EXHIBIT A
THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH
SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144(K), OR (III)
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN STANDARD TIME ON __________,
2011 (the "EXPIRATION DATE").
SCIENCE DYNAMICS CORPORATION
WARRANT TO PURCHASE __________ SHARES OF
COMMON STOCK, PAR VALUE $.01 PER SHARE
For VALUE RECEIVED, _____________________________________________
("WARRANTHOLDER"), is entitled to purchase, subject to the provisions of this
Warrant, from Science Dynamics Corporation, a Delaware corporation (the
"COMPANY"), at any time not later than 5:00 P.M., Eastern Standard Time, on the
Expiration Date (as defined above), at an exercise price per share equal to
Twelve Cents ($0.12) (the exercise price in effect being herein called the
"WARRANT PRICE"), ________________________________ (__________) shares ("WARRANT
SHARES") of the Company's common stock, par value $.01 per share ("COMMON
STOCK"). The number of Warrant Shares purchasable upon exercise of this Warrant
and the Warrant Price shall be subject to adjustment from time to time as
described herein.
Section 1. Registration. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the initial issuance of this
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.
Section 2. Transfers. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), or an exemption from such
registration. Subject to such restrictions, the Company shall transfer this
Warrant from time to time upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer and such other documents as
may be reasonably required by the Company, including, if required by the
Company, an opinion of its counsel to the effect that such transfer is exempt
from the registration requirements of the Securities Act, to establish that such
transfer is being made in accordance with the terms hereof, and a new Warrant
shall be issued to the transferee and the surrendered Warrant shall be canceled
by the Company.
Section 3. Exercise of Warrant. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part at any time prior to
its expiration upon surrender of the Warrant, together with delivery of the duly
executed Warrant exercise form attached hereto as Appendix A (the "EXERCISE
AGREEMENT") and payment by cash, certified check or wire transfer of immediately
available funds for the aggregate Warrant Price for that number of Warrant
Shares then being purchased, to the Company during normal business hours on any
business day at the Company's principal executive offices (or such other office
or agency of the Company as it may designate by notice to the Warrantholder).
The Warrant Shares so purchased shall be deemed to be issued to the
Warrantholder or the Warrantholder's designee, as the record owner of such
shares, as of the close of business on the date on which this Warrant shall have
been surrendered (or evidence of loss, theft or destruction thereof and security
or indemnity satisfactory to the Company), the Warrant Price shall have been
paid and the completed Exercise Agreement shall have been delivered.
Certificates for the Warrant Shares so purchased, representing the aggregate
number of shares specified in the Exercise Agreement, shall be delivered to the
Warrantholder within a reasonable time, not exceeding three (3) business days,
after this Warrant shall have been so exercised. The certificates so delivered
shall be in such denominations as may be requested by the Warrantholder and
shall be registered in the name of the Warrantholder or such other name as shall
be designated by the Warrantholder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the
Warrantholder a new Warrant representing the number of shares with respect to
which this Warrant shall not then have been exercised. As used herein, "BUSINESS
DAY" means a day, other than a Saturday or Sunday, on which banks in New York
City are open for the general transaction of business. Each exercise hereof
shall constitute the re-affirmation by the Warrantholder that the
representations and warranties contained in Article II of the Subscription
Agreement (the "SUBSCRIPTION AGREEMENT") dated __________, 2006 between the
Company and the Subscriber thereto are true and correct in all material respects
with respect to the Warrantholder as of the time of such exercise.
Section 4. Compliance with the Securities Act of 1933. Except as
provided in the Subscription Agreement, the Company may cause the legend set
forth on the first page of this Warrant to be set forth on each Warrant or
similar legend on any security issued or issuable upon exercise of this Warrant,
unless counsel for the Company is of the opinion as to any such security that
such legend is unnecessary.
Section 5. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the Warrantholder in respect of which such shares are
issued, and in such case, the Company shall not be required to issue or deliver
any certificate for Warrant Shares or any Warrant until the person requesting
the same has paid to the Company the amount of such tax or has established to
the Company's reasonable satisfaction that such tax has been paid. The
Warrantholder shall be responsible for income taxes due under federal, state or
other law, if any such tax is due.
-2-
Section 6. Mutilated or Missing Warrants. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
Section 7. Reservation of Common Stock. The Company hereby represents
and warrants that there have been reserved, and the Company shall at all
applicable times keep reserved until issued (if necessary) as contemplated by
this Section 7, out of the authorized and unissued shares of Common Stock,
sufficient shares to provide for the exercise of the rights of purchase
represented by this Warrant. The Company agrees that all Warrant Shares issued
upon due exercise of the Warrant shall be, at the time of delivery of the
certificates for such Warrant Shares, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Company.
Section 8. Adjustments. Subject and pursuant to the provisions of this
Section 8, unless waived in a particular case by the Warrantholder, the Warrant
Price and number of Warrant Shares subject to this Warrant shall be subject to
adjustment from time to time as set forth hereinafter.
(a) If the Company shall, at any time or from time to time
while this Warrant is outstanding, pay a dividend or make a distribution on its
Common Stock in shares of Common Stock, subdivide its outstanding shares of
Common Stock into a greater number of shares or combine its outstanding shares
of Common Stock into a smaller number of shares or issue by reclassification of
its outstanding shares of Common Stock any shares of its capital stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then the number of
Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in
effect immediately prior to the date upon which such change shall become
effective, shall be adjusted by the Company so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been exercised immediately prior to such event upon payment
of a Warrant Price that has been adjusted to reflect a fair allocation of the
economics of such event to the Warrantholder. Such adjustments shall be made
successively whenever any event listed above shall occur.
(b) If any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with
another corporation in which the Company is not the survivor, or sale, transfer
or other disposition of all or substantially all of the Company's assets to
another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, sale, transfer or other
disposition, lawful and adequate provision shall be made whereby each
Warrantholder shall thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
such shares of stock, securities or assets as would have been issuable or
payable with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares immediately theretofore issuable upon exercise of
the Warrant, had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price) shall thereafter be
applicable, as nearly equivalent as may be practicable in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise hereof.
The Company shall not effect any such consolidation, merger, sale, transfer or
other disposition unless prior to or simultaneously with the consummation
thereof the successor corporation (if other than the Company) resulting from
such consolidation or merger, or the corporation purchasing or otherwise
acquiring such assets or other appropriate corporation or entity shall assume
the obligation to deliver to the Warrantholder, at the last address of the
Warrantholder appearing on the books of the Company, such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the
Warrantholder may be entitled to purchase, and the other obligations under this
Warrant. The provisions of this paragraph (b) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales,
transfers or other dispositions.
-3-
(c) In case the Company shall fix a payment date for the
making of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness or assets
(other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions referred to in Section
8(a)), or subscription rights or warrants, the Warrant Price to be in effect
after such payment date shall be determined by multiplying the Warrant Price in
effect immediately prior to such payment date by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding multiplied
by the Market Price (as defined below) per share of Common Stock immediately
prior to such payment date, less the fair market value (as determined by the
Company's Board of Directors in good faith) of said assets or evidences of
indebtedness so distributed, or of such subscription rights or warrants, and the
denominator of which shall be the total number of shares of Common Stock
outstanding multiplied by such Market Price per share of Common Stock
immediately prior to such payment date. "MARKET PRICE" as of a particular date
(the "VALUATION DATE") shall mean the following: (a) if the Common Stock is then
listed on a national stock exchange, the closing sale price of one share of
Common Stock on such exchange on the last trading day prior to the Valuation
Date; (b) if the Common Stock is then quoted on The Nasdaq Stock Market, Inc.
("NASDAQ"), the National Association of Securities Dealers, Inc. OTC Bulletin
Board (the "BULLETIN BOARD") or such similar exchange or association, the
closing sale price of one share of Common Stock on Nasdaq, the Bulletin Board or
such other exchange or association on the last trading day prior to the
Valuation Date or, if no such closing sale price is available, the average of
the high bid and the low asked price quoted thereon on the last trading day
prior to the Valuation Date; or (c) if the Common Stock is not then listed on a
national stock exchange or quoted on Nasdaq, the Bulletin Board or such other
exchange or association, the fair market value of one share of Common Stock as
of the Valuation Date, shall be determined in good faith by the Board of
Directors of the Company and the Warrantholder. If the Common Stock is not then
listed on a national securities exchange, the Bulletin Board or such other
exchange or association, the Board of Directors of the Company shall respond
promptly, in writing, to an inquiry by the Warrantholder prior to the exercise
hereunder as to the fair market value of a share of Common Stock as determined
by the Board of Directors of the Company. In the event that the Board of
Directors of the Company and the Warrantholder are unable to agree upon the fair
market value in respect of subpart (c) hereof, the Company and the Warrantholder
shall jointly select an appraiser, who is experienced in such matters. The
decision of such appraiser shall be final and conclusive, and the cost of such
appraiser shall be borne equally by the Company and the Warrantholder. Such
adjustment shall be made successively whenever such a payment date is fixed.
-4-
(d) An adjustment to the Warrant Price shall become effective
immediately after the payment date in the case of each dividend or distribution
and immediately after the effective date of each other event which requires an
adjustment.
(e) In the event that, as a result of an adjustment made
pursuant to this Section 8, the Warrantholder shall become entitled to receive
any shares of capital stock of the Company other than shares of Common Stock,
the number of such other shares so receivable upon exercise of this Warrant
shall be subject thereafter to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Warrant.
Section 9. Fractional Interest. The Company shall not be required to
issue fractions of Warrant Shares upon the exercise of this Warrant. If any
fractional share of Common Stock would, except for the provisions of the first
sentence of this Section 9, be deliverable upon such exercise, the Company, in
lieu of delivering such fractional share, shall pay to the exercising
Warrantholder an amount in cash equal to the Market Price of such fractional
share of Common Stock on the date of exercise.
Section 10. Benefits. Nothing in this Warrant shall be construed to
give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company and
the Warrantholder.
Section 11. Notices to Warrantholder. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall promptly give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject
adjustment.
Section 12. Notices. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given as hereinafter described (a) if given by personal delivery,
then such notice shall be deemed given upon such delivery, (b) if given by telex
or facsimile, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (c) if given by mail, then such notice
shall be deemed given upon the earlier of (i) receipt of such notice by the
recipient or (ii) three days after such notice is deposited in first class mail,
postage prepaid, and (d) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one business day after delivery
to such carrier. All notices shall be addressed as follows: if to the
Warrantholder, at its address as set forth in the Company's books and records
and, if to the Company, at the address as follows, or at such other address as
the Warrantholder or the Company may designate by ten days' advance written
notice to the other:
-5-
If to the Company:
Science Dynamics Corporation
7150 N. Park Drive, Suite 500
Pennsauken, New Jersey 08109
Attn: Chief Executive Officer
Facsimile: (___) ___-____
With a copy to (which shall not constitute notice):
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Attn: Gregory Sichenzia, Esq.
Facsimile: (212) 930-9725
Section 13. Registration Rights. The initial Warrantholder is entitled
to the benefit of certain registration rights with respect to the shares of
Common Stock issuable upon the exercise of this Warrant as provided in Article
IV of the Subscription Agreement.
Section 14. Successors. All the covenants and provisions hereof by or
for the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 15. Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial. This Warrant shall be governed by, and construed in accordance with, the
internal laws of the State of New York, without reference to the choice of law
provisions thereof. The Company and, by accepting this Warrant, the
Warrantholder, each irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and federal courts
located in New York County, New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Warrant and the
transactions contemplated hereby. Service of process in connection with any such
suit, action or proceeding may be served on each party hereto anywhere in the
world by the same methods as are specified for the giving of notices under this
Warrant. The Company and, by accepting this Warrant, the Warrantholder, each
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. The Company and,
by accepting this Warrant, the Warrantholder, each irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY
WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO
THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO
THIS WAIVER.
-6-
Section 16. No Rights as Stockholder. Prior to the exercise of this
Warrant, the Warrantholder shall not have or exercise any rights as a
stockholder of the Company by virtue of its ownership of this Warrant.
Section 17. Amendment; Waiver. Any term of this Warrant may be amended
or waived upon the written consent of the Company and the holder of this
Warrant.
Section 18. Section Headings. The section headings in this Warrant are
for the convenience of the Company and the Warrantholder and in no way alter,
modify, amend, limit or restrict the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed, as of the ____ day of __________ 2006.
SCIENCE DYNAMICS CORPORATION
By:
----------------------------------------
Name: Paul Burgess
Title: Chief Executive Officer
-7-
APPENDIX A
SCIENCE DYNAMICS CORPORATION
WARRANT EXERCISE FORM
To Science Dynamics Corporation:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("WARRANT") for, and to purchase
thereunder by the payment of the Warrant Price and surrender of the Warrant,
_______________ shares of Common Stock ("WARRANT SHARES") provided for therein,
and requests that certificates for the Warrant Shares be issued as follows:
-------------------------------------
Name
-------------------------------------
-------------------------------------
Address
-------------------------------------
Federal Tax ID or Social Security No.
and delivered by (certified mail to the above address, or
(electronically (provide DWAC Instructions: ___________________), or (other
(specify): ______________________
_______________________________________________________________________), and,
if the number of Warrant Shares shall not be all the Warrant Shares purchasable
upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
Shares purchasable upon exercise of this Warrant be registered in the name of
the undersigned Warrantholder or the undersigned's Assignee as below indicated
and delivered to the address stated below.
By signing below, the undersigned hereby represents that he or she is
an "ACCREDITED INVESTOR" as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act and the undersigned further re-affirms that
the representations and warranties contained in Article II of the Subscription
Agreement (the "SUBSCRIPTION AGREEMENT") dated __________, 2006 between the
Company and the Subscriber thereto are true and correct in all material respects
with respect to the Warrantholder as of the time this exercise.
Dated: ___________________, _____
Note: The signature must correspond with the name of the Warrantholder as
written on the first page of the Warrant in every particular, without alteration
or enlargement or any change whatever, unless the Warrant has been assigned.
Warrant Signature:
------------------------------------
Name (please print):
------------------------------------
------------------------------------
------------------------------------
Address
------------------------------------
Federal Identification or
Social Security No.