EXHIBIT 10.69
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT 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 APPLICABLE STATE SECURITIES LAWS OR (B)
AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER THAT ACT OR APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD
PURSUANT TO RULE 144 UNDER THAT ACT.
SSP SOLUTIONS, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No.:_____________ Number of Shares: 100,000
Date of Issuance: March __, 2003
SSP SOLUTIONS, INC., a Delaware corporation (the "COMPANY"), hereby
certifies that, for $10.00 and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, _________, the
registered holder hereof or its permitted assigns, is entitled, subject to the
terms set forth below, to purchase from the Company upon surrender of this
Warrant, at any time or times on or after the date hereof, but not after 11:59
P.M. Eastern Standard Time on the Expiration Date (as defined herein), ONE
HUNDRED THOURSAND (100,000) fully paid nonassessable shares of Common Stock (as
defined herein) of the Company (the "WARRANT SHARES") at the Warrant Exercise
Price (as defined herein); provided, however, that, if the number of shares of
Common Stock into which the Secured Convertible Promissory Note issued to the
registered holder hereof in connection with the Agreement (as defined below) may
be converted (the "CONVERSION SHARES") is less than the number of Warrant Shares
indicated above, then the number of Warrant Shares shall be equal to the number
of Conversion Shares.
Definitions.
The following words and terms as used in this Warrant shall have the
following meanings:
(a) "BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which the Principal Market is authorized or required to be closed to
trading.
(b) "CLOSING SALE PRICE" means, for any security as of any date, the
last closing trade price for such security on the Principal Market as reported
by Bloomberg Financial Markets ("BLOOMBERG"), or, if the Principal Market begins
to operate on an extended hours basis and does not designate the closing trade
price, then the last trade price at 4:00 p.m., New York City Time (or such other
time as the Principal Market publicly announces is the official close of
trading), as reported by Bloomberg, or, if the foregoing do not apply, the last
closing trade price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
closing trade price is reported for such security by Bloomberg, the last closing
ask price for such security as reported by Bloomberg, or, if no last closing ask
price is reported for such security by Bloomberg, the average of the highest bid
price and the lowest ask price of any market makers for such security as
reported in the "pink sheets" by the National Quotation Bureau, Inc. If the
Closing Sale Price cannot be calculated for that security on that date on any of
the foregoing bases, the Closing Sale Price of such security on such date shall
be the fair market value as mutually determined by the Company and the
Representative of the Lenders. If the Company and the holders of the Warrant are
unable to agree upon the fair market value of the Common Stock, then the Company
shall immediately submit via facsimile the disputed determination of the fair
market value to an independent, reputable investment banking firm. The Company
shall cause the investment banking firm to perform the determinations or
calculations and notify the Company and the holder of the results no later than
48 hours from the time it receives the disputed determinations or calculations.
The investment banking firm's determination or calculation, as the case may be,
shall be deemed conclusive absent manifest error.
(c) "COMMON STOCK" means (i) the Company's common stock, par value
$0.01 per share, and (ii) any capital stock into which the Common Stock has been
changed or any capital stock resulting from a reclassification of the Common
Stock.
(d) "CONVERTIBLE SECURITIES" means any stock or securities (other than
Options) directly or indirectly convertible into or exchangeable or exercisable
for Common Stock.
(e) "EXPIRATION DATE" means the date three years from the date of this
Warrant or, if such date does not fall on a Business Day or on a day on which
trading takes place on the principal exchange or automated quotation system on
which the Common Stock is traded, then the next Business Day.
(f) "OTHER SECURITIES" means (i) shares of Common Stock issued upon
exercise of warrants of the Company issued prior to, and outstanding on, the
date of issuance of this Warrant and (ii) the shares of Common Stock issued upon
conversion of the Notes.
(g) "OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
(h) "PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
(i) "PRINCIPAL MARKET" means The Nasdaq National Market, or, if the
Common Stock is not traded on The Nasdaq National Market, then the principal
securities exchange or trading market for the Common Stock.
(j) "REPRESENTATIVE OF THE LENDERS" means Kingsport Capital Partners,
LLC.
(k) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(l) "SUBSCRIPTION FORM" means the Subscription Form attached hereto and
incorporated herein as EXHIBIT A.
(m) "WARRANT" means this Warrant and all Warrants issued in exchange,
transfer or replacement of this Warrant.
(n) "WARRANT EXERCISE PRICE" shall be $1.30 per share, subject to
adjustment as hereinafter provided.
2. EXERCISE OF WARRANT.
2.1 EXERCISE; DELIVERY OF CERTIFICATES. This Warrant may be exercised,
at the option of the holder, at any time and from time to time (a) after
effectiveness of the Registration Statement and (b) prior to the end of business
on the Expiration Date, for all or any part of the Warrant Shares. This Warrant
may be exercised by delivering the payment of the Warrant Exercise Price for the
number of Warrant Shares being purchased and concurrently surrendering this
Warrant to the Company at its principal office (the "DESIGNATED OFFICE"),
together with the Subscription Form attached hereto duly completed and signed.
The Warrant Shares purchased under this Warrant shall be and are deemed to be
issued to the holder as the record owner of those shares as of the close of
business on the date on which this Warrant was surrendered and payment made
therefor. Certificates for Warrant Shares so purchased shall be delivered to the
holder within three Business Days after this Warrant has been exercised, and, in
case of a purchase of less than all of the Warrant Shares purchasable upon
exercise of this Warrant, the Company shall cancel this Warrant and, within
three Business Days, shall execute and deliver to the holder a new Warrant of
like tenor for the balance of the Warrant Shares. Each stock certificate so
delivered shall be registered in the name of the holder or, subject to
compliance with applicable laws, such other name as shall be designated by the
holder.
2.2 PAYMENT OF WARRANT PRICE. Payment of the Warrant Exercise Price may
be made, at the option of the holder (i) by certified or official bank check,
(ii) by wire transfer, or (iii) by "Cashless Exercise" as described in SECTION
2.4.
2.3 NO FRACTIONAL SHARES. 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 issued upon exercise of this Warrant shall be rounded up or down to
the nearest whole number.
2.4 CASHLESS EXERCISE. Notwithstanding anything contained herein to the
contrary, the holder of this Warrant may, at its election exercised 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 Closing Sale Price of the Common Stock on the
date immediately preceding the date of the
subscription notice.
C = the Warrant Exercise Price then in effect for the
applicable Warrant Shares at the time of such
exercise.
2.5 EXERCISE RESTRICTIONS.
2.5.1 BENEFICIAL OWNERSHIP LIMITATION. Notwithstanding
anything herein to the contrary, the holder may not exercise, and the
Company may not cause the holder to exercise, this Warrant to the
extent such exercise would result in the holder, together with any
affiliate thereof, beneficially owning (as determined in accordance
with Section 13(d) of the Exchange Act and the rules promulgated
thereunder) in excess of 4.999% of the then issued and outstanding
shares of Common Stock, including shares issuable upon conversion or
exercise of this Warrant or any other instrument of the Company
(including the Note which accompanied this Warrant) held by the holder
after application of this SECTION 2.5. Since the holder will not be
obligated to report to the Company the number of shares of Common Stock
it may hold at the time of an exercise hereunder, unless the exercise
at issue would result in the issuance of shares of Common Stock in
excess of 4.999% of the then outstanding shares of Common Stock without
regard to any other shares which may be beneficially owned by the
holder or an affiliate thereof, the holder shall have the authority and
obligation to determine whether the restriction contained in this
SECTION 2.5 will limit any particular exercise hereunder and to the
extent that the holder determines that the limitation contained in this
SECTION 2.5 applies, the determination of the amount of this Warrant is
exercisable shall be the responsibility and obligation of the holder.
If the holder has delivered a Subscription Form that, without regard to
any other shares that the holder or its affiliates may beneficially
own, would result in the issuance in excess of the permitted amount
hereunder, the Company shall notify the holder of this fact and shall
honor the exercise for the maximum amount permitted to be exercised on
the exercise date in accordance with this SECTION 2.5. If this Warrant
was not surrendered on the exercise date, the Company shall provide the
holder written notice of the amount actually exercised. If the holder
surrendered this Warrant on the exercise date, the Company shall, at
the option of the holder, either retain any portion of the Warrant
Exercise Price tendered for exercise in excess of the permitted amount
hereunder for future exercises or return such excess portion of the
Warrant Exercise Price to the holder. The provisions of this SECTION
2.5 may be waived by the holder (but only as to itself and not to any
other holder of a Note or Warrant) in whole or in part (x) upon not
less than 61 days prior notice to the Company and (y) immediately upon
written notice to the Company in the event of the occurrence or notice
of an intended or pending Change of Control. Other holders of Notes and
Warrants shall be unaffected by any such waiver. For purposes of this
SECTION 2.5, "CHANGE OF Control" means (i) the consolidation, merger or
other business combination of the Company with or into another Person
(other than (A) a consolidation, merger or other business combination
in which holders of the Company's voting power immediately prior to the
transaction continue after the transaction to hold, directly or
indirectly, the voting power of the surviving entity or entities
necessary to elect a majority of the members of the board of directors
(or their equivalent if other than a corporation) of such entity or
entities, or (B) pursuant to a migratory merger effected solely for the
purpose of changing the jurisdiction of incorporation of the Company),
(ii) the sale or transfer of all or substantially all of the Company's
assets, (iii) a purchase, tender or exchange offer made to and accepted
by the holders of more than 50% of the outstanding shares of Common
Stock, or (iv) the execution by the Company of an agreement to which
the Company is a party or by which it is bound providing for any of the
events set forth in (i), (ii) or (iii) above.
3. COVENANTS AS TO COMMON STOCK.
The Company hereby covenants and agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution for or
replacement of this Warrant will upon issuance be, duly authorized and validly
issued.
(b) All Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof.
(c) During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved at least 100% of the number of shares of Common Stock needed to provide
for the exercise of the rights then represented by this Warrant and the par
value of said shares will at all times be less than or equal to the applicable
Warrant Exercise Price.
(d) The Company shall promptly secure the listing of the shares of
Common Stock issuable upon exercise of this Warrant upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance upon
exercise of this Warrant) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all shares of Common Stock from
time to time issuable upon the exercise of this Warrant; and the Company shall
so list on each national securities exchange or automated quotation system, as
the case may be, and shall maintain such listing of, any other shares of capital
stock of the Company issuable upon the exercise of this Warrant if and so long
as any shares of the same class shall be listed on such national securities
exchange or automated quotation system.
(e) The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant.
(f) This Warrant will be binding upon any entity succeeding to the
Company by merger, consolidation or acquisition of all or substantially all of
the Company's assets.
4. TAXES.
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.
5. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.
Except as otherwise specifically provided herein, no holder, as such,
of this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which it is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on such holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this SECTION 5, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.
6. REPRESENTATIONS OF HOLDER.
The holder of this Warrant, by the acceptance hereof, represents that
it is acquiring this Warrant and the Warrant Shares for its own account and not
with a view towards, or for resale in connection with, the public sale or
distribution of this Warrant or the Warrant Shares, except pursuant to sales
registered or exempted under the Securities Act. The holder of this Warrant
further represents, by acceptance hereof, that, as of this date, the holder is
an "accredited investor" as that term is defined in Rule 501(a)(3) of Regulation
D promulgated by the Securities and Exchange Commission under the Securities
Act. Upon exercise of this Warrant, the holder shall, if requested by the
Company, confirm in writing, in a form satisfactory to the Company,
representations concerning the Warrant Shares in substantially the form of the
first sentence of this SECTION 6.
7. OWNERSHIP AND TRANSFER.
(a) The Company shall maintain at its principal executive offices (or
such other office or agency of the Company as it may designate by notice to the
holder hereof), a register for this Warrant, in which the Company shall record
the name and address of the person in whose name this Warrant has been issued,
as well as the name and address of each transferee. The Company may treat the
person in whose name any Warrant is registered on the register as the owner and
holder thereof for all purposes, notwithstanding any notice to the contrary, but
in all events recognizing any transfers made in accordance with the terms of
this Warrant.
(b) This Warrant and the rights granted hereunder shall be assignable
by the holder hereof without the consent of the Company.
(c) The Company is obligated to register the Warrant Shares for resale
under the Securities Act pursuant to the Agreement and the initial holder of
this Warrant (and certain assignees thereof) is entitled to the registration
rights in respect of the Warrant Shares as set forth in the Agreement.
8. ADJUSTMENT OF
WARRANT EXERCISE PRICE AND NUMBER OF SHARES.
8.1.1 The Warrant Exercise Price and the number of shares of
Common Stock issuable upon exercise of this Warrant shall be adjusted
from time to time as follows:
8.1 ADJUSTMENT OF WARRANT EXERCISE PRICE UPON SUBDIVISION OR
COMBINATION OF COMMON STOCK. If the Company at any time after the date of
issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Warrant Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced and
the number of shares of Common Stock obtainable upon exercise of this Warrant
will be proportionately increased. If the Company at any time after the date of
issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Warrant Exercise Price in effect immediately prior
to such combination will be proportionately increased and the number of shares
of Common Stock obtainable upon exercise of this Warrant will be proportionately
decreased. Any adjustment under this SECTION 8.1 shall become effective at the
close of business on the date the subdivision or combination becomes effective
8.2 DISTRIBUTION OF ASSETS. If the Company declares or makes any
dividend or other distribution of its assets (or rights to acquire its assets)
to holders of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate
rearrangement or other similar transaction) (a "Distribution"), at any time
after the issuance of this Warrant, then, in each such case:
(a) the Warrant Exercise Price in effect immediately prior to the close
of business on the record date fixed for the determination of holders of Common
Stock entitled to receive the Distribution shall be reduced, effective as of the
close of business on such record date, to a price determined by multiplying such
Warrant Exercise Price by a fraction of which (A) the numerator shall be the
Closing Sale Price of the Common Stock on the trading day immediately preceding
such record date minus the value of the Distribution (as determined in good
faith by the Company's Board of Directors) applicable to one share of Common
Stock, and (B) the denominator shall be the Closing Sale Price of the Common
Stock on the trading day immediately preceding such record date; and
(b) either (A) the number of Warrant Shares obtainable upon exercise of
this Warrant shall be increased to a number of shares equal to the number of
shares of Common Stock obtainable immediately prior to the close of business on
the record date fixed for the determination of holders of Common Stock entitled
to receive the Distribution multiplied by the reciprocal of the fraction set
forth in the immediately preceding clause (a), or (B) if the Distribution is of
common stock of a company whose common stock is traded on a national securities
exchange or a national automated quotation system, then the holder of this
Warrant shall receive an additional warrant to purchase Common Stock, the terms
of which shall be identical to those of this Warrant, except that such warrant
shall be exercisable into the amount of the assets that would have been payable
to the holder of this Warrant pursuant to the Distribution had the holder
exercised this Warrant immediately prior to such record date and with an
exercise price equal to the amount by which the exercise price of this Warrant
was decreased with respect to the Distribution pursuant to the terms of the
immediately preceding clause (a).
8.3 CERTAIN EVENTS. If any event occurs of the type contemplated by the
provisions of this SECTION 8 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company's
Board of Directors will make an appropriate adjustment in the Warrant Exercise
Price and the number of shares of Common Stock obtainable upon exercise of this
Warrant so as to protect the rights of the holders of the Warrants; provided
that no such adjustment will increase the Warrant Exercise Price or decrease the
number of shares of Common Stock obtainable as otherwise determined pursuant to
this SECTION 8.
8.4 NOTICES.
(a) Immediately upon any adjustment of the Warrant Exercise Price, the
Company will give written notice thereof to the holder of this Warrant, setting
forth in reasonable detail, and certifying, the calculation of such adjustment.
(b) The Company will give written notice to the holder of this Warrant
at least 20 days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata subscription offer to holders of Common
Stock or (C) for determining rights to vote with respect to any Organic Change
(as defined below), dissolution or liquidation, provided that such information
shall be made known to the public prior to or in conjunction with such notice
being provided to such holder.
(c) The Company will also give written notice to the holder of this
Warrant at least 20 days prior to the date on which any Organic Change,
dissolution or liquidation will take place, provided that such information shall
be made known to the public prior to or in conjunction with such notice being
provided to such holder.
9. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
(a) Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
to another Person or other transaction which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "ORGANIC Change." Prior to
the consummation of any (i) sale of all or substantially all of the Company's
assets to an acquiring Person or (ii) other Organic Change following which the
Company is not a surviving entity, the Company will secure from the Person
purchasing the assets or the successor resulting from the Organic Change (in
each case, the "ACQUIRING ENTITY") written agreement (in form and substance
satisfactory to the Representative of the Investors and to the holders of
Warrants representing at least two-thirds of the shares of Common Stock
obtainable upon exercise of the Warrants then outstanding, whose approval shall
not unreasonably be withheld) to deliver to each holder of Warrants in exchange
for the Warrants, a security of the Acquiring Entity evidenced by a written
instrument substantially similar in form and substance to this Warrant and
satisfactory to the holders of the Warrants (including, an adjusted warrant
exercise price equal to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and exercisable for a corresponding number
of shares of Common Stock acquirable and receivable upon exercise of the
Warrants (without regard to any limitations on exercises), if the value so
reflected is less than the Warrant Exercise Price in effect immediately prior to
such consolidation, merger or sale). Prior to the consummation of any other
Organic Change, the Company shall make appropriate provision (in form and
substance satisfactory to the holders of Warrants representing at least
two-thirds of the shares of Common Stock obtainable upon exercise of the
Warrants then outstanding) to insure that each of the holders of the Warrants
will thereafter have the right to acquire and receive in lieu of or in addition
to (as the case may be) the shares of Common Stock immediately theretofore
acquirable and receivable upon the exercise of the holder's Warrants (without
regard to any limitations on exercises), such shares of stock, securities or
assets that would have been issued or payable in such Organic Change with
respect to or in exchange for the number of shares of Common Stock which would
have been acquirable and receivable upon the exercise of the holder's Warrant as
of the date of the Organic Change (without taking into account any limitations
or restrictions on the exercisability of this Warrant).
10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT.
If this Warrant is lost, stolen, mutilated or destroyed, the Company
shall promptly, on receipt of an indemnification undertaking (or in the case of
a mutilated Warrant, the Warrant), issue a new warrant of like denomination and
tenor as the Warrant so lost, stolen, mutilated or destroyed.
11. NOTICE.
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Warrant must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:
If to the Company:
SSP Solutions, Inc.
17861 Cartwright Road
Irvine, California 92614
Telephone: 949-851-1085
Facsimile: 949-851-8679
Attention: President
With copy to:
Rutan & Tucker, LLP
611 Anton Boulevard, Fourteenth Floor
Costa Mesa, California 92626-1998
Telephone: 714-641-5100
Facsimile: 714-546-9035
Attention: Gregg Amber, Esq.
If to a holder of this Warrant, to it at the address and facsimile
number set forth on EXHIBIT A to the Agreement, with copies to the holder's
representatives as set forth on EXHIBIT A to the Agreement, or at such other
address and facsimile as is delivered to the Company upon the issuance or
transfer of this Warrant. Each party shall provide five days' prior written
notice to the other party of any change in address or facsimile number. Written
confirmation of receipt (A) given by the recipient of the notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender's facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of the transmission or (C) provided by a
nationally recognized overnight delivery service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from a nationally recognized
overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
12. AMENDMENTS.
This Warrant and any term hereof may be changed, waived, discharged, or
terminated only by an instrument in writing signed by the party or holder hereof
against which enforcement of such change, waiver, discharge or termination is
sought.
13. DATE.
The date of this Warrant is November 12, 2002(the "WARRANT DATE"). This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of SECTION 6 shall continue in full force and
effect after such date as to any Warrant Shares or other securities issued upon
the exercise of this Warrant.
14. AMENDMENT AND WAIVER.
Except as otherwise provided herein, the provisions of the Warrant may
be amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the holders of Warrant; provided that no such
action may increase the Warrant Exercise Price of the Warrant or decrease the
number of shares or class of stock obtainable upon exercise of any Warrant
without the written consent of the holder of the Warrant.
15. SECTION DESCRIPTIVE HEADINGS; GOVERNING LAW.
The descriptive headings of the several sections and paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant. The corporate laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by the internal laws of the State of
California, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of California or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of California. In any action, dispute, litigation or other proceeding
concerning this Warrant (including arbitration), exclusive jurisdiction shall be
with the courts of California, with the County of Orange being the sole venue
for the bringing of the action or proceeding.
16. COSTS.
The Company agrees to pay to the holder of this Warrant upon demand all
reasonable costs and expenses incurred (including, without limitation reasonable
fees and expenses of counsel) in connection with (i) the enforcement of the
terms of or protection of the holder's rights under this Warrant, (ii) any
waiver requested by the Company of any of the holder's rights under this Warrant
and (iii) any proposed amendment, modification or restructuring of this Warrant.
17. WAIVER OF JURY TRIAL.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, AND
UNDERSTANDING THEY ARE WAIVING A CONSTITUTIONAL RIGHT, THE PARTIES HERETO WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO, THIS WARRANT, THE AGREEMENT AND/OR ANY
RELATED AGREEMENT OR THE TRANSACTIONS COMPLETED HEREBY OR THEREBY.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed as
of the 18th day of March, 2003.
SSP SOLUTIONS, INC.
By: /S/ MARVIN J. WINKLER
---------------------------------------------
Marvin J. Winkler, co-Chief Executive Officer
By: /S/ THOMAS E. SCHIFF
---------------------------------------------
Thomas E. Schiff, Chief Financial Officer
EXHIBIT A TO WARRANT
--------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
SSP SOLUTIONS, INC.
The undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("WARRANT SHARES") of SSP
Solutions, Inc., a Delaware corporation (the "COMPANY"), evidenced by the
attached Warrant (the "WARRANT"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1. FORM OF WARRANT EXERCISE PRICE. The holder intends that payment of the
Warrant Exercise Price shall be made as:
____________ "CASH EXERCISE" with respect to _________________
Warrant Shares; and/or
____________ "CASHLESS EXERCISE" with respect to _________________
Warrant Shares (to the extent permitted by the terms
of the Warrant).
2. PAYMENT OF WARRANT EXERCISE PRICE. If the holder has elected a Cash Exercise
with respect to some or all of the Warrant Shares to be issued pursuant hereto,
the holder shall pay the sum of $___________________ to the Company in
accordance with the terms of the Warrant.
3. DELIVERY OF WARRANT SHARES. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
___________________________________
Name of Registered Holder
By:________________________________
Name:______________________________
Title:_____________________________
ACKNOWLEDGMENT
The Company hereby acknowledges this Subscription Form and hereby
directs [TRANSFER AGENT] to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated __________, 200__
from the Company and acknowledged and agreed to by [TRANSFER AGENT].
SSP SOLUTIONS, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
EXHIBIT B TO WARRANT
--------------------
FORM OF WARRANT POWER
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of SSP Solutions, Inc., a Delaware
corporation, represented by warrant certificate no. _____, standing in the name
of the undersigned on the books of said corporation. The undersigned does hereby
irrevocably constitute and appoint ______________, attorney to transfer the
warrants of said corporation, with full power of substitution in the premises.
Dated: _________, 200_ ___________________________________
By:________________________________
Its:____________________________