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NEITHER
THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE 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.
WHERIFY WIRELESS, INC.
WARRANT TO PURCHASE
_______ SHARES
OF COMMON STOCK
(SUBJECT TO ADJUSTMENT)
(Void
after _____ __, 2013)
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Investor Warrant No : ___
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____
__, 2008
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This
certifies that for value, _________________________, or
registered assigns (the “
Holder ”),
is entitled, subject to the terms set forth below, at any time from
and after ________ __, 2008 (the “
Original
Issuance Date ”)
and before 5:00 p.m., Eastern Time, on ________ __, 2013 (the
“
Expiration Date ”),
to purchase from Wherify Wireless, Inc., a Delaware corporation,
(the “
Company ”),
____________________
(_______) shares
(subject to adjustment as described herein), of common stock, par
value $___ 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 therefore in lawful, immediately available
money of the United States or otherwise as hereinafter provided, at
an initial exercise price per share (the “
Purchase Price ”)
a set forth in Section 1. The Purchase Price is subject to further
adjustment as provided in
Section 4 below.
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 “
Warrant ,”
as used herein, shall mean this Warrant and any other Warrants
delivered in substitution or exchange therefore as provided
herein.
This
Warrant was issued pursuant to the Bridge Note and Warrant
Purchase Agreement (“
BWPA ”),
dated the date hereof, by and between the Company and the
Holder.
1.
Exercise .
This Warrant may be exercised at any time or from time to time from
and after the Original Issuance Date through and including the
Expiration Date (the “
Exercise Period ”),
on any business day, for the full number of shares of Common Stock
called for hereby, by surrendering this Warrant at the principal
office of the Company, at 63 Bovet Road, #521, San Mateo,
California 94402-3104 (the “
Principal Office ”),
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, multiplied (b) by the
Purchase Price. Payment of the Purchase Price may be made at
Holder’s choosing either: (1) by payment in immediately
available funds; or (2) in lieu of any cash payment, if this
Warrant is exercised on a date when a Registration Statement (as
defined in the Registration Rights Agreement), covering the resale
of the shares of Common Stock issuable upon exercise of this
Warrant has not been declared effective by the Securities and
Exchange Commission (the “
Commission ”),
or is no longer in effect, in exchange for the number of shares of
Common Stock equal to the product of (x) the number of shares to
which the Warrants are being exercised multiplied by (y) a
fraction, the numerator of which is the Purchase Price and the
denominator of which is the Fair Market Value (as defined below).
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 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 therefore. This 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.
“
Purchase Price ”
shall mean, prior to the application of any adjustment pursuant
to
Section 4 hereof,
that price which is equal to seventy-five (75%) percent of the
conversion price of the securities issued in the Recapitalization
Financing (as defined in the BWPA);
provided ,
that ,
in the event that there shall not be a closing of the
Recapitalization Financing, the Purchase Price shall be $0.001 per
share. The Purchase Price may be adjusted as provided for in
Section 4 and,
at such time as any provision thereof shall have resulted in an
adjustment to the Purchase price, that adjusted price shall be the
then effective Purchase Price.
“
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
ten (10) 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 Global Market
(“
NGM ”),
the average of the closing prices as reported on the NGM during the
ten (10) 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
NGM; or if applicable, the NASDAQ Capital Market (“
NCM ”),
(iii) if not then included for quotation on the NGM or the NCM, the
average of the highest reported bid and lowest reported asked
prices as reported by the OTC Bulletin Board of the National
Quotation Bureau, as the case may be; or (iv) 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 the
independent members of the Board of Directors of the Company and
the Holders of a majority of the then outstanding
Warrants.
2.
Shares Fully Paid; Payment of Taxes . All shares of
Common Stock issued upon the exercise of this 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 .
(a) Neither this Warrant nor the Common Stock to be issued upon
exercise hereof (the “
Warrant Shares ”)
have been registered under the Act or any state securities laws
(“
Blue Sky Laws ”).
This Warrant has been acquired, and the Warrant Shares and all
securities issuable thereunder or upon recapitalization thereof
will be acquired for investment purposes and not with a view to
distribution or resale and may not be pledged, hypothecated, sold,
made subject to a security interest, or otherwise transferred
without: (i) an effective registration statement for such Warrant
under the Act and such applicable Blue Sky Laws; or (ii) an opinion
of counsel reasonably satisfactory to the Company that registration
is not required under the Act or under any applicable Blue Sky
Laws.
(b)
Upon
compliance with applicable federal and state securities laws
as set forth in
Section 3 ,
above, 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 by the 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 hereto
as
Exhibit B, and
payment of any necessary transfer tax or other governmental charge
imposed upon such transfer. Upon any partial transfer, the Company
will issue and deliver to the assignee a new Warrant with respect
to the shares of Common Stock for which it is exercisable that have
been transferred, and will deliver to the Holder a new Warrant or
Warrants with respect to the shares of Common Stock not so
transferred. A Warrant may be transferred only by the procedure set
forth herein. No transfer shall be effective until such transfer is
recorded on the books of the Company, provided that such transfer
is recorded promptly by the Company, and until such transfer on
such books, the Company shall treat the registered Holder hereof as
the owner of the Warrant for all purposes.
(c)
This
Warrant is exchangeable at the Principal Office for two or
more new Warrants, each in the form of this Warrant, to
purchase 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, but which shall not exceed the total number of
shares for which this Warrant may be from time to time
exercisable.
(d)
Transfer
of the Warrant Shares issued upon the exercise of this Warrant
shall be restricted in the same manner and to the same extent
as the Warrant, and the certificates representing such Warrant
Shares shall bear substantially the following legend, until
such Warrant Shares have been registered under the Act or may
be removed as otherwise permitted under the Act:
“THE
SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (i) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD
THERETO, OR (ii) IN THE OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY, REGISTRATION UNDER THE ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.”
(e)
The
Holder and the Company agree to execute such other documents
and instruments as counsel to the Company deems necessary to
effect the compliance of the issuance of this Warrant and any
Warrant Shares issued upon exercise hereof with applicable
federal and state securities laws, including compliance with
applicable exemptions from the registration requirements of
such laws.
4.
Anti-Dilution Provisions .
The Purchase Price in effect at any time and the number and kind of
securities issuable upon conversion of this Warrant shall be
subject to adjustment from time to time upon the happening of
certain events as follows:
A.
Adjustment for Stock Splits and Combinations
. If the Company at any time or from time to time on or after the
date of Warrant issuance (the “
Original Issuance Date ”)
effects a subdivision of the outstanding Common Stock, the Purchase
Price then in effect immediately before that subdivision shall be
proportionately decreased, and conversely, if the Company at any
time or from time to time on or after the Original Issuance Date
combines the outstanding shares of Common Stock into a smaller
number of shares, the Purchase Price then in effect immediately
before the combination shall be proportionately increased. Any
adjustment under this
Section 4(A) shall
become effective at the close of business on the date the
subdivision or combination becomes effective.
B.
Adjustment for Certain Dividends and Distributions
.
If the Company at any time or from time to time on or after the
Original Issuance Date makes or fixes a record date for the
determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in additional shares of
Common Stock, then and in each such event the Purchase Price then
in effect shall be decreased as of the time of such issuance or, in
the event such record date is fixed, as of the close of business on
such record date, by multiplying the Purchase Price then in effect
by a fraction (1) the numerator of which is the total number of
shares of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such record
date and (2) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to
the time of such issuance or the close of business on such record
date plus the number of shares of Common Stock issuable in payment
of such dividend or distribution;
provided ,
however ,
that if such record date is fixed and such dividend is not fully
paid or if such distribution is not fully made on the date fixed
therefore, the Purchase Price shall be recomputed accordingly as of
the close of business on such record date and thereafter the
Purchase Price shall be adjusted pursuant to this
Section 4(B) as
of the time of actual payment of such dividends or
distributions.
C.
Adjustments for Other Dividends and Distributions
.
In the event the Company at any time or from time to time on or
after the Original Issuance Date makes, or fixes a record date for
the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities of the Company
other than shares of Common Stock, then and in each such event
provision shall be made so that the Holders of Warrants shall
receive upon exercise thereof, in addition to the number of shares
of Common Stock receivable thereupon, the amount of securities of
the Company which they would have received had their Warrants been
exercised into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and
including the conversion date, retained such securities receivable
by them as aforesaid during such period, subject to all other
adjustments called for during such period under this
Section 4 with
respect to the rights of the Holders of the Warrants.
D.
Adjustment for Reclassification, Exchange and
Substitution .
In the event that at any time or from time to time on or after the
Original Issuance Date, the Common Stock issuable upon the exercise
of the Warrants is changed into the same or a different number of
shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a
reorganization, merger, consolidation or sale of assets, provided
for elsewhere in this
Section 4 ),
then and in an
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