warrant shall be validly
issued, fully paid
and non-assessable,
and the Company shall
pay all taxes and other governmental
charges (other than
income taxes to the
holder) that may be imposed in respect
of the issue or delivery thereof.
3.
TRANSFER AND EXCHANGE.
This Warrant and all rights hereunder
are transferable,
in whole or in part,
on the books of the Company maintained
for such purpose at its principal office referred to above by Holder in
person
or by duly authorized
attorney, upon
surrender of this Warrant together with a
completed and executed assignment form in the form attached as
2
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EXHIBIT B, payment of any necessary transfer tax or other governmental charge
imposed upon such transfer and an opinion of counsel reasonably acceptable the
Company stating that such transfer is exempt from the registration
requirements
of the Securities
Act of 1933,
as amended (the "1933
ACT"). Upon any
partial
transfer, the Company will issue and deliver to Holder a new
Warrant or Warrants
with respect to the
shares of Common Stock not so transferred. Each taker and
holder of this Warrant, by taking or holding the same,
consents and agrees that
this Warrant when
endorsed in blank
shall be deemed
negotiable and that
when
this Warrant shall
have been so endorsed,
the holder hereof may
be treated by
the Company and all other persons dealing with this Warrant as the absolute
owner hereof for any
purpose and as the person entitled to exercise the
rights
represented hereby, or
to the transfer hereof on the books of the Company, any
notice to the contrary
notwithstanding; but
until such transfer on such books,
the Company
may treat the registered Holder hereof as the owner for all
purposes.
This Warrant is
exchangeable at such
office for Warrants for the same
aggregate number of
shares of Common
Stock, each new
Warrant to represent the
right to purchase such
number of shares as the Holder shall designate at the
time of such exchange.
4.
ANTI-DILUTION PROVISIONS.
A.
ADJUSTMENT FOR
DIVIDENDS IN OTHER STOCK AND PROPERTY
RECLASSIFICATIONS. In
case at any time or from time to time the holders of the
Common Stock (or any shares of stock or other securities at the time
receivable
upon the exercise of
this Warrant)
shall have
received, or, on or after the
record date fixed for the determination of eligible shareholders, shall have
become entitled to receive, without payment therefor,
(1) other
or additional stock or other
securities or property (other than cash) by way of dividend,
(2) any cash
or other property
paid or payable
out of any source other than retained earnings (determined in accordance
with
generally accepted accounting principles), or
(3) other
or additional stock or other
securities or
property (including cash) by way of stock-split, spin-off,
reclassification,
combination of shares
or similar corporate rearrangement
(other than
(x) additional shares of Common Stock or any other stock or
securities into which
such Common Stock shall have been changed, (y) any other
stock or securities
convertible into or
exchangeable for such
Common Stock or
such other stock or securities or (z) any stock purchase rights, issued as a
stock dividend or stock-split, adjustments in respect of which
shall be covered
by the terms of SECTION 4.C, SECTION 4.D OR SECTION 4.E,
then and in each
such
case, Holder,
upon the exercise hereof as provided in SECTION 1, shall be
entitled to
receive the amount of stock and other
securities
and property
(including cash in the cases referred to in
3
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clauses (2) and (3)
above) which such Holder would hold on the date of such
exercise if on the Original Issuance Date Holder had been the holder of
record
of the number of shares of Common Stock called for on the face of
this Warrant,
as adjusted in
accordance with the
first paragraph of
this Warrant,
and had
thereafter, during the
period from the Original Issuance Date to and including
the date of such
exercise, retained
such shares and/or all other or additional
stock and other securities and property (including cash in the
cases referred to
in clause (2) and (3) above) receivable by it as aforesaid
during such
period,
giving effect to all
adjustments
called for during such
period by SECTION 4.A
and SECTION 4.B.
B.
ADJUSTMENT FOR
REORGANIZATION,
CONSOLIDATION
AND
MERGER. In case of any
reorganization of the
Company (or any other corporation
the stock or other securities of which are at the time receivable on the
exercise of this Warrant) after the Original Issuance Date, or in case, after
such date, the Company (or any such other corporation) shall
consolidate with or
merge into another
corporation or entity or convey all or substantially all its
assets to another corporation or entity, then and in each such case
Holder, upon
the exercise hereof as provided in SECTION 1 at any time after the
consummation
of such reorganization, consolidation, merger or conveyance, shall be
entitled
to receive, in lieu of
the stock or other
securities and
property
receivable
upon the exercise of this Warrant prior to such consummation, the
stock or other
securities or property
to which such Holder would have been entitled upon such
consummation if Holder had exercised this Warrant immediately prior
thereto, all
subject to further
adjustment as provided in SECTIONS 4.A, SECTION 4.B, SECTION
4.C, SECTION 4.D and
SECTION 4.E; in each such case, the terms of this Warrant
shall be applicable
to the shares of stock or other
securities
or property
receivable upon the exercise of this Warrant after such
consummation.
C.
[SALE OF SHARES BELOW PURCHASE PRICE].
(1) Subject
to the exceptions set forth in
SECTION 4.C(5),
if the Company issues or sells, or is deemed by the express
provisions of this
SECTION 4.C to have issued or sold,
Additional
Shares of
Common Stock
(as hereinafter defined), other than as a dividend or other
distribution on any
class of stock as
provided in SECTION
4.D and other than
upon a subdivision
or combination of shares of Common Stock as provided in
SECTION 4.E, for an Effective Price (as hereinafter defined) less than the then
existing Purchase Price, then and in each such case:
(A) the then
existing Purchase Price
shall be reduced,
as of the opening of business on the date of such issue
or
sale, as follows: the
Purchase Price shall be reduced to a price determined by
multiplying that
Purchase Price by a
fraction (i) the numerator of which shall
be (a) the number of shares of Common Stock outstanding at the
close of business
on the day next preceding the date of such issue or sale, plus (b)
the number of
shares of Common Stock
which the aggregate
consideration
received (or by
the
express provisions
hereof deemed to have
been received) by the Company for the
total number of
Additional Shares of
Common Stock so issued would purchase at
the Effective Price, plus
4
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(c) the number of shares of Common Stock for which all Warrants, and all other
options and warrants
outstanding
as of the Original Issuance Date that are
exercisable for shares
of Common Stock are exercisable at the Purchase Price in
effect at the close of
business on the date
next preceding the date of such
issue or sale, plus
(d) the number of
shares of Common Stock
underlying
all
Other Securities (as
hereinafter defined)
at the close of business on the date
next preceding the date of such issue or sale, and (ii) the
denominator of which
shall be (a) the number of shares of Common Stock outstanding at the close of
business on the date of such issue or sale after giving
effect to such issue
of
Additional Shares of Common Stock, plus (b) the number of shares of
Common Stock
for which all Warrants and all other options and warrants outstanding on the
Original Issuance
Date that are
exercisable
for shares of Common Stock are
exercisable at the Purchase Price in effect at the close of
business on the date
next preceding the date
