Exhibit 10.1

 

ENCISION INC.

 

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SECURITIES PURCHASE AGREEMENT

 

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ENCISION INC.

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is entered into as of the
17th day of December, 2013 (the “Effective Date”) by and among ENCISION INC., a
Colorado corporation (the “Company”), and the persons and entities named on the
executed counterpart signature pages attached hereto (individually, a
“Purchaser” and collectively, the “Purchasers”) and who are listed on EXHIBIT A
hereto.

 

RECITALS

 

WHEREAS, the Company has authorized the sale and issuance of up to an aggregate
of 3,125,000 shares of its Common Stock (the “Shares”) and warrants to purchase
Common Stock of the Company, substantially in the form attached hereto as
EXHIBIT B (the “Warrants”);

 

WHEREAS, the shares of Common Stock issuable upon exercise of the Warrants are
sometimes referred to as the “Warrant Shares”, and the Shares, the Warrants and
the Warrant Shares are sometimes collectively referred to as the “Securities”;
and

 

WHEREAS, the Company desires to issue and sell the Securities to Purchasers on
the terms and conditions set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing, and the representations,
warranties, covenants and conditions set forth below, the Company and each
Purchaser, intending to be legally bound, hereby agree as follows:

 

1.                                      AGREEMENT TO SELL AND PURCHASE.

 

1.1                               Authorization of Shares and Warrants.  The
Company has authorized the sale and issuance to Purchasers of the Shares and
Warrants.  The Shares have the rights, preferences, privileges and restrictions
set forth in the Company’s Articles of Incorporation, as amended to date (the
“Charter”).

 

1.2                               Sale and Purchase.  Subject to the terms and
conditions hereof, at the Closing (as defined below), the Company hereby agrees
to issue and sell to each Purchaser, severally and not jointly, and each
Purchaser agrees to purchase from the Company, severally and not jointly, the
number of Shares set forth opposite such Purchaser’s name on the executed
counterpart signature pages attached hereto, at a purchase price of $0.80 per
share (the “Purchase Price”).  As additional consideration for Purchaser’s
obligations under this Agreement, at each Closing the Company shall issue to
Purchaser a Warrant exercisable for such number of Warrant Shares equal to fifty
percent (50%) of the number of Shares that Purchaser purchases at such Closing. 
The exercise price of the Warrants shall be $1.20 per Warrant Share, subject to
the other terms of the Warrants.

 

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2.                                      THE CLOSING

 

2.1                               Closing Date.  The closing of the sale and
purchase of the Shares (the “Closing”) shall be held on the Effective Date (the
“Closing Date”).

 

2.2                               Delivery.  At the Closing, subject to the
terms and conditions hereof, the Company will deliver to each Purchaser a stock
certificate representing the number of Shares to be purchased at such Closing by
such Purchaser and a Warrant, against payment of the purchase price therefor by
check or wire transfer made in accordance with the Company’s instructions.

 

3.                                      REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE COMPANY

 

The Company hereby represents and warrants to, and covenants with, each
Purchaser as follows:

 

3.1                               Organization, Good Standing and
Qualification.  The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado.  The Company has
all requisite corporate power and authority to own and operate its properties
and assets, to execute and deliver this Agreement, to issue and sell the
Securities, to carry out the provisions of this Agreement, and to carry on its
business as presently conducted and as presently proposed to be conducted.  The
Company is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which the nature of
its activities and of its properties (both owned and leased) makes such
qualification necessary, except for those jurisdictions in which failure to do
so would not have a material adverse effect on the Company or its business.

 

3.2                               Authorization.  All corporate action on the
part of the Company, its directors and its stockholders necessary for the
authorization, execution, delivery and performance of this Agreement, the
Warrants, and the Registration Rights Agreement by and among the Company and the
Purchasers, substantially in the form attached hereto as EXHIBIT C (the
“Registration Rights Agreement”, and together with this Agreement and the
Warrants, the “Transaction Documents”) by the Company and the performance of the
Company’s obligations hereunder and thereunder, including the issuance and
delivery of the Shares and Warrants, has been taken or will be taken prior to
the issuance of the Shares and Warrants.  The Transaction Documents, when
executed and delivered by the Company, shall constitute valid and binding
obligations of the Company enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency, the relief of
debtors and, with respect to rights to indemnity, subject to federal and state
securities laws.

 

3.3                               Capitalization.

 

(a) The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock and 10,000,000 shares of Preferred Stock.  As of November 30,
2013:

 

(i) (1) 8,210,100 shares of Common Stock were issued and outstanding, all of
which were validly issued, fully paid, nonassessable and free of preemptive
rights and (2) no shares of Common Stock were held in the treasury of the
Company;

 

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(ii) 431,750 shares of Common Stock were issuable upon exercise of outstanding
employee stock options granted pursuant to the Company’s 2007 Stock Option Plan,
as amended; and

 

(iii) no shares of Preferred Stock have been designated and no shares are issued
and outstanding.

 

Except as set forth in this Section 3.3 or the SEC Reports (as defined below),
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character to which the Company is a party or by which the
Company is bound relating to the issued or unissued capital stock or other
equity interests of the Company, or securities convertible into or exchangeable
for such capital stock or other equity interests, or obligating the Company to
issue or sell any shares of its capital stock or other equity interests, or
securities convertible into or exchangeable for such capital stock of, or other
equity interests in, the Company.

 

(b) The Shares, when issued, paid for and delivered in accordance with the terms
of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. The Warrant Shares have been
duly reserved for issuance, and upon issuance in accordance with the terms of
the Warrants, will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.

 

3.4                               Governmental Consents.  Assuming the accuracy
of the representations made by the Purchasers in Section 4 of this Agreement,
all consents, approvals, orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with, any governmental
authority, required on the part of the Company in connection with the valid
execution and delivery of this Agreement, the offer, sale or issuance of the
Shares and Warrants or the consummation of any other transaction contemplated
hereby shall have been obtained and will be effective at the Closing, filings
pursuant to Regulation D of the Securities Act of 1933, as amended (the “Act”),
and applicable state securities laws, which have been made or will be made in a
timely manner.

 

3.5                               Compliance with Laws.  To its knowledge, the
Company is not in violation of any applicable statute, rule, regulation, order
or restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties, which violation of which would materially and adversely affect the
business, assets, liabilities, financial condition, operations or prospects of
the Company.

 

3.6                               Compliance with Other Instruments.  The
Company is not in violation or default of any term of the Charter or its bylaws,
or of any provision of any mortgage, indenture or contract to which it is a
party and by which it is bound or of any judgment, decree, order or writ, other
than such violation(s) that would not have a material adverse effect on the
Company.  The execution, delivery and performance of the Transaction Documents,
and the consummation of the transactions contemplated hereby or thereby will not
result in any such violation or be in conflict with, or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, decree, order or writ or an event that
results in the creation of any lien, charge or encumbrance upon any assets of
the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal
of any material permit, license,

 

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authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.

 

3.7                               Offering.  Assuming the accuracy of the
representations and warranties of the Purchasers contained in Section 4 hereof,
the offer, issue, and sale of the Securities are and will be exempt from the
registration and prospectus delivery requirements of the Act, and have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit, or qualification requirements of all applicable
state securities laws.

 

3.8                               SEC Filings; Financial Statements.

 

(a)  The Company has timely filed all forms, reports and documents (including
all exhibits) required to be filed by it with the SEC since March 31, 2013 (the
“SEC Reports”). The SEC Reports (i) were prepared in accordance with the
requirements of the Act and the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules and regulations promulgated thereunder and
(ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

 

(b)  Each of the financial statements (including, in each case, any notes
thereto) contained in the SEC Reports was prepared in accordance with United
States generally accepted accounting principles (“GAAP”) applied on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto) and the Company’s books and records, and each fairly presented the
financial position, results of operations and cash flows of the Company as at
the respective dates thereof and for the respective periods indicated therein
except as otherwise noted therein (subject, in the case of unaudited statements,
to normal year-end adjustments which individually or in the aggregate did not
have, and would not reasonably be expected to have, a material adverse effect on
the business, operations, assets, liabilities, financial condition or results of
operations of the Company).  The books and records of the Company have been, and
are being, maintained in accordance with applicable legal and accounting
requirements in all material respects.

 

(c)  Except as and to the extent set forth on the balance sheet of the Company
as of September 30, 2013 included in the Company Form 10-Q for the quarterly
period ended September 30, 2013, including the notes thereto, the Company has no
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise), except for liabilities or obligations incurred since
September 30, 2013 that would not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the business, operations,
assets, liabilities, financial condition or results of operations of the
Company.

 

(d)  Except as expressly contemplated by this Agreement or as set forth in the
SEC Reports, since September 30, 2013 through the date hereof, the Company has
conducted its business in the ordinary course consistent with past practice and,
since such date through the date hereof, there has not occurred any event or
development that would, individually or in the aggregate, reasonably be expected
to have a material adverse effect on the business, operations, assets,
liabilities, financial condition or results of operations of the Company.

 

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4.                                      REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS

 

Each Purchaser hereby represents and warrants to the Company, severally and not
jointly, as follows (provided that such representations and warranties do not
lessen or obviate the representations and warranties of the Company set forth in
this Agreement):

 

4.1                               Purchase for Own Account.  Purchaser
represents that it is acquiring the Securities solely for its own account and
beneficial interest for investment and not for sale or with a view to
distribution of the Securities or any part thereof, has no present intention of
selling (in connection with a distribution or otherwise), granting any
participation in, or otherwise distributing the same, and does not presently
have reason to anticipate a change in such intention.

 

4.2                               Information and Sophistication.  Purchaser
hereby: (i) acknowledges that it has received all the information it has
requested from the Company and it considers necessary or appropriate for
deciding whether to acquire the Securities, (ii) represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Securities and to obtain any
additional information necessary to verify the accuracy of the information given
the Purchaser and (iii) further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of this investment.

 

4.3                               Ability to Bear Economic Risk.  Purchaser
acknowledges that investment in the Securities involves a high degree of risk,
and represents that it is able, without materially impairing its financial
condition, to hold the Securities for an indefinite period of time and to suffer
a complete loss of its investment.

 

4.4                               Rule 144.  Purchaser acknowledges and agrees
that the Securities are “restricted securities” as defined in Rule 144
promulgated under the Act as in effect from time to time and must be held
indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available.  Purchaser has been advised or is
aware of the provisions of Rule 144, which permits limited resale of Securities
purchased in a private placement subject to the satisfaction of certain
conditions.  Except as set forth in the Registration Rights Agreement, Purchaser
acknowledges that the Company has no obligation to register or qualify the
Securities for resale.

 

4.5                               Legends.  Purchaser acknowledges and agrees
that the Securities may bear one or all of the following legends:

 

(a)                                 “THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933 AS AMENDED.”

 

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(b)                                 Any legend required by the Blue Sky laws of
any state to the extent such laws are applicable to the shares represented by
the certificate so legended.

 

4.6                               Accredited Investor Status.  Purchaser is an
“accredited investor” as such term is defined in Rule 501 under the Act.

 

4.7                               Residence.  If Purchaser is an individual,
then Purchaser resides in the state or province identified in the address of
Purchaser set forth on the executed counterpart signature page attached hereto. 
If Purchaser is a partnership, corporation, limited partnership, limited
liability company or other entity, then the office or offices of Purchaser in
which its investment decision was made is located at the address or addresses of
Purchaser set forth on the executed counterpart signature page attached hereto.

 

4.8                               Further Assurances.  Each Purchaser agrees and
covenants that at any time and from time to time it will promptly execute and
deliver to the Company such further instruments and documents and take such
further action as the Company may reasonably require in order to carry out the
full intent and purpose of this Agreement and to comply with state or federal
securities laws or other regulatory approvals.

 

5.                                      CONDITIONS TO CLOSING

 

5.1                               Conditions to Purchasers’ Obligations at the
Closing.  Purchasers’ obligations to purchase the Shares and Warrants at the
Closing are subject to the satisfaction, at or prior to the Closing Date, of the
following conditions:

 

(a)                                 Representations and Warranties True;
Performance of Obligations.  The representations and warranties made by the
Company in Section 3 hereof shall be true and correct in all material respects
as of the Closing with the same force and effect as if they had been made as of
the Closing, and the Company shall have performed all obligations and conditions
herein required to be performed or observed by it on or prior to the Closing.

 

(b)                                 Consents, Permits, and Waivers.  The Company
shall have obtained any and all consents, permits and waivers necessary or
appropriate for consummation of the transactions contemplated by the Agreement,
except for such as may be properly obtained subsequent to the Closing.

 

(c)                                  Registration Rights Agreement.  The Company
shall have executed and delivered the Registration Rights Agreement.

 

(d)                                 Closing Amount.  The Company shall have sold
at least 1,875,000 Shares at the Closing.

 

(e)                                  Proceedings and Documents.  All corporate
and other proceedings in connection with the transactions contemplated at the
Closing hereby and all documents and instruments incident to such transactions
shall be reasonably satisfactory in substance and form to Purchasers, and
Purchasers shall have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request.

 

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5.2                               Conditions to Obligations of the Company.  The
Company’s obligation to issue and sell the Shares and Warrants at the Closing is
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions:

 

(a)                                 Representations and Warranties True.  The
representations and warranties in Section 4 made by those Purchasers acquiring
Shares hereof shall be true and correct in all material respects at the date of
the Closing, with the same force and effect as if they had been made on and as
of said date.

 

(b)                                 Closing Amount.  The Company shall have sold
at least 1,875,000 Shares at the Closing.

 

(c)                                  Consents, Permits, and Waivers.  The
Company shall have obtained any and all consents, permits and waivers necessary
or appropriate for consummation of the transactions contemplated by this
Agreement, except for such as may be properly obtained subsequent to the
Closing.

 

6.                                      MISCELLANEOUS

 

6.1                               Binding Agreement.  The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties.  Nothing in this Agreement,
expressed or implied, is intended to confer upon any third party any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.

 

6.2                               Governing Law.  This Agreement shall be
governed by and construed under the laws of the State of Colorado as applied to
agreements among Colorado residents, made and to be performed entirely within
the State of Colorado, without giving effect to conflicts of laws principles.

 

6.3                               Counterparts.  This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

 

6.4                               Titles and Subtitles.  The titles and
subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.

 

6.5                               Notices.  All notices required or permitted
hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed telex,
electronic mail or facsimile if sent during normal business hours of the
recipient, if not, then on the next business day, (c) five (5) days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid, or (d) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. 
All communications shall be sent to the Company at 6797 Winchester Circle,
Boulder, CO 80301, and to the Purchasers at the address(es) set forth on the
executed counterpart signature pages attached hereto or at such other
address(es) as the Company or a Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.

 

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6.6                               Modification; Waiver.  No modification or
waiver of any provision of this Agreement or consent to departure therefrom
shall be effective unless in writing and approved by the Company and the holders
of at least a majority of the then outstanding Shares issued pursuant to this
Agreement.  Any such amendment or modification shall be binding on all parties
hereto.

 

6.7                               Expenses.  The Company and each Purchaser
shall each bear its respective expenses and legal fees incurred with respect to
this Agreement and the transactions contemplated herein.

 

6.8                               Delays or Omissions.  It is agreed that no
delay or omission to exercise any right, power or remedy accruing to each
Purchaser, upon any breach or default of the Company under this Agreement shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach or default, or any acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.  It is further agreed that any waiver,
permit, consent or approval of any kind or character by Purchaser of any breach
or default under this Agreement, or any waiver by any Purchaser of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in writing and that all
remedies, either under this Agreement, or by law or otherwise afforded to the
Purchaser, shall be cumulative and not alternative.

 

6.9                               Entire Agreement.  This Agreement constitutes
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and no party shall be liable or bound to any other party
in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein.

 

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties have executed this SECURITIES PURCHASE AGREEMENT
as of the date first written above.

 

 

ENCISION INC.

 

 

 

 

 

By:

/s/ Patrick Pace, MD

 

Name: Patrick Pace, MD

 

Title: Executive Chairman

 

 

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ENCISION INC.

 

COUNTERPART SIGNATURE PAGE TO

SECURITIES PURCHASE AGREEMENT

 

The undersigned hereby acknowledges receipt of a copy of the Securities Purchase
Agreement dated December 17, 2013 (the “Purchase Agreement”), by and among
ENCISION INC., a Colorado corporation, and the persons and entities named on the
executed counterpart signature pages attached thereto.  Pursuant to the Purchase
Agreement, the undersigned is hereby purchasing the number of Shares set forth
below and agrees to be bound by the provisions of the Purchase Agreement as a
“Purchaser” with the same rights and obligations as a “Purchaser” thereunder.

 

Purchaser’s Aggregate Purchase Price:

$

 

 

 

 

 

Number of Shares Purchased:

 

 

 

 

 

Warrant Shares:

 

 

 

Dafna Lifescience Select LTD

 

 

 

 

 

 

 

 

 

By:

/s/ Nathan Fischel

 

 

Title: CEO

 

 

 

 

 

 

 

 

Dafna Lifescience LTD

 

 

 

 

 

 

 

 

 

By:

/s/ Nathan Fischel

 

 

Title: CEO

 

 

 

 

 

 

 

 

Dafna Lifescience Market Neutral LTD

 

 

 

 

 

 

 

 

 

By:

/s/ Nathan Fischel

 

 

Title: CEO

 

 

 

COUNTERPART SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT

 

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CMED Partners LLLP

 

 

 

 

 

 

 

 

 

By:

/s/ Vern D. Kornelsen

 

 

Title: General Partner

 

 

 

 

 

/s/ Charles E. Sheedy

 

 

 

 

 

TOM JUDA AND NANCY JUDA LIVING TRUST

 

 

 

 

 

 

 

 

 

By:

/s/ Tom Juda

 

 

Title: Trustee

 

 

 

 

 

/s/ Raul P. Esquivel

 

 

 

 

 

Paul J. McCormick Charles Schwab & Co Inc. Cust IRA Rollover

 

 

 

 

 

 

 

 

By:

/s/ Paul McCormick

 

 

Title: Owner

 

 

 

 

 

/s/ Alan Budd Zuckerman

 

 

 

 

 

 

 

 

/s/ Jordan Barrow

 

 

 

 

 

 

 

 

/s/ Nicholas Sarchese

 

 

 

 

 

 

 

 

/s/ Kathleen Bette Newton

 

 

 

 

 

 

 

 

/s/ Gregory J. Trudel

 

 

 

 

 

 

 

 

/s/ John Halt

 

 

 

 

 

 

 

 

/s/ Thomas Whitley

 

 

 

COUNTERPART SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT

 

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EXHIBIT A

 

SCHEDULE OF PURCHASERS

 

Purchaser

 

Shares

 

Warrant
Shares

 

Purchase
Price

 

Dafna Lifescience Select LTD

c/o Dafna Capital Mgmt LLC, 10990 Wilshire Blvd.,

Suite 1400

Los Angeles, CA 90024

 

528,750

 

264,375

 

$

423,000

 

Dafna Lifescience LTD

c/o Dafna Capital Mgmt LLC, 10990 Wilshire Blvd.,

Suite 1400

Los Angeles, CA 90024

 

456,250

 

228,125

 

365,000

 

Dafna Lifescience Market Neutral LTD

c/o Dafna Capital Mgmt LLC 10990 Wilshire Blvd.,

Suite 1400

Los Angeles, CA 90024

 

77,500

 

38,750

 

62,000

 

CMED Partners LLLP

Attn: Vern D. Kornelsen

4605 S. Denice Drive

Englewood, CO 80111

 

525,000

 

262,500

 

420,000

 

Charles E. Sheedy

2907 The Houston Center

Houston, TX 77010

 

250,000

 

125,000

 

200,000

 

TOM JUDA AND NANCY JUDA LIVING TRUST

410 S. Lucerne Blvd

Los Angeles, CA 90020

 

250,000

 

125,000

 

200,000

 

Raul P. Esquivel

91 Prospect Street

Summit, NJ 07901

 

200,000

 

100,000

 

160,000

 

Paul J. McCormick Charles Schwab & Co Inc. Cust

IRA Rollover

338 Spear Street, 19F

San Francisco, CA 94105

 

62,500

 

31,250

 

50,000

 

Alan Budd Zuckerman

6587 Lakeview Drive

Boulder, CO 80303

 

31,250

 

15,625

 

25,000

 

Jordan Barrow

401 E. 65th Street, Apt. 13D

New York, NY 10065

 

31,250

 

15,625

 

25,000

 

Nicholas Sarchese

18 Red Cliff Ave.

Port Washington, NY 11050

 

25,000

 

12,500

 

20,000

 

 

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Purchaser

 

Shares

 

Warrant
Shares

 

Purchase
Price

 

Kathleen Bette Newton

8099 N. 63rd Street

Longmont, CO 80503

 

12,500

 

6,250

 

10,000

 

Gregory J. Trudel

3327 Alexander Way

Broomfield, CO 80023

 

5,625

 

2,813

 

4,500

 

John Halt

11840 Homewood Road

Ellicott City, MD 21042

 

3,750

 

1,875

 

3,000

 

Thomas Whitley

9 Allaire Ave.

Middletown, NJ 07748

 

3,750

 

1,875

 

3,000

 

Total:

 

2,463,125

 

1,231,563

 

$

1,970,500

 

 

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EXHIBIT B

 

FORM OF WARRANT

 

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THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

ENCISION, INC.

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.:
Date of Issuance: December 17, 2013 (“Issuance Date”)

 

Encision, Inc., a Colorado corporation, located at 6797 Winchester Circle,
Boulder, CO 80301 (the “Company”), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
[NAME OF PURCHASER], the registered holder hereof or its permitted assigns (the
“Holder”), is entitled, subject to the terms set forth below, to purchase from
the Company, at the Exercise Price (as defined below) then in effect, upon
exercise of this Warrant to Purchase Common Stock (including any Warrants to
Purchase Common Stock issued in exchange, transfer or replacement hereof, the
“Warrant”), at any time or times on or after the Issuance Date but not after
11:59 p.m., ET, on the Expiration Date (as defined below),
[            ](1) (subject to adjustment as provided herein) fully paid and
non-assessable shares of Common Stock (as defined below) (the “Warrant Shares”).
Except as otherwise defined herein, capitalized terms in this Warrant shall have
the meanings set forth in Section 13. This Warrant is one of several similar
warrants issued pursuant to that certain Securities Purchase Agreement, dated as
of December 17, 2013, by and among the Company, the Holder and the other
purchasers named therein (the “Securities Purchase Agreement”).

 

1.                                      EXERCISE OF WARRANT.

 

(a)                                 Mechanics of Exercise.  Subject to the other
terms of this Warrant, Holder may elect to exercise this Warrant for the Warrant
Shares for the Exercise Price during the Exercise Period.  The rights
represented by this Warrant may be exercised in whole or in part at any time
during the Exercise Period, by delivery of the following to the Company at its
address set forth above (or at such other address as it may designate by notice
in writing to the Holder):

 

(i)                                     An executed Exercise Notice in the form
attached hereto as EXHIBIT A (the “Exercise Notice”); and

 

(ii)                                  Payment of the Exercise Price in cash or
by check, or in certain circumstances, pursuant to the terms of
Section 1(b) below

 

The Holder shall not be required to deliver the original Warrant in order to
effect an exercise hereunder.  Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original Warrant and issuance
of a new Warrant evidencing the right to

 

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(1)  50% warrant coverage.

 

6

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purchase the remaining number of Warrant Shares.  Upon the exercise of the
rights represented by this Warrant, a certificate or certificates for the
Exercise Shares so purchased, registered in the name of the Holder, shall be
issued and delivered to the Holder after the rights represented by this Warrant
shall have been so exercised.  The Company shall issue such shares to Holder
within three trading days after receiving a properly delivered Exercise Notice. 
In the event that this Warrant is being exercised for less than all of the
then-current number of Exercise Shares purchasable hereunder, the Company shall,
concurrently with the issuance by the Company of the number of Exercise Shares
for which this Warrant is then being exercised, issue a new Warrant exercisable
for the remaining number of Exercise Shares purchasable hereunder.

 

The Holder shall be deemed to become the holder of record of the Exercise Shares
on the date on which this Warrant is surrendered or an Exercise Notice is
delivered and payment of the Exercise Price is made, irrespective of the date of
delivery of such certificate or certificates, except that, if the date of such
surrender and payment is a date when the stock transfer books of the Company are
closed, Holder shall be deemed to become the holder of such shares at the close
of business on the next succeeding date on which the stock transfer books are
open.

 

(b)                                 Net Exercise.  Beginning six (6) months
after the Issuance Date, if at any time the Company is unable to maintain the
continuous effectiveness of the Registration Statement applicable to the Warrant
Shares pursuant to the terms of the Registration Rights Agreement (other than
pursuant to the permitted exceptions contained in the Registration Rights
Agreement), and only for the duration of such unavailability, Holder shall have
the following right to exercise this Warrant on a “net exercise” basis.  Subject
to the foregoing, in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value of this Warrant (or the portion
thereof being exercised) by surrender of this Warrant at the principal office of
the Company together with notice of such election (a “Net Exercise”).  A Holder
who Net Exercises shall have the rights described in Section 1(a) hereof, and
the Company shall issue to such Holder a number of Exercise Shares computed
using the following formula:

 

[g269541ko03i001.jpg]

 

Where

 

X =                             The number of Exercise Shares to be issued to
the Holder.

 

Y =                             The number of Exercise Shares purchasable under
this Warrant or, if only a portion of the Warrant is being exercised, the
portion of the Warrant being cancelled (at the date of such calculation).

 

A =                             The fair market value of one (1) Exercise Share
(at the date of such calculation).

 

B =                             The Exercise Price (as adjusted to the date of
such calculation).

 

For purposes of this Section 1(b), the fair market value of an Exercise Share
shall mean the average of the closing prices of the Exercise Shares (or
equivalent shares of common stock

 

7

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issuable upon conversion of the Exercise Shares) quoted in the over-the-counter
market in which the Exercise Shares (or equivalent shares of common stock
issuable upon conversion of the Exercise Shares) are traded or the closing price
quoted on any exchange or electronic securities market on which the Exercise
Shares (or equivalent shares of common stock issuable upon conversion of the
Exercise Shares) are listed, whichever is applicable, as published in The Wall
Street Journal for the five (5) trading days prior to the date of determination
of fair market value (or such shorter period of time during which such Exercise
Shares were traded over-the-counter or on such exchange).

 

(c)                                  Exercise Price.  For purposes of this
Warrant, “Exercise Price” means $1.20 per Warrant Share, subject to adjustment
as provided herein.

 

(d)                                 Limitations on Exercise.  Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that may
be acquired by the Holder upon any exercise of this Warrant (or otherwise in
respect hereof) shall be limited to the extent necessary to ensure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by the Holder and its Affiliates and any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not
exceed 4.999% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. Each delivery of an Exercise Notice by the Holder will
constitute a representation by the Holder that it has evaluated the limitation
set forth in this Section and determined that issuance of the full number of
Warrant Shares requested in such Exercise Notice is permitted under this
Section.  The Company’s obligation to issue shares of Common Stock in excess of
the limitation referred to in this Section shall be suspended (and, except as
provided below, shall not terminate or expire notwithstanding any contrary
provisions hereof) until such time, if any, as such shares of Common Stock may
be issued in compliance with such limitation; provided, that, if, as of
5:30 p.m. ET on the Expiration Date, the Company has not received written notice
that the shares of Common Stock may be issued in compliance with such
limitation, the Company’s obligation to issue such shares shall terminate.  This
provision shall not restrict the number of shares of Common Stock which a Holder
may receive or beneficially own in order to determine the amount of securities
or other consideration that such Holder may receive in accordance with Section 2
of this Warrant.  By written notice to the Company, the Holder may waive the
provisions of this Section.  Any such waiver will not affect any other Holder.

 

2.                                      ADJUSTMENT OF EXERCISE PRICE AND NUMBER
OF WARRANT SHARES.  The Exercise Price and number of Warrant Shares issuable
upon exercise of this Warrant are subject to adjustment from time to time as set
forth in this Section 2.

 

(a)                                 Stock Dividends and Splits.  If the Company,
at any time on or after the date of the Issuance Date, (i) pays a stock dividend
on one or more classes of its then outstanding shares of Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more

 

8

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classes of its then outstanding shares of Common Stock into a larger number of
shares or (iii) combines (by combination, reverse stock split or otherwise) one
or more classes of its then outstanding shares of Common Stock into a smaller
number of shares, then in each such case the Exercise Price shall be
proportionately adjusted. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of shareholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.

 

(b)                                 Number of Warrant Shares.  Simultaneously
with any adjustment to the Exercise Price pursuant to paragraph (a) of this
Section 2, the number of Warrant Shares that may be purchased upon exercise of
this Warrant shall be increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the adjusted
number of Warrant Shares shall be the same as the aggregate Exercise Price in
effect immediately prior to such adjustment (without regard to any limitations
on exercise contained herein).

 

(c)                                  Dilutive Issuances.

 

(i)                                     If and whenever the Company sells or
issues, or is deemed to have issued pursuant to Section 2(c)(ii), Additional
Shares of Common Stock in a Material Financing after the Issuance Date for
consideration per share less than the Exercise Price in effect immediately prior
to the time of such issue or sale, then and in each such case (a “Trigger
Issuance”) the then-existing Exercise Price shall be reduced to the
consideration per share received by the Company in such Trigger Issuance.  In no
event, however, will the Exercise Price be adjusted pursuant to this
Section 2(c) to less than $0.40 (as such amount may be ratably adjusted pursuant
to any stock split, reverse stock split or similar transaction, the “Floor
Price”).

 

(ii)                                  If the Company at any time or from time to
time after the Issuance Date shall issue any Options or Convertible Securities
(excluding Options or Convertible Securities which are themselves Exempted
Securities) or shall fix a record date for the determination of holders of any
class of securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares of Common Stock (as set forth in
the instrument relating thereto, assuming the satisfaction of any conditions to
exercisability, convertibility or exchangeability but without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common Stock issued as of the time of
such issue or, in case such a record date shall have been fixed, as of the close
of business on such record date.  Upon the expiration or termination of any
unexercised Option or unconverted or unexchanged Convertible Security (or
portion thereof) which resulted (either upon its original issuance or upon a
revision of its terms) in an adjustment to the Exercise Price pursuant to the
terms of Section 2(c)(i), the Exercise Price shall be readjusted to such
Exercise as would have obtained had such Option or Convertible Security (or
portion thereof) never been issued.

 

(d)                                 Certain Definitions.  For the purposes of
this Section 2, the following defined terms have the following meanings:

 

9

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(i)                                     “Additional Shares of Common Stock”
means all shares of Common Stock issued (or, pursuant to Section 2(c)(ii) above,
deemed to be issued by the Company) after the Issuance Date in a Qualifying
Financing, other than the following “Exempted Securities”:

 

(1)                                 shares of Common Stock, Options or
Convertible Securities issued by reason of a dividend, stock split, split-up or
other distribution on shares of Common Stock that is covered by Section 2(a) or
2(b);

 

(2)                                 shares of Common Stock, Options or
Convertible Securities issued in an equity financing transaction that does not
constitute a Material Financing;

 

(3)                                 shares of Common Stock or Options issued to
employees or directors of, or consultants or advisors to, the Company or any of
its subsidiaries pursuant to a plan, agreement or arrangement approved by the
Board of Directors of the Company;

 

(4)                                 shares of Common Stock or Convertible
Securities issued upon the exercise of Options outstanding immediately prior to
the Issuance Date or shares of Common Stock issued upon the conversion or
exchange of Convertible Securities outstanding immediately prior to the Issuance
Date, in each case provided such issuance is pursuant to the terms of such
Option or Convertible Security; or

 

(5)                                 shares of Common Stock, Options or
Convertible Securities issued to equipment lessors or to real property lessors,
pursuant to an equipment leasing or real property leasing transaction approved
by the Board of Directors of the Company.

 

(ii)                                  “Convertible Securities” means any
evidences of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock, but excluding Options.

 

(iii)                               “Material Financing” means a bona fide
equity financing resulting in gross cash proceeds to the Company of $300,000.00
or more.

 

(iv)                              “Option” means rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities.

 

3.                                      CHANGE OF CONTROL TRANSACTIONS.

 

(a)                                 Change of Control Offer.  Within 30 days
following the public disclosure by the Company of any transaction that would
consitute a Change of Control, the Company will provide notice to Holder, which
notice will:

 

(i)                                     describe the circumstances and relevant
facts regarding the transaction that would consitute a Change of Control; and

 

10

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(ii)                                  offer to repurchase this Warrant effective
as of the closing date (and conditioned upon the closing) of such Change of
Control (the “Change of Control Payment Date”), which offer will constitute the
“Change of Control Offer”.

 

(b)                                 Change of Control Payment.  On the Change of
Control Payment Date, the Company will be required, if so elected by Holder and
to the extent lawful, to:

 

(i)                                     accept for payment the Warrant tendered
pursuant to the Change of Control Offer; and

 

(ii)                                  pay to Holder, or to a paying agent for
the benefit of Holder, the Change of Control Payment with respect to the Warrant
properly tendered.

 

(c)                                  Certain Limitations.  To the extent that
the provisions of any securities laws or regulations conflict with the Change of
Control provisions of the Warrant, the Company will be required to comply with
the applicable securities laws and regulations. The Company will not be deemed
to have breached its obligations under this Warrant by virtue of such
compliance.

 

(d)                                 Certain Definitions.  For the purposes of
this Section 3, the following defined terms have the following meanings:

 

(i)                                     “Change of Control” means the occurrence
of any of the following:

 

(1)                                 the consummation of any transaction
(including any merger or consolidation) the result of which is that any person
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that for purposes of this clause (1) such person shall be
deemed to have “beneficial ownership” of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time) of shares representing more than 50% of the voting power of
the then outstanding Voting Stock of the Company or other Voting Stock into
which the Voting Stock of the Company is reclassified, consolidated, exchanged
or changed;

 

(2)                                 the direct or indirect sale, lease,
transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its subsidiaries taken as a
whole to any person other than the Company or one of its subsidiaries; or

 

(3)                                 the merger or consolidation of the Company
with or into any person or the merger or consolidation of any person with or
into the Company, in any such event pursuant to a transaction in which any of
the outstanding shares of the Voting Stock of the Company or the Voting Stock of
such other person is converted into or exchanged for cash, securities or other
property, other than any such transaction in which the shares of Voting Stock of
the

 

11

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Company outstanding immediately prior to such transaction constitute, or are
converted into or exchanged for, shares representing more than 50% of the voting
power of the Voting Stock of the resulting or surviving person or any direct or
indirect parent company of the resulting or surviving person immediately after
giving effect to such transaction.

 

(ii)                                  “Change of Control Payment” means the
value of the unexercised portion of this Warrant remaining on the closing date
of the Change of Control, which value is calculated using the Black Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (A)
an underlying price per share equal to the greater of (1) the highest Closing
Sale Price of the Common Stock during the period beginning on the trading day
immediately preceding the public disclosure by the Company of a transaction that
could constitute a Change of Control and ending on the trading day of the
consummation of such Change of Control and (2) the sum of the price per share
being offered in cash in the applicable Change of Control (if any) plus the
value of the non-cash consideration being offered in the applicable Change of
Control (if any), (B) a strike price equal to the Exercise Price in effect on
the date of the Change of Control Offer, (C) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the greater of (1)
the remaining term of this Warrant as of the date of the Change of Control Offer
and (2) the remaining term of this Warrant as of the date of consummation of the
applicable Change of Control, (D) a zero cost of borrow and (E) an expected
volatility equal to the greater of 100% and the 100 day volatility obtained from
the HVT function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the trading day immediately following the earliest to occur of (1)
the public disclosure by the Company of the applicable Change of Control and (2)
the consummation of the applicable Change of Control.

 

(iii)                               “Closing Sale Price” means closing price of
the Common Stock quoted in the over-the-counter market in which the Common Stock
is traded or the closing price quoted on any exchange or electronic securities
market on which the Common Stock is listed as published in The Wall Street
Journal.

 

(iv)                              “Voting Stock” means, with respect to any
specified “person” (as that term is used in Section 13(d)(3) of the Exchange
Act) as of any date, stock, partnership interests or any other participations,
rights, warrants, options or other interests in the nature of an equity interest
that ordinarily (without regard to the occurrence of any contingency) has voting
power for the election of directors, managers or trustees of such person,
whether at all times or only so long as no senior class of stock has that voting
power by reason of any contingency.

 

4.                                      NONCIRCUMVENTION.  The Company hereby
covenants and agrees that the Company will not, by amendment of its articles or
certificate of incorporation, bylaws or through any reorganization, transfer of
assets, consolidation, merger, scheme of arrangement, 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 of this Warrant, and will at all
times in good faith carry out all the provisions of this Warrant and take all
action as may be required to protect the rights of the Holder. Without limiting
the generality of the foregoing, the Company (a) shall not increase the par
value of any shares of Common Stock receivable upon the exercise of this Warrant
above the Exercise Price then in effect, (b) shall take all such actions as may
be necessary or appropriate in

 

12

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order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock upon the exercise of this Warrant (or such
other securities, cash, assets or other property then deliverable on exercise of
this Warrant), and (c) shall, so long as any of the Warrants are outstanding,
take all action necessary to reserve and keep available out of its authorized
and unissued shares of Common Stock, solely for the purpose of effecting the
exercise of the Warrants, the maximum number of shares of Common Stock as shall
from time to time be necessary to effect the exercise of the Warrants then
outstanding (without regard to any limitations on exercise).

 

5.                                      WARRANT HOLDER NOT DEEMED A
STOCKHOLDER.  Except as otherwise specifically provided herein, the Holder,
solely in its capacity as a holder of this Warrant, shall not be entitled to
vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, solely in its capacity as the Holder of
this Warrant, 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 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 the 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.

 

6.                                      REISSUANCE OF WARRANTS.

 

(a)                                 Transfer of Warrant.  Subject to Section 12,
if this Warrant is to be transferred, the Holder shall surrender this Warrant to
the Company, whereupon the Company will forthwith issue and deliver upon the
order of the Holder a new Warrant (in accordance with Section 6(d)), registered
as the Holder may request, representing the right to purchase the number of
Warrant Shares being transferred by the Holder and, if less than the total
number of Warrant Shares then underlying this Warrant is being transferred, a
new Warrant (in accordance with Section 6(d)) to the Holder representing the
right to purchase the number of Warrant Shares not being transferred. Prior to
transferring this Warrant, the Holder shall inform the transferee of the total
number of Warrant Shares then underlying this Warrant.

 

(b)                                 Lost, Stolen or Mutilated Warrant.  Upon
receipt by the Company of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant (as to which a written
certification and the indemnification contemplated below shall suffice as such
evidence), and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary and
reasonable form and, in the case of mutilation, upon surrender and cancellation
of this Warrant, the Company shall execute and deliver to the Holder a new
Warrant (in accordance with Section 6(d)) representing the right to purchase the
Warrant Shares then underlying this Warrant.

 

(c)                                  Exchangeable for Multiple Warrants.  This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Warrant or Warrants (in accordance
with Section 6(d)) representing in the aggregate the right to purchase

 

13

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the number of Warrant Shares then underlying this Warrant, and each such new
Warrant will represent the right to purchase such portion of such Warrant Shares
as is designated by the Holder at the time of such surrender; provided, however,
no warrants for fractional shares of Common Stock shall be given.

 

(d)                                 Issuance of New Warrants.  Whenever the
Company is required to issue a new Warrant pursuant to the terms of this
Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii)
shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a
new Warrant being issued pursuant to Section 6(a) or Section 6(c), the Warrant
Shares designated by the Holder which, when added to the number of shares of
Common Stock underlying the other new Warrants issued in connection with such
issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such
new Warrant which is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.

 

7.                                      NOTICES.  Whenever notice is required to
be given under this Warrant, unless otherwise provided herein, such notice shall
be given in accordance with the Securities Purchase Agreement. The Company shall
provide the Holder with prompt written notice of all actions taken pursuant to
this Warrant, including in reasonable detail a description of such action and
the reason therefor. Without limiting the generality of the foregoing, the
Company will give written notice to the Holder as soon as practicable upon each
adjustment of the Exercise Price and the number of Warrant Shares, setting forth
in reasonable detail, and certifying, the calculation of such adjustment(s). If
the Company (i) declares a dividend or any other distribution of cash,
securities or other property in respect of its Common Stock (other than a
dividend payable solely in shares of Common Stock) or (ii) authorizes the
voluntary dissolution, liquidation or winding up of the affairs of the Company,
then the Company shall deliver to each Holder a notice describing the material
terms and conditions of such dividend, distribution or transaction.
Notwithstanding anything to the contrary in this Section 7, the failure to
deliver any notice under this Section 7 or any defect therein shall not affect
the validity of the corporate action required to be described in such notice.
Until the exercise of its, his or her Warrant or any portion of such Warrant, a
Holder shall not have nor exercise any rights by virtue of ownership of a
Warrant as a shareholder of the Company (including without limitation the right
to notification of shareholder meetings or the right to receive any notice or
other communication concerning the business and affairs of the Company other
than as provided in this Section 7.

 

8.                                      AMENDMENT AND WAIVER.  This Warrant may
be amended, and any provision waived, only by the written consent of the
Purchasers (as defined in the Securities Purchase Agreement) holding a
majority-in-interest of the Warrants issued pursuant to the Securities Purchase
Agreement and the Company.  Any amendment or waiver so approved shall be binding
on Holder.

 

9.                                      SEVERABILITY.  If any provision of this
Warrant is prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision that would
otherwise be prohibited, invalid or unenforceable shall be deemed amended to
apply to the broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect the validity
of the remaining provisions of this Warrant so long

 

14

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as this Warrant as so modified continues to express, without material change,
the original intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).

 

10.                               GOVERNING LAW.  This Warrant shall be governed
by and construed under the laws of the State of Colorado as applied to
agreements among Colorado residents, made and to be performed entirely within
the State of Colorado, without giving effect to conflicts of laws principles.

 

11.                               CONSTRUCTION; HEADINGS.  This Warrant shall be
deemed to be jointly drafted by the Company and the Holder and shall not be
construed against any Person as the drafter hereof. The headings of this Warrant
are for convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant. Terms used in this Warrant but defined in the
other Transaction Documents shall have the meanings ascribed to such terms on
the Closing Date (as defined in the Securities Purchase Agreement) in such other
Transaction Documents unless otherwise consented to in writing by the Holder.

 

12.                               TRANSFER.  Subject to compliance with the
terms and conditions of this Section 12 and any other agreements to which the
Holder is a party, this Warrant is transferable, in whole or in part, without
charge to the Holder (except for transfer taxes), upon surrender of this Warrant
properly endorsed or accompanied by written instructions of transfer. With
respect to any offer, sale or other disposition of this Warrant, the Holder
agrees to give written notice to the Company prior thereto, describing briefly
the manner thereof, together with a written opinion of the Holder’s counsel, or
other evidence, if requested by the Company, to the effect that such offer, sale
or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state securities law then in
effect) of this Warrant and indicating whether or not under the Act certificates
for this Warrant to be sold or otherwise disposed of require any restrictive
legend as to applicable restrictions on transferability in order to ensure
compliance with such law. Upon receiving such written notice and reasonably
satisfactory opinion or other evidence, if so requested, the Company, as
promptly as practicable, shall notify the Holder that the Holder may sell or
otherwise dispose of this Warrant, all in accordance with the terms of the
notice delivered to the Company. If a determination has been made pursuant to
this Section 12 that the opinion of counsel for the Holder or other evidence is
not reasonably satisfactory to the Company, the Company shall so notify the
Holder promptly with details thereof after such determination has been made.
Each certificate representing this Warrant transferred in accordance with this
Section 12 shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with such laws, unless in the
aforesaid opinion of counsel for the Holder, such legend is not required in
order to ensure compliance with such laws. The Company may issue stop transfer
instructions to its transfer agent in connection with such restrictions.

 

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13.                               CERTAIN DEFINITIONS.  Defined terms used but
not otherwise defined herein shall have the meaning ascribed to such terms in
the Securities Purchase Agreement.  For purposes of this Warrant, the following
terms shall have the following meanings:

 

(a)                                 “Common Stock” means (i) the Company’s
shares of common stock and (ii) any capital stock into which such common stock
shall have been changed or any share capital resulting from a reclassification
of such common stock.

 

(b)                                 “Exchange Act” means the Securities Exchange
Act of 1934, as amended.

 

(c)                                  “Expiration Date” means the date that is
the fifth (5th) anniversary of the Issuance Date.

 

(d)                                 “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity or a government or any department
or agency thereof.

 

(e)                                  “Registration Rights Agreement” has the
meaning set forth in the Securities Purchase Agreement”.

 

(f)                                   “Registration Statement” has the meaning
set forth in the Registration Rights Agreement.

 

 [The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, the Company and Holder have caused this Warrant to Purchase
Common Stock to be duly executed as of the Issuance Date set out above.

 

 

 

Company:

 

 

 

ENCISION, INC.

 

 

 

 

 

 

 

By:

/s/ Patrick Pace

 

Name:

Patrick Pace, MD

 

Title:

Executive Chairman

 

SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK

 

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IN WITNESS WHEREOF, the Company and Holder have caused this Warrant to Purchase
Common Stock to be duly executed as of the Issuance Date set out above.

 

 

 

Holder:

 

 

 

 

 

SIGNATURE PAGE TO WARRANT TO PURCHASE COMMON STOCK

 

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EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK

 

ENCISION, INC.

 

The undersigned holder hereby exercises the right to purchase of the shares of
Common Stock (“Warrant Shares”) of Encision, Inc., a Colorado corporation (the
“Company”), evidenced by Warrant to Purchase Common Stock No. [    ] (the
“Warrant”). Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.

 

1.  Form of Exercise Price.  The Holder intends that payment of the Exercise
Price shall be made as with respect to                    Warrant Shares;

 

2.  Payment of Exercise Price.  [Check one]

 

[    ] The Holder shall pay the Exercise Price in the sum of $[      ] to the
Company in accordance with the terms of the Warrant.

 

[    ] The Holder is exercising this Warrant on a “net exercise” basis pursuant
to Section 1(b) of the Warrant.

 

3.  Delivery of Warrant Shares.  The Company shall deliver to Holder, or its
designee or agent as specified below, shares of Common Stock in respect of the
exercise contemplated hereby. Delivery shall be made to Holder, or for its
benefit, to the following address:

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

Name of Registered Holder

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

Account Number:

 

 

 

(if electronic book entry transfer)

 

 

 

 

 

 

 

Transaction Code Number:

 

 

 

(if electronic book entry transfer)

 

 

 

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EXHIBIT C

 

REGISTRATION RIGHTS AGREEMENT

 

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