Exhibit 4.2
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS
WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SUCH
ACT OR, AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY
SATISFACTORY TO COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
________________________________________
BLUEGATE CORPORATION
SUITE 630
701 NORTH POST OAK ROAD
HOUSTON, TEXAS 77027
STOCK PURCHASE WARRANT
Warrant No.: ____ Right to Purchase: _______
Date:
THIS CERTIFIES THAT, for value received, ______________ (the "HOLDER"), is
entitled to purchase from BLUEGATE CORPORATION, A NEVADA corporation (the
"COMPANY"), at any time from __________ until 5:00 p.m. (EST) on ___________ [5
years] ______________ [number] fully paid and nonassessable shares of the
Company's common stock, par value $0.001 per share ("COMMON STOCK"), at an
exercise price of $1.00 per share, as adjusted.
1. The Company is issuing this Warrant to the Holder pursuant to a
Subscription Agreement under a confidential private placement. This Warrant
constitutes part of a unit subscribed to by the Holder in the Subscription
Agreement.
2. (a) To exercise this Warrant or any part of this Warrant, the
Holder must deliver to the Company (collectively, the "EXERCISE DOCUMENTATION"):
(i) a completed exercise agreement a form of which is attached; (ii) this
Warrant; and (iii) a check payable to the Company in an amount equal to the
product of the exercise price and the number of shares the Holder desires to
purchase. The Company will, without charge, issue certificates for shares of
Common Stock purchased upon exercise of this Warrant within five days after
receipt of the Exercise Documentation. Unless this Warrant has expired, or all
of the purchase rights represented by this Warrant have been exercised, the
Company will also prepare a new Warrant, substantially identical to this
Warrant, representing the rights formerly represented by this Warrant which have
not expired or been exercised.
1 (B) IF, BUT ONLY IF, AT ANY TIME AFTER ONE YEAR FROM THE
DATE OF ISSUANCE OF THIS WARRANT THERE IS NO EFFECTIVE REGISTRATION STATEMENT
REGISTERING THE RESALE OF THE COMMON STOCK UNDERLYING THIS WARRANT BY THE
HOLDER, THIS WARRANT MAY ALSO BE EXERCISED, IN WHOLE OR IN PART, AT SUCH TIME BY
MEANS OF A "CASHLESS EXERCISE" IN WHICH THE HOLDER SHALL BE ENTITLED TO RECEIVE
A CERTIFICATE FOR THE NUMBER OF SHARES OF COMMON STOCK EQUAL TO THE QUOTIENT
OBTAINED BY DIVIDING [(A-B) (X)] BY (A), WHERE:
(A) = the closing bid price on the trading day preceding the date of
such election;
(B) = the Exercise Price of the Warrants, as adjusted; and
(X) = the number of shares of Common Stock issuable upon exercise of
the Warrants in accordance with the terms of this Warrant.
3. The Company will at all times reserve and keep available for issuance
upon the exercise of this Warrant such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full of
this Warrant, and upon such issuance such shares of Common Stock will be validly
issued, fully paid and nonassessable.
4. This Warrant does not and will not entitle the Holder to any voting
rights or other rights as a stockholder of the Company.
2 5. CERTAIN ADJUSTMENTS.
--------------------
2.1
2.2 (a) Stock Splits, etc. The number and kind of securities
--------------------
purchasable upon the exercise of this Warrant and the exercise price shall
be subject to adjustment from time to time upon the happening of any of the
following. In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock to holders of its
outstanding Common Stock, (ii) subdivide its outstanding shares of Common
Stock into a greater number of shares, (iii) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock, or (iv)
issue any shares of its capital stock in a reclassification of the Common
Stock, then the number of shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder shall be
entitled to receive the kind and number of shares or other securities of
the Company which it would have owned or have been entitled to receive had
such Warrant been exercised in advance thereof. Upon each such adjustment
of the kind and number of shares or other securities of the Company which
are purchasable hereunder, the Holder shall thereafter be entitled to
purchase the number of shares or other securities resulting from such
adjustment at an exercise price per share or other security obtained by
multiplying the exercise price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment and dividing by the number of shares or other
securities of the Company resulting from such adjustment. An adjustment
made pursuant to this paragraph shall become effective immediately after
the effective date of such event retroactive to the record date, if any,
for such event.
(b) Subsequent Equity Sales. If the Company or any subsidiary
-------------------------
thereof, as applicable, at any time while this Warrant is outstanding,
shall offer, sell, grant any option to purchase or offer, sell or grant any
right to reprice its securities, or otherwise dispose of or issue (or
announce any offer, sale, grant or any option to purchase or other
disposition) any Common Stock or any securities of the Company or the
subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock ("Common Stock Equivalents") at an
------------------------
effective price per share less than the then exercise price of this Warrant
(such lower price, the "Base Share Price" and such issuances collectively,
----------------
a "Dilutive Issuance"), as adjusted hereunder (if the holder of the Common
-----------------
Stock or Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to warrants,
options or rights per share which is issued in connection with such
issuance, be entitled to receive shares of Common Stock at an effective
price per share which is less than the exercise price of this Warrant, such
issuance shall be deemed to have occurred for less than the exercise
price), then, the Exercise Price shall be reduced by multiplying the
Exercise Price by a fraction, the numerator of which is the number of
shares of Common Stock issued and outstanding immediately prior to the
Dilutive Issuance plus the number of shares of Common Stock which the
offering price for such Dilutive Issuance would purchase at the then
Exercise Price, and the denominator of which shall be the sum of the number
of shares of Common Stock issued and outstanding immediately prior to the
Dilutive Issuance plus the number of shares of Common Stock so issued or
issuable in connection with the Dilutive Issuance, the number of Warrant
Shares issuable hereunder shall be increased such that the aggregate
Exercise Price payable hereunder, after taking into account the decrease in
the Exercise Price, shall be equal to the aggregate Exercise Price prior to
such adjustment and the number of shares of Common Stock issuable hereunder
shall be increased such that the aggregate exercise price payable
hereunder, after taking into account the decrease in the exercise price,
shall be equal to the aggregate exercise price prior to such adjustment.
Such adjustment shall be made whenever such Common Stock or Common Stock
Equivalents are issued. The Company shall notify the Holder in writing, no
later than the business day following the issuance of any Common Stock or
Common Stock Equivalents subject to this section, indicating therein the
applicable issuance price, or of applicable reset price, exchange price,
conversion price and other pricing terms (such notice the "Dilutive
--------
Issuance Notice"). Notwithstanding the foregoing, no adjustments, Alternate
---------------
Consideration nor notices shall be made, paid or issued under this Section
__ in respect of an issuance of (a) shares of Common Stock or options to
employees, officers or directors of the Company pursuant to any stock or
option plan duly adopted by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose, (b)
securities upon the exercise of or conversion of any securities issued
hereunder, and (c) securities issued pursuant to acquisitions or strategic
transactions, provided any such issuance shall only be to a person or
entity which is, itself or through its subsidiaries, an operating company
in a business synergistic with the business of the Company and in which the
Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities.
(c) Pro Rata Distributions. If the Company, at any time prior to
-----------------------
the termination date of this Warrant, shall distribute to all holders of
Common Stock (and not to Holders of the Warrants) evidences of its
indebtedness or assets or rights or warrants to subscribe for or purchase
any security other than the Common Stock (which shall be subject to the
above section), then in each such case the exercise price of this Warrant
shall be adjusted by multiplying the exercise price in effect immediately
prior to the record date fixed for determination of stockholders entitled
to receive such distribution by a fraction of which the denominator shall
be the closing bid price determined as of the record date mentioned above,
and of which the numerator shall be such closing bid price on such record
date less the then per share fair market value at such record date of the
portion of such assets or evidence of indebtedness so distributed
applicable to one outstanding share of the Common Stock as determined by
the Board of Directors in good faith. In either case the adjustments shall
be described in a statement provided to the Holders of the portion of
assets or evidences of indebtedness so distributed or such subscription
rights applicable to one share of Common Stock. Such adjustment shall be
made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
(d) Reorganization, Reclassification, Merger, Consolidation or
--------------------------------------------------------------
Disposition of Assets. In case the Company shall reorganize its capital,
-----------------------
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where
there is a change in or distribution with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another corporation
and, pursuant to the terms of such reorganization, reclassification,
merger, consolidation or disposition of assets, shares of common stock of
the successor or acquiring corporation, or any cash, shares of stock or
other securities or property of any nature whatsoever (including warrants
or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"),
--------------
are to be received by or distributed to the holders of Common Stock of the
Company, then the Holder shall have the right thereafter to receive upon
exercise of this Warrant, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as a result of
such reorganization, reclassification, merger, consolidation or disposition
of assets by a holder of the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to such event. In case of any
such reorganization, reclassification, merger, consolidation or disposition
of assets, the successor or acquiring corporation (if other than the
Company) shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of shares for
which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section. For purposes
of this Section, "common stock of the successor or acquiring corporation"
shall include stock of such corporation of any class which is not preferred
as to dividends or assets over any other class of stock of such corporation
and which is not subject to redemption and shall also include any evidences
of indebtedness, shares of stock or other securities which are convertible
into or exchangeable for any such stock, either immediately or upon the
arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition
of assets.
Whenever the number of shares or number or kind of securities or
other property purchasable upon the exercise of this Warrant or the
exercise price is adjusted, as herein provided, the Company shall give
notice thereof to the Holder, which notice shall state the number of shares
(and other securities or property) purchasable upon the exercise of this
Warrant and the exercise price of such shares (and other securities or
property) after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which
such adjustment was made.
3 6. WHENEVER THE NUMBER OF SHARES OR NUMBER OR KIND OF SECURITIES
OR OTHER PROPERTY PURCHASABLE UPON THE EXERCISE OF THIS WARRANT OR THE EXERCISE
PRICE IS ADJUSTED, AS HEREIN PROVIDED, THE COMPANY SHALL GIVE NOTICE THEREOF TO
THE HOLDER, WHICH NOTICE SHALL STATE THE NUMBER OF SHARES (AND OTHER SECURITIES
OR PROPERTY) PURCHASABLE UPON THE EXERCISE OF THIS WARRANT AND THE EXERCISE
PRICE OF SUCH SHARES (AND OTHER SECURITIES OR PROPERTY) AFTER SUCH ADJUSTMENT,
SETTING FORTH A BRIEF STATEMENT OF THE FACTS REQUIRING SUCH ADJUSTMENT AND
SETTING FORTH THE COMPUTATION BY WHICH SUCH ADJUSTMENT WAS MADE.
4 7. NOTICE OF CORPORATE ACTION. IF AT ANY TIME:
-----------------------------
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of
its indebtedness, any shares of stock of any class or any other securities
or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger of the Company with, or any sale, transfer or
other disposition of all or substantially all the property, assets or
business of the Company to, another corporation or,
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in any one or more of such
cases, the Company shall give to Holder (i) at least 20 days' prior written
notice of the date on which a record date shall be selected for such
dividend, distribution or right or for determining rights to vote in
respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and
(ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or
winding up, at least 20 days' prior written notice of the date when the
same shall take place. Such notice in accordance with the foregoing clause
also shall specify (i) the date on which any such record is to be taken for
the purpose of such dividend, distribution or right, the date on which the
holders of Common Stock shall be entitled to any such dividend,
distribution or right, and the amount and character thereof, and (ii) the
date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or
winding up is to take place and the time, if any such time is to be fixed,
as of which the holders of Common Stock shall be entitled to exchange their
shares for securities or other property deliverable upon such disposition,
dissolution, liquidation or winding up. Each such written notice shall be
sufficiently given if addressed to Holder at the last address of Holder
appearing on the books
of the Company and delivered in accordance with Section 7.
8. The construction, validity and interpretation of this Warrant will
be governed by the laws of the State of Nevada.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal.
BLUEGATE CORPORATION ATTEST:
By:
----------------------------- -----------------------------
Name: Manfred Sternberg Secretary
Title: President and CEO
EXERCISE AGREEMENT
To: Bluegate Corporation
(1) The undersigned hereby elects to purchase ________ shares of
Bluegate Corporation. pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of shares as is
necessary, in accordance with the formula set forth in
subsection 2(b), to exercise this Warrant with respect to
the maximum number of Warrant Shares purchasable pursuant to
the cashless exercise procedure set forth in subsection
2(b).
(3) Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name as is specified
below:
-------------------------------
The shares shall be delivered to the following:
--------------------------------
-------------------------------
-------------------------------
[HOLDER]
By:
------------------------------
Name:
Title:
Dated:
--------------------------