Exhibit 10.1

 

 

 

 

 

ENERPULSE TECHNOLOGIES, INC. WARRANT AGENCY AGREEMENT

 

WARRANT AGENCY AGREEMENT (this “Warrant Agreement”) made as of May 16, 2014 (the
“Issuance Date”), between Enerpulse Technologies, Inc., a Nevada corporation,
with offices at 2451 Alamo Ave SE, Albuquerque, New Mexico, 87106 (“Company”),
and Securities Transfer Corporation, with offices at 2591 Dallas Parkway, Suite
102, Frisco, TX 75034 (“Warrant Agent”).

 

WHEREAS, the Company is engaged in a public offering (the “Offering”) of Common
Stock and Warrants and, in connection therewith, has determined to issue and
deliver up to 5,000,000 Warrants (the “Warrants”) to the public investors, with
each such Warrant evidencing the right of the holder thereof to purchase one and
one-half share of common stock, par value $0.001 per share, of the Company's
Common Stock (the “Common Stock”) for $0.96, subject to adjustment as described
herein; and

 

WHEREAS, the Company has filed with the Securities and Exchange Commission a
Registration Statement, No. 333-191471 on Form S-1 (as the same may be amended
from time to time, the “Registration Statement”) for the registration, under the
Securities Act of 1933, as amended (the “Act”) of, among other securities, the
Warrants and the Common Stock issuable upon exercise of the Warrants (the
“Warrant Shares”), and such Registration Statement was declared effective on May
13, 2014; and

 

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company,
and the Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer, exchange and exercise of the Warrants; and

 

WHEREAS, the Company desires to provide for the form and provisions of the
Warrants, the terms upon which they shall be issued and exercised, and the
respective rights, limitation of rights, and immunities of the Company, the
Warrant Agent, and the holders of the Warrants; and

 

WHEREAS, all acts and things have been done and performed which are necessary to
make the Warrants, when executed on behalf of the Company and countersigned by
or on behalf of the Warrant Agent, as provided herein, the valid, binding and
legal obligations of the Company, and to authorize the execution and delivery of
this Warrant Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:

 

1.          Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company for the Warrants, and the Warrant
Agent hereby accepts such appointment and agrees to perform the same in
accordance with the terms and conditions set forth in this Warrant Agreement.

 

2.           Warrants.

 

2.1          Form of Warrant. Each Warrant shall be issued in registered form
only, shall be in substantially the form of Exhibit A hereto, the provisions of
which are incorporated herein, and shall be signed by, or bear the facsimile
signature of, the Chief Executive Officer, President, Chief Financial Officer or
Treasurer, Secretary or Assistant Secretary of the Company and shall bear a
facsimile of the Company’s seal. In the event the person whose facsimile
signature has been placed upon any Warrant shall have ceased to serve in the
capacity in which such person signed the Warrant before such Warrant is issued,
it may be issued with the same effect as if he or she had not ceased to be such
at the date of issuance. All of the Warrants shall initially be represented by
one or more book-entry certificates (each a “Book-Entry Warrant Certificate”).

 

2.2.         Effect of Countersignature. Unless and until countersigned by the
Warrant Agent pursuant to this Warrant Agreement, a Warrant shall be invalid and
of no effect and may not be exercised by the holder thereof.

 

1

 

2.3.         Registration.

 

2.3.1.          Warrant Register. The Warrant Agent shall maintain books
(“Warrant Register”), for the registration of original issuance and the
registration of transfer of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants in the names
of the respective holders thereof in such denominations and otherwise in
accordance with instructions delivered to the Warrant Agent by the Company. To
the extent the Warrants are DTC eligible as of the Issuance Date, all of the
Warrants shall be represented by one or more Book-Entry Warrant Certificates
deposited with the Depository Trust Company (the “Depository”) and registered in
the name of Cede & Co., a nominee of the Depository. Ownership of beneficial
interests in the Book-Entry Warrant Certificates shall be shown on, and the
transfer of such ownership shall be effected through, records maintained (i) by
the Depository or its nominee for each Book-Entry Warrant Certificate; (ii) by
institutions that have accounts with the Depository (such institution, with
respect to a Warrant in its account, a “Participant”); or (iii) directly on the
book-entry records of the Warrant Agent with respect only to owners of
beneficial interests that represent such direct registration.

 

If the Warrants are not DTC Eligible as of the Issuance Date or the Depository
subsequently ceases to make its book-entry settlement system available for the
Warrants, the Company may instruct the Warrant Agent regarding making other
arrangements for book-entry settlement within ten (10) days after the Depository
ceases to make its book-entry settlement available. In the event that the
Company does not make alternative arrangements for book-entry settlement within
ten (10) days or the Warrants are not eligible for, or it is no longer necessary
to have the Warrants available in, book-entry form, the Warrant Agent shall
provide written instructions to the Depository to deliver to the Warrant Agent
for cancellation each Book-Entry Warrant Certificate, and the Company shall
instruct the Warrant Agent to deliver to the Depository definitive Warrant
Certificates in physical form evidencing such Warrants. Such definitive Warrant
Certificates shall be in substantially the form annexed hereto as Exhibit A.

 

2.3.2.          Beneficial Owner; Registered Holder. The term “beneficial owner”
shall mean any person in whose name ownership of a beneficial interest in the
Warrants evidenced by a Book-Entry Warrant Certificate is recorded in the
records maintained by the Depository or its nominee. Prior to due presentment
for registration of transfer of any Warrant, the Company and the Warrant Agent
may deem and treat the person in whose name such Warrant shall be registered
upon the Warrant Register (“registered holder”), as the absolute owner of such
Warrant and of each Warrant represented thereby (notwithstanding any notation of
ownership or other writing on the Warrant Certificate made by anyone other than
the Company or the Warrant Agent), for the purpose of any exercise thereof, and
for all other purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.

 

2.4           Uncertificated Warrants. Notwithstanding the foregoing and
anything else herein to the contrary, the Warrants may be issued in
uncertificated form.

 

3.           Terms and Exercise of Warrants.

 

3.1.         Exercise Price. Each Warrant shall, when countersigned by the
Warrant Agent, entitle the registered holder thereof, subject to the provisions
of such Warrant and of this Warrant Agreement, to purchase from the Company the
number of shares of Common Stock stated therein, at the price of $0.96 per one
and one-half share, subject to the subsequent adjustments provided in Section 4
hereof. The term “Exercise Price” as used in this Warrant Agreement refers to
the price per one and one-half share at which Common Stock may be issued at the
time a Warrant is exercised.

 

3.2.         Duration of Warrants. A Warrant may be exercised only during the
period (“Exercise Period”) commencing on the Issuance Date and terminating at
5:00 P.M., New York City time on May 21, 2019 (“Expiration Date”). Each Warrant
not exercised on or before the Expiration Date shall become void, and all rights
thereunder and all rights in respect thereof under this Warrant Agreement shall
cease at the close of business on the Expiration Date.

 

3.3.         Exercise of Warrants.

 

3.3.1.          Exercise and Payment. A registered holder may exercise a Warrant
by delivering, not later than 5:00 P.M., New York time, on any business day
during the Exercise Period (the “Exercise Date”) to the Warrant Agent at its
corporate trust department (i) the Warrant Certificate evidencing the Warrants
to be exercised, or, in the case of a Book-Entry Warrant Certificate, the
Warrants to be exercised (the “Book-Entry Warrants”) shown on the records of the
Depository to an account of the Warrant Agent at the Depository designated for
such purpose in writing by the Warrant Agent to the Depository from time to
time, (ii) an election to purchase the Warrant Shares underlying the Warrants to
be exercised (“Election to Purchase”), properly completed and executed by the
registered holder on the reverse of the Warrant Certificate or, in the case of a
Book-Entry Warrant Certificate, properly delivered by the Participant in
accordance with the Depository’s procedures, and (iii) the Exercise Price for
each Warrant to be exercised in lawful money of the United States of America by
certified or official bank check or by bank wire transfer in immediately
available funds.

 

2

 

If any of (A) the Warrant Certificate or the Book-Entry Warrants, (B) the
Election to Purchase, or (C) the Exercise Price therefor, is received by the
Warrant Agent after 5:00 P.M., New York time, on the specified Exercise Date,
the Warrants will be deemed to be received and exercised on the business day
next succeeding the Exercise Date. If the date specified as the Exercise Date is
not a business day, the Warrants will be deemed to be received and exercised on
the next succeeding day that is a business day. If the Warrants are received or
deemed to be received after the Expiration Date, the exercise thereof will be
null and void and any funds delivered to the Warrant Agent will be returned to
the registered holder or Participant, as the case may be, as soon as
practicable. In no event will interest accrue on funds deposited with the
Warrant Agent in respect of an exercise or attempted exercise of Warrants. The
validity of any exercise of Warrants will be determined by the Company in its
sole discretion and such determination will be final and binding upon the
registered holder or Participant, as applicable, and the Warrant Agent. Neither
the Company nor the Warrant Agent shall have any obligation to inform a
registered holder or the Participant, as applicable, of the invalidity of any
exercise of Warrants.

 

The Warrant Agent shall deposit all funds received by it in payment of the
Exercise Price in the account of the Company maintained with the Warrant Agent
for such purpose and shall advise the Company via email or telephone at the end
of each day on which funds for the exercise of the Warrants are received of the
amount so deposited to its account. The Warrant Agent shall promptly confirm by
email or telephone advice to the Company.

 

3.3.2.          Issuance of Certificates. The Warrant Agent shall, by 3:00 P.M.,
Texas Time on the business day following the Exercise Date of any Warrant,
advise the Company or the transfer agent and registrar in respect of (a) the
Warrant Shares issuable upon such exercise as to the number of Warrants
exercised in accordance with the terms and conditions of this Warrant Agreement,
(b) the instructions of each registered holder or Participant, as the case may
be, with respect to delivery of the Warrant Shares issuable upon such exercise,
and the delivery of definitive Warrant Certificates, as appropriate, evidencing
the balance, if any, of the Warrants remaining after such exercise, (c) in case
of a Book-Entry Warrant Certificate, the notation that shall be made to the
records maintained by the Depository, its nominee for each Book-Entry Warrant
Certificate, or a Participant, as appropriate, evidencing the balance, if any,
of the Warrants remaining after such exercise and (d) such other information as
the Company or such transfer agent and registrar shall reasonably require.

 

The Company shall, by 5:00 P.M., New York time, on the third business day next
succeeding the Exercise Date of any Warrant and the clearance of the funds in
payment of the Exercise Price, execute, issue and deliver to the Warrant Agent,
the Warrant Shares to which such registered holder or Participant, as the case
may be, is entitled, in fully registered form, registered in such name or names
as may be directed by such registered holder or the Participant, as the case may
be. Upon receipt of such Warrant Shares, the Warrant Agent shall, by 5:00 P.M.,
New York time, on the third Business Day next succeeding such Exercise Date,
transmit such Warrant Shares to or upon the order of the registered holder or
Participant, as the case may be.

 

In lieu of delivering physical certificates representing the Warrant Shares
issuable upon exercise, provided the Company’s transfer agent is participating
in the Depository’s Fast Automated Securities Transfer program, the Company
shall use its reasonable best efforts to cause its transfer agent to
electronically transmit the Warrant Shares issuable upon exercise to the
Depository by crediting the account of the Depository or of the Participant
through its Deposit Withdrawal Agent Commission system. The time periods for
delivery described in the immediately preceding paragraph shall apply to the
electronic transmittals described herein.

 

3

 

3.3.3.          Valid Issuance. All shares of Common Stock issued upon the
proper exercise of a Warrant in conformity with this Warrant Agreement shall be
validly issued, fully paid and nonassessable.

 

3.3.4.          No Fractional Exercise. Warrants may be only be exercised such
that a whole number of Warrant Shares is issuable upon exercise; provided,
however, that a holder may request the exercise of all of its remaining Warrants
even if the aggregate number of Warrant Shares issuable upon such exercise as
calculated hereunder includes a fractional Warrant Share. No fractional Warrant
Shares are to be issued upon the exercise of Warrants, but rather the number of
Warrant Shares to be issued shall be rounded up or down, as applicable, to the
nearest whole number. If fewer than all of the Warrants evidenced by a Warrant
Certificate are exercised, a new Warrant Certificate for the number of
unexercised Warrants remaining shall be executed by the Company and
countersigned by the Warrant Agent as provided in Section 2 of this Warrant
Agreement, and delivered to the holder of this Warrant Certificate at the
address specified on the books of the Warrant Agent or as otherwise specified by
such registered holder. If fewer than all the Warrants evidenced by a Book-Entry
Warrant Certificate are exercised, a notation shall be made to the records
maintained by the Depository, its nominee for each Book-Entry Warrant
Certificate, or a Participant, as appropriate, evidencing the balance of the
Warrants remaining after such exercise.

 

3.3.5           No Transfer Taxes. The Company shall not be required to pay any
stamp or other tax or governmental charge required to be paid in connection with
any transfer involved in the issue of the Warrant Shares upon the exercise of
Warrants; and in the event that any such transfer is involved, the Company shall
not be required to issue or deliver any Warrant Shares until such tax or other
charge shall have been paid or it has been established to the Company’s
satisfaction that no such tax or other charge is due.

 

3.3.6           Date of Issuance. Each person in whose name any such certificate
for shares of Common Stock is issued shall for all purposes be deemed to have
become the holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of such shares at the close of
business on the next succeeding date on which the stock transfer books are open.

 

3.3.7           Cashless Exercise Under Certain Circumstances.

 

(i)          The Company shall provide to the registered holder prompt written
notice of any time that the Company is unable to issue the Warrant Shares via
DTC transfer or otherwise (without restrictive legend), because (A) the
Commission has issued a stop order with respect to the Registration Statement,
(B) the Commission otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, (C) the Company has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or (D) otherwise (each a “Restrictive Legend
Event”). To the extent that a Restrictive Legend Event occurs after the
registered holder has exercised a Warrant in accordance with the terms of the
Warrants but prior to the delivery of the Warrant Shares, the Company shall, at
the election of the registered holder to be given within five (5) days of
receipt of notice of the Restrictive Legend Event, either (A) rescind the
previously submitted Election to Purchase and the Company shall return all
consideration paid by registered holder for such shares upon such rescission or
(B) treat the attempted exercise as a cashless exercise as described in the next
paragraph and refund the cash portion of the exercise price to the registered
holder.

 

(ii)         If a Restrictive Legend Event has occurred and no exemption from
the registration requirements is available, the Warrant shall only be
exercisable on a cashless basis. Notwithstanding anything herein to the
contrary, the Company shall not be required to make any cash payments or net
cash settlement to the registered holder in lieu of issuance of the Warrant
Shares. Upon a “cashless exercise”, the Holder shall be entitled to receive a
certificate (or book entry) for the number of Warrant Shares equal to the
quotient obtained by dividing [(A-B) (X)] by (A), where:

 

  (A) = the VWAP on the Business Day immediately preceding the date on which the
registered holder elects to exercise the Warrant by means of a “cashless
exercise,” as set forth in the applicable Election to Purchase;

 

  (B) = the Exercise Price of the Warrant, as it may have been adjusted
hereunder; and

 

  (X) = the number of Warrant Shares that would be issuable upon exercise of the
Warrant in accordance with the terms of the Warrant if such exercise were by
means of a cash exercise rather than a cashless exercise.

 

4

 

Upon receipt of an Election to Purchase for a cashless exercise, the Warrant
Agent will promptly deliver a email copy of the Election to Purchase to the
Company to confirm the number of Warrant Shares issuable in connection with the
cashless exercise. The Company shall calculate and transmit to the Warrant
Agent, and the Warrant Agent shall have no obligation under this section to
calculate, the number of Warrant Shares issuable in connection with the cashless
exercise.

 

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on NYSE
AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market or the New York Stock Exchange (each, a “Trading Market”), the
daily volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board or OTCQX, as applicable, (c) if the
Common Stock is not then listed or quoted for trading on the OTC Bulletin Board
or OTCQX and if prices for the Common Stock are then reported in the “Pink
Sheets” published by OTC Markets, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the holders of a majority in interest of the
Warrants then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

 

3.3.8           Disputes. In the case of a dispute as to the determination of
the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the registered holder the number of Warrant
Shares that are not disputed.

 

4.          Adjustments.

 

4.1        Adjustment upon Subdivision or Combination of Common Stock. If the
Company at any time after the Issuance Date subdivides (by any stock split,
stock dividend, recapitalization, reorganization, scheme, arrangement or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced and the number of Warrant Shares will be
proportionately increased. If the Company at any time after the Issuance Date
combines (by any stock split, stock dividend, recapitalization, reorganization,
scheme, arrangement or otherwise) its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of Warrant Shares
will be proportionately decreased. Any adjustment under this Section 4.1 shall
become effective at the close of business on the date the subdivision or
combination becomes effective. The Company shall promptly notify Warrant Agent
of any such adjustment and give specific instructions to Warrant Agent with
respect to any adjustments to the warrant register.

 

4.2         Adjustment Upon Issuance of Shares of Common Stock. If the Company
at any time after the Issuance Date issues or sells any shares of Common Stock
or securities convertible or exercisable into (including the issuance or sale of
shares of Common Stock owned or held by or for the account of the Company, but
excluding any Excluded Securities issued or sold or deemed to have been issued
or sold) for a consideration per share (the “New Issuance Price”) less than a
price equal to the Exercise Price in effect immediately prior to such issue or
sale (such Exercise Price then in effect is referred to as the “Applicable
Price”) (the foregoing a “Dilutive Issuance”), then immediately after such
Dilutive Issuance, the Exercise Price then in effect shall be reduced to an
amount equal to the New Issuance Price. For purposes of this Warrant Agreement,
“Excluded Securities” shall mean (a) shares of Common Stock or options issuable
to employees, officers, directors, consultants or advisors of the Company
pursuant to any stock or option plan duly adopted for such purpose, by the board
of directors of the Company, (b) shares of Common Stock issued in the Offering,
and (c) securities issuable upon the exercise or exchange of or conversion of
any securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the Issuance Date, provided that such
securities have not been amended since the Issuance Date to increase the number
of such securities or to decrease the exercise price, exchange price or
conversion price of such securities. For the avoidance of doubt, no adjustment
to the Exercise Price under this Section 4.2 shall be accompanied by any
adjustment in the number of Warrant Shares to be delivered upon exercise of any
Warrant.

 

5

 

4.3 Adjustment for Other Distributions. In the event the Company shall fix a
record date for the making of a dividend or distribution to all holders of
Common Stock of any evidences of indebtedness or assets or subscription rights
or warrants (excluding those referred to in Section 4.1 or other dividends paid
out of retained earnings), then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the VWAP determined
as of the record date mentioned above, and of which the numerator shall be such
VWAP on such record date less the then per share fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith. In either case the
adjustments shall be described in a statement provided to the registered holder
of the portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.

 

4.4. Reclassification, Consolidation, Purchase, Combination, Sale or Conveyance.
If, at any time while the Warrants are outstanding, (i) the Company, directly or
indirectly, in one or more related transactions effects any merger or
consolidation of the Company with or into another person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (iii) any, direct or indirect, purchase
offer, tender offer or exchange offer (whether by the Company or another person)
is completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and has
been accepted by the holders of 50% or more of the outstanding Common Stock,
(iv) the Company, directly or indirectly, in one or more related transactions
effects any reclassification, reorganization or recapitalization of the Common
Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property,
(v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another person whereby such other person acquires
more than 50% of the outstanding shares of Common Stock (not including any
shares of Common Stock held by the other person or other persons making or party
to, or associated or affiliated with the other persons making or party to, such
stock or share purchase agreement or other business combination) (each a
“Fundamental Transaction”), then, upon any subsequent exercise of a Warrant, the
registered holder shall have the right to receive, for each Warrant Share that
would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction, the number of shares of Common Stock, if any,
of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the “Alternate
Consideration”) receivable as a result of such Fundamental Transaction by a
holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction. For purposes of
any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the registered holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. The Company shall cause any successor entity in a
Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) and for which shareholders received any equity securities of the
Successor Entity, to assume in writing all of the obligations of the Company
under this Warrant Agreement in accordance with the provisions of this Section
4.4 pursuant to written agreements and shall, upon the written request of the
registered holder of a Warrant, deliver to the registered holder in exchange for
this Warrant created by this Warrant Agreement a security of the Successor
Entity evidenced by a written instrument substantially similar in form and
substance to the Warrant which is exercisable for a corresponding number of
shares of capital stock of such Successor Entity (or its parent entity), if any,
plus any Alternate Consideration, receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which the
Warrant is exercisable immediately prior to such Fundamental Transaction, and
with an exercise price which applies the exercise price hereunder to such shares
of capital stock, if any, plus any Alternate Consideration (but taking into
account the relative value of the shares of Common Stock pursuant to such
Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for the purpose
of protecting the economic value of such Warrant immediately prior to the
consummation of such Fundamental Transaction). Upon the occurrence of any such
Fundamental Transaction the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant Agreement and the Warrant referring
to the “Company” shall refer instead to the Successor Entity), and may exercise
every right and power of the Company and shall assume all of the obligations of
the Company under this Warrant Agreement and the Warrant with the same effect as
if such Successor Entity had been named as the Company herein.

 

6

 

The Company shall instruct the Warrant Agent to mail by first class mail,
postage prepaid, to each registered holder of a Warrant, written notice of the
execution of any such amendment, supplement or agreement. Any supplemented or
amended agreement entered into by the successor corporation or transferee shall
provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in Section 4. The Warrant Agent
shall be under no responsibility to determine the correctness of any provisions
contained in such agreement relating either to the kind or amount of securities
or other property receivable upon exercise of warrants or with respect to the
method employed and provided therein for any adjustments and shall be entitled
to rely upon the provisions contained in any such agreement. The provisions of
this Section 4.4 shall similarly apply to successive reclassifications, changes,
consolidations, mergers, sales and conveyances of the kind described above.

 

4.5           Other Events. If any event occurs of the type contemplated by the
provisions of Section 4.1, 4.2, 4.3 or 4.4 but not expressly provided for by
such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features
to all holders of Common Stock for no consideration), then the Company's Board
of Directors will in good faith make an adjustment in the Exercise Price and the
number of Warrant Shares so as to protect the rights of the registered holder.

 

4.6.          Notices of Changes in Warrant. Upon every adjustment of the
Exercise Price or the number of shares issuable upon exercise of a Warrant, the
Company shall give written notice thereof to the Warrant Agent, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease, if any, in the number of shares purchasable at such price upon the
exercise of a Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Upon the
occurrence of any event specified in Sections 4.1, 4.2 or 4.3, then, in any such
event, the Company shall give written notice to each registered holder, at the
last address set forth for such holder in the warrant register, of the record
date or the effective date of the event. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such event.

 

4.7.          No Fractional Shares. If, by reason of any adjustment made
pursuant to this Section 4, the holder of any Warrant would be entitled, upon
the exercise of such Warrant, to receive a fractional interest in a share, the
Company shall, upon such exercise, round up or down, as applicable, to the
nearest whole number the number of the shares of Common Stock to be issued to
the registered holder.

 

4.8.          Form of Warrant. The form of Warrant need not be changed because
of any adjustment pursuant to this Section 4, and Warrants issued after such
adjustment may state the same Exercise Price and the same number of shares as is
stated in the Warrants initially issued pursuant to this Warrant Agreement.
However, the Company may at any time in its sole discretion make any change in
the form of Warrant that the Company may deem appropriate and that does not
affect the substance thereof, and any Warrant thereafter issued or
countersigned, whether in exchange or substitution for an outstanding Warrant or
otherwise, may be in the form as so changed.

 

5.           Transfer and Exchange of Warrants.

 

5.1.          Registration of Transfer. The Warrant Agent shall register the
transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, properly endorsed with
signatures properly guaranteed and accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant representing an equal aggregate
number of Warrants shall be issued and the old Warrant shall be cancelled by the
Warrant Agent. The Warrants so cancelled shall be delivered by the Warrant Agent
to the Company from time to time upon request.

 

7

 

5.2.          Procedure for Surrender of Warrants. Warrants may be surrendered
to the Warrant Agent, together with a written request for exchange or transfer
reasonably acceptable to Warrant Agent, duly executed by the registered holder
thereof, or by a duly authorized attorney, and thereupon the Warrant Agent shall
issue in exchange therefor one or more new Warrants as requested by the
registered holder of the Warrants so surrendered, representing an equal
aggregate number of Warrants; provided, however, that except as otherwise
provided herein or in any Book-Entry Warrant Certificate, each Book-Entry
Warrant Certificate may be transferred only in whole and only to the Depository,
to another nominee of the Depository, to a successor depository, or to a nominee
of a successor depository; provided further, however, that in the event that a
Warrant surrendered for transfer bears a restrictive legend, the Warrant Agent
shall not cancel such Warrant and issue new Warrants in exchange therefor until
the Warrant Agent has received an opinion of counsel for the Company stating
that such transfer may be made and indicating whether the new Warrants must also
bear a restrictive legend. Upon any such registration of transfer, the Company
shall execute, and the Warrant Agent shall countersign and deliver, in the name
of the designated transferee a new Warrant Certificate or Warrant Certificates
of any authorized denomination evidencing in the aggregate a like number of
unexercised Warrants.

 

5.3.          Fractional Warrants. The Warrant Agent shall not be required to
effect any registration of transfer or exchange which will result in the
issuance of a Warrant Certificate for a fraction of a Warrant.

 

5.4.          Service Charges. A transfer fee service charge shall be made for
any exchange or registration of transfer of Warrants.

 

5.5.          Warrant Execution and Countersignature. The Warrant Agent is
hereby authorized to countersign and to deliver, in accordance with the terms of
this Warrant Agreement, the Warrants required to be issued pursuant to the
provisions of this Section 5, and the Company, whenever required by the Warrant
Agent, will supply the Warrant Agent with Warrants duly executed on behalf of
the Company for such purpose.

 

6.              Limitations on Exercise. Neither the Warrant Agent nor the
Company shall effect any exercise of any Warrant, and a registered holder shall
not have the right to exercise any portion of a Warrant, to the extent that
after giving effect to the issuance of shares of Common Stock after exercise as
set forth on the applicable Election to Purchase, the registered holder
(together with such registered holder’s Affiliates (as defined in Rule 405 under
The Securities Act of 1933), and any other persons acting as a group together
with the registered holder or any of the registered holder’s Affiliates), would
beneficially own in excess of 4.99% of the Company’s Common Stock. For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially
owned by the registered holder and its Affiliates shall include the number of
shares of Common Stock issuable upon exercise of the Warrant with respect to
which such determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon exercise of the remaining,
nonexercised portion of any Warrant beneficially owned by the registered holder
or any of its Affiliates. Except as set forth in the preceding sentence, for
purposes of this Section 6, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder, it being acknowledged by the registered holder that
neither the Warrant Agent nor the Company is representing to the registered
holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and the registered holder is solely responsible for any schedules required
to be filed in accordance therewith. To the extent that the limitation contained
in this Section 6 applies, the determination of whether a Warrant is exercisable
(in relation to other securities owned by the registered holder together with
any Affiliates) and of which portion of a Warrant is exercisable shall be in the
sole discretion of the registered holder, and the submission of an Election to
Purchase shall be deemed to be the registered holder’s determination of whether
such Warrant is exercisable (in relation to other securities owned by the
registered holder together with any Affiliates) and of which portion of a
Warrant is exercisable, and neither the Warrant Agent nor the Company shall have
any obligation to verify or confirm the accuracy of such determination and
neither of them shall have any liability for any error made by the registered
holder. In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder. For purposes of this
Section 6, in determining the number of outstanding shares of Common Stock, a
registered holder may rely on the number of outstanding shares of Common Stock
as reflected in (A) the Company’s most recent periodic or annual report filed
with the Securities and Exchange Commission, as the case may be, (B) a more
recent public announcement by the Company or (C) a more recent written notice by
the Company or the Company’s transfer agent setting forth the number of shares
of Common Stock outstanding. The provisions of this Section 6 shall be construed
and implemented in a manner otherwise than in strict conformity with the terms
of this Section 6 to correct this subsection (or any portion hereof) which may
be defective or inconsistent with the intended beneficial ownership limitation
herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of a Warrant.

 

8

 

7.           Other Provisions Relating to Rights of Holders of Warrants.

 

7.1.          No Rights as Stockholder. Except as otherwise specifically
provided herein, a registered holder, solely in its capacity as a holder of a
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 Agreement be construed to confer upon a registered
holder, solely in its capacity as the registered holder of a 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 registered holder of the Warrant Shares
which it is then entitled to receive upon the due exercise of a Warrant. A
Warrant does not entitle the registered holder thereof to any of the rights of a
stockholder.

 

7.2.          Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is
lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on
such terms as to indemnity (including obtaining an open penalty bond protecting
the Warrant Agent) or otherwise as they may in their discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination, tenor, and date as the Warrant so lost,
stolen, mutilated, or destroyed. Any such new Warrant shall constitute a
substitute contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable
by anyone.

 

7.3.          Reservation of Common Stock. The Company shall at all times
reserve and keep available a number of its authorized but unissued shares of
Common Stock that will be sufficient to permit the exercise in full of all
outstanding Warrants issued pursuant to this Warrant Agreement.

 

8.           Concerning the Warrant Agent and Other Matters.

 

8.1           Concerning the Warrant Agent. The Warrant Agent:

 

a)           shall have no duties or obligations other than those set forth
herein and no duties or obligations shall be inferred or implied;

 

b)           may rely on and shall be held harmless by the Company in acting
upon any certificate, statement, instrument, opinion, notice, letter, facsimile
transmission, telegram or other document, or any security delivered to it, and
reasonably believed by it to be genuine and to have been made or signed by the
proper party or parties;

 

c)           may rely on and shall be held harmless by the Company in acting
upon written or oral instructions or statements from the Company with respect to
any matter relating to its acting as Warrant Agent;

 

d)           may consult with counsel satisfactory to it (including counsel for
the Company) and shall be held harmless by the Company in relying on the advice
or opinion of such counsel in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with such advice or opinion of
such counsel;

 

e)           solely shall make the final determination as to whether or not a
Warrant received by Warrant Agent is duly, completely and correctly executed,
and Warrant Agent shall be held harmless by the Company in respect of any action
taken, suffered or omitted by Warrant Agent hereunder in good faith and in
accordance with its determination;

 

9

 

f)            shall not be obligated to take any legal or other action hereunder
which might, in its judgment subject or expose it to any expense or liability
unless it shall have been furnished with an indemnity satisfactory to it; and

 

g)           shall not be liable or responsible for any failure of the Company
to comply with any of its obligations relating to the Registration Statement or
this Warrant Agreement, including, without limitation, obligations under
applicable regulation or law.

 

8.2           Payment of Taxes. The Company will from time to time promptly pay
all taxes and charges that may be imposed upon the Company or the Warrant Agent
in respect of the issuance or delivery of shares of Common Stock upon the
exercise of Warrants, but the Company shall not be obligated to pay any transfer
taxes in respect of the Warrants or such shares. The Warrant Agent shall not
register any transfer or issue or deliver any Warrant Certificate(s) or Warrant
Shares unless or until the persons requesting the registration or issuance shall
have paid to the Warrant Agent for the account of the Company the amount of such
tax, if any, or shall have established to the reasonable satisfaction of the
Company that such tax, if any, has been paid.

 

8.3               Resignation, Consolidation, or Merger of Warrant Agent.

 

8.3.1.       Appointment of Successor Warrant Agent. The Warrant Agent, or any
successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving sixty (60) days’
notice in writing to the Company. If the office of the Warrant Agent becomes
vacant by resignation or incapacity to act or otherwise, the Company shall
appoint in writing a successor Warrant Agent in place of the Warrant Agent. If
the Company shall fail to make such appointment within a period of 30 days after
it has been notified in writing of such resignation or incapacity by the Warrant
Agent or by the holder of the Warrant (who shall, with such notice, submit his
Warrant for inspection by the Company), then the holder of any Warrant may apply
to the Supreme Court of the State of New York for the County of New York for the
appointment of a successor Warrant Agent at the Company’s cost. Any successor
Warrant Agent (but not including the initial Warrant Agent), whether appointed
by the Company or by such court, shall be a corporation organized and existing
under the laws of the State of New York, in good standing and having its
principal office in the Borough of Manhattan, City and State of New York, and
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authority. After appointment, any
successor Warrant Agent shall be vested with all the authority, powers, rights,
immunities, duties, and obligations of its predecessor Warrant Agent with like
effect as if originally named as Warrant Agent hereunder, without any further
act or deed; but if for any reason it becomes necessary or appropriate, the
predecessor Warrant Agent shall execute and deliver, at the expense of the
Company, an instrument transferring to such successor Warrant Agent all the
authority, powers, and rights of such predecessor Warrant Agent hereunder; and
upon request of any successor Warrant Agent the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for more fully and
effectually vesting in and confirming to such successor Warrant Agent all such
authority, powers, rights, immunities, duties, and obligations.

 

8.3.2.          Notice of Successor Warrant Agent. In the event a successor
Warrant Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the transfer agent for the Common Stock not later
than the effective date of any such appointment.

 

8.3.3.          Merger or Consolidation of Warrant Agent. Any corporation into
which the Warrant Agent may be merged or with which it may be consolidated or
any corporation resulting from any merger or consolidation to which the Warrant
Agent shall be a party shall be the successor Warrant Agent under this Warrant
Agreement without any further act.

 

8.4.        Fees and Expenses of Warrant Agent.

 

8.4.1.          Remuneration. The Company agrees to pay the Warrant Agent
reasonable remuneration in an amount separately agreed to between Company and
Warrant Agent for its services as Warrant Agent hereunder and will reimburse the
Warrant Agent upon demand for all expenditures that the Warrant Agent may
reasonably incur in the execution of its duties hereunder.

 

10

 

8.4.2.          Further Assurances. The Company agrees to perform, execute,
acknowledge, and deliver or cause to be performed, executed, acknowledged, and
delivered all such further and other acts, instruments, and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
of the provisions of this Warrant Agreement.

 

8.5.        Liability of Warrant Agent.

 

8.5.1.          Reliance on Company Statement. Whenever in the performance of
its duties under this Warrant Agreement, the Warrant Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a statement signed by the
President of the Company and delivered to the Warrant Agent. The Warrant Agent
may rely upon such statement for any action taken or suffered in good faith by
it pursuant to the provisions of this Warrant Agreement.

 

8.5.2.          Indemnity. The Warrant Agent shall be liable hereunder only for
its own gross negligence, willful misconduct or bad faith. The Company agrees to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, claims, losses, damages, costs and reasonable
counsel fees, for anything done or omitted by the Warrant Agent in the execution
of this Warrant Agreement except as a result of the Warrant Agent’s gross
negligence, willful misconduct, or bad faith.

 

8.5.3.          Limitation of Liability. The Warrant Agent’s aggregate
liability, if any, during the term of this Warrant Agreement with respect to,
arising from, or arising in connection with this Warrant Agreement, or from all
services provided or omitted to be provided under this Warrant Agreement,
whether in contract, or in tort, or otherwise, is limited to, and shall not
exceed, the amounts paid or payable hereunder by the Company to Warrant Agent as
fees and charges, but not including reimbursable expenses.

 

8.5.4           Disputes. In the event any question or dispute arises with
respect to the proper interpretation of this Warrant Agreement or the Warrant
Agent’s duties hereunder or the rights of the Company or of any holder of a
Warrant, the Warrant Agent shall not be required to act and shall not be held
liable or responsible for refusing to act until the question or dispute has been
judicially settled (and the Warrant Agent may, if it deems it advisable, but
shall not be obligated to, file a suit in interpleader or for a declaratory
judgment for such purpose) by final judgment rendered by a court of competent
jurisdiction, binding on all parties interested in the matter which is no longer
subject to review or appeal, or settled by a written document in form and
substance satisfactory to the Warrant Agent and executed by the Company and each
other interested party. In addition, the Warrant Agent may require for such
purpose, but shall not be obligated to require, the execution of such written
settlement by all the Warrant holders, as applicable, and all other parties that
may have an interest in the settlement.

 

8.5.5           Exclusions. The Warrant Agent shall have no responsibility with
respect to the validity of this Warrant Agreement or with respect to the
validity or execution of any Warrant (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Warrant Agreement or in any Warrant; nor shall it be
responsible to make any adjustments required under the provisions of Section 4
hereof or responsible for the manner, method, or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such
adjustment; nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Warrant Agreement or any Warrant
or as to whether any shares of Common Stock will when issued be valid and fully
paid and nonassessable.

 

8.6.        Acceptance of Agency. The Warrant Agent hereby accepts the agency
established by this Warrant Agreement and agrees to perform the same upon the
terms and conditions herein set forth and among other things, shall account
promptly to the Company with respect to Warrants exercised and concurrently
account for, and pay to the Company, all moneys received by the Warrant Agent
for the purchase of shares of Common Stock through the exercise of Warrants.

 

11

 

9.           Miscellaneous Provisions.

 

9.1.        Successors. All the covenants and provisions of this Warrant
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns.

 

9.2.        Notices. Any notice, statement or demand authorized by this Warrant
Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant to or on the Company shall be sufficiently given when so delivered if by
hand or overnight delivery or if sent by certified mail or private courier
service within five days after deposit of such notice, postage prepaid,
addressed (until another address is filed in writing by the Company with the
Warrant Agent), as follows:

 

Enerpulse Technologies, Inc.

2451 Alamo Ave SE,
Albuquerque, New Mexico, 87106
Attn: Chief Executive Officer

 

Any notice, statement or demand authorized by this Warrant Agreement to be given
or made by the holder of any Warrant or by the Company to or on the Warrant
Agent shall be sufficiently given when so delivered if by hand or overnight
delivery or if sent by certified mail or private courier service within five
days after deposit of such notice, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company), as follows:

 

Securities Transfer Corporation

2591 Dallas Parkway
Suite 102
Frisco, TX 75034
Attn: Kevin Halter Jr.

 

with a copy in each case to: 

 

Greenberg Traurig, LLP
1201 K Street
Suite 1100
Sacramento, CA 95814
Attn: Mark C. Lee, Esq.  

 

9.3.         Applicable law. The validity, interpretation, and performance of
this Warrant Agreement and of the Warrants shall be governed in all respects by
the laws of the State of New York, without giving effect to conflicts of law
principles that would result in the application of the substantive laws of
another jurisdiction. The Company hereby agrees that any action, proceeding or
claim against it arising out of or relating in any way to this Warrant Agreement
shall be brought and enforced in the courts of the State of New York or the
United States District Court for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
The Company hereby waives any objection to such exclusive jurisdiction and that
such courts represent an inconvenience forum. Any such process or summons to be
served upon the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 9.2 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the Company
in any action, proceeding or claim.

 

9.4.         Persons Having Rights under this Warrant Agreement. Nothing in this
Warrant Agreement expressed and nothing that may be implied from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the parties hereto and the registered
holders of the Warrants and, for purposes of Sections 3.3, 9.3 and 9.8, the
Underwriter, any right, remedy, or claim under or by reason of this Warrant
Agreement or of any covenant, condition, stipulation, promise, or agreement
hereof. The Underwriters shall be deemed to be an express third-party
beneficiary of this Warrant Agreement with respect to Sections 3.3, 9.3 and 9.8
hereof. All covenants, conditions, stipulations, promises, and agreements
contained in this Warrant Agreement shall be for the sole and exclusive benefit
of the parties hereto (and the Underwriters with respect to the Sections 3.3,
9.3 and 9.8 hereof) and their successors and assigns and of the registered
holders of the Warrants.

 

12

 

9.5.         Examination of the Warrant Agreement. A copy of this Warrant
Agreement shall be available at all reasonable times at the office of the
Warrant Agent in the city of Denver, State of Colorado, for inspection by the
registered holder of any Warrant. The Warrant Agent may require any such holder
to submit his Warrant for inspection by it.

 

9.6.          Counterparts. This Warrant Agreement may be executed in any number
of original or facsimile counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.

 

9.7.          Effect of Headings. The Section headings herein are for
convenience only and are not part of this Warrant Agreement and shall not affect
the interpretation thereof.

 

9.8           Amendments. This Warrant Agreement may be amended by the parties
hereto without the consent of any registered holder for the purpose of curing
any ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Warrant Agreement as the parties may
deem necessary or desirable and that the parties deem shall not adversely affect
the interest of the registered holders. All other modifications or amendments,
including any amendment to increase the Exercise Price or shorten the Exercise
Period, shall require the written consent of the Underwriter and the registered
holders of a majority of the then outstanding Warrants.

 

9.9           Severability. This Warrant Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Warrant Agreement or of any other
term or provision hereof. Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties hereto intend that there shall be
added as a part of this Warrant Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and
enforceable.

 

9.10         Force Majeure. In the event either party is unable to perform its
obligations under the terms of this Warrant Agreement because of acts of God,
strikes, failure of carrier or utilities, equipment or transmission failure or
damage that is reasonably beyond its control, or any other cause that is
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes. Performance under this Warrant Agreement shall resume when the
affected party or parties are able to perform substantially that party’s duties.

 

9.11         Consequential Damages. Notwithstanding anything in this Warrant
Agreement to the contrary, neither party to this Warrant Agreement shall be
liable to the other party for any consequential, indirect, special or incidental
damages under any provision of this Warrant Agreement or for any consequential,
indirect, punitive, special or incidental damages arising out of any act or
failure to act hereunder even if that party has been advised of or has foreseen
the possibility of such damages.

 

13

 

 

IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the parties
hereto as of the day and year first above written.

 

  ENERPULSE TECHNOLOGIES, INC.       By:  /s/ Joseph E. Gonnella   Name:  Joseph
E. Gonnella   Title:  Chief Executive Officer       SECURITIES TRANSFER
CORPORATION       By:  /s/ Kevin Halter Jr.   Name:  Kevin Halter Jr.   Title:
 President

 

14

 

 

Exhibit A

 

[FORM OF WARRANT CERTIFICATE]

 

EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT

AGENT AS PROVIDED HEREIN.

 

Warrant Certificate Evidencing Warrants to Purchase

Common Stock, par value of $0.001 per share, as described herein.

 

ENERPULSE TECHNOLOGIES, INC.

 

No. ___________ [CUSIP_________]

 

VOID AFTER 5:00 P.M., NEW YORK TIME, ON MAY 21, 2019

 

This certifies that ________________________ or registered assigns is the
registered holder of _____________________ warrants to purchase certain
securities (each a “Warrant”). Each Warrant entitles the holder thereof, subject
to the provisions contained herein and in the Warrant Agreement (as defined
below), to purchase from Enerpulse Technologies, Inc., a Nevada corporation (the
“Company”), one and one-half shares (collectively, the “Warrant Shares”) of
Common Stock, par value $0.001 per share, of the Company (“Common Stock”), at
the Exercise Price set forth below. The price at which each one and one-half
share of Common Stock may be purchased at the time each Warrant is exercised
(the “Exercise Price”) is $0.96 initially, subject to adjustments as set forth
in the Warrant Agreement (as defined below).

 

Capitalized terms used but not defined herein shall have the meaning ascribed to
them in the Warrant Agreement.

 

Subject to the terms of the Warrant Agreement, each Warrant evidenced hereby may
be exercised in whole but not in part at any time, as specified herein, on any
Business Day (as defined below) occurring during the period (the “Exercise
Period”) commencing the date of detachability of the Warrants from the Common
Stock as set forth in Section 2.4 of the Warrant Agreement and terminating on
the earlier to occur of 5:00 P.M., New York City time, on May 21, 2019 (the
“Expiration Date”). Each Warrant remaining unexercised after 5:00 P.M., New York
City time, on the Expiration Date shall become void, and all rights of the
holder of this Warrant Certificate evidencing such Warrant shall cease.

 

The holder of the Warrants represented by this Warrant Certificate may exercise
any Warrant evidenced hereby by delivering, not later than 5:00 P.M., New York
time, on any Business Day during the Exercise Period (the “Exercise Date”) to
Securities Transfer Corporation (the “Warrant Agent”, which term includes any
successor warrant agent under the Warrant Agreement described below) at its
corporate trust department at 2591 Dallas Parkway, Suite 102, Frisco, TX 75034
(i) this Warrant Certificate or, in the case of a Book-Entry Warrant Certificate
(as defined in the Warrant Agreement), the Warrants to be exercised (the
“Book-Entry Warrants”) as shown on the records of The Depository Trust Company
(the “Depository”) to an account of the Warrant Agent at the Depository
designated for such purpose in writing by the Warrant Agent to the Depository,
(ii) an election to purchase (“Election to Purchase”), properly executed by the
holder hereof on the reverse of this Warrant Certificate or properly executed by
the institution in whose account the Warrant is recorded on the records of the
Depository (the “Participant”), and substantially in the form included on the
reverse of this Warrant Certificate and (iii) the Exercise Price for each
Warrant to be exercised in lawful money of the United States of America by
certified or official bank check or by bank wire transfer in immediately
available funds, unless cashless exercise is permitted under the Warrant
Agreement.

 

As used herein, the term “Business Day” means any day other than Saturday,
Sunday or other day on which commercial banks in The City of New York are
authorized or required by law or executive order to remain closed.

 

15

 

Warrants may be exercised only in whole numbers of Warrants. Warrants may be
only be exercised such that a whole number of Warrant Shares is issuable upon
exercise; provided, however, that a holder may request the exercise of all of
its remaining Warrants even if the aggregate number of Warrant Shares issuable
upon such exercise as calculated hereunder includes a fractional Warrant Share.
No fractional Warrant Shares are to be issued upon the exercise of Warrants, but
rather the number of Warrant Shares to be issued shall be rounded up or down, as
applicable, to the nearest whole number. If fewer than all of the Warrants
evidenced by this Warrant Certificate are exercised, a new Warrant Certificate
for the number of Warrants remaining unexercised shall be executed by the
Company and countersigned by the Warrant Agent as provided in Section 2 of the
Warrant Agreement, and delivered to the registered holder of this Warrant
Certificate at the address specified on the books of the Warrant Agent or as
otherwise specified by such registered holder.

 

This Warrant Certificate is issued under and in accordance with the Warrant
Agreement, dated as of May 16, 2014 (the “Warrant Agreement”), between the
Company and the Warrant Agent and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
holder of this Warrant Certificate and the beneficial owners of the Warrants
represented by this Warrant Certificate consent by acceptance hereof. Copies of
the Warrant Agreement are on file and can be inspected at the above-mentioned
office of the Warrant Agent and at the office of the Company at 2451 Alamo Ave
SE, Albuquerque, New Mexico, 87106.

 

The Company shall provide to the registered holder prompt written notice of any
time that the Company is unable to issue the Warrant Shares via DTC transfer or
otherwise (without restrictive legend), because (A) the Commission has issued a
stop order with respect to the Registration Statement, (B) the Commission
otherwise has suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, (C) the Company has suspended or
withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or (D) otherwise (each a “Restrictive Legend Event”). To the extent
that a Restrictive Legend Event occurs after the registered holder has exercised
a Warrant in accordance with the terms of the Warrants but prior to the delivery
of the Warrant Shares, the Company shall, at the election of the registered
holder to be given within five (5) days of receipt of notice of the Restrictive
Legend Event, either (A) rescind the previously submitted Election to Purchase
and the Company shall return all consideration paid by registered holder for
such shares upon such rescission or (B) treat the attempted exercise as a
cashless exercise as described in the next paragraph and refund the cash portion
of the exercise price to the registered holder.

 

If a Restrictive Legend Event has occurred and no exemption from the
registration requirements is available, the Warrant shall only be exercisable on
a cashless basis. Notwithstanding anything herein to the contrary, the Company
shall not be required to make any cash payments or net cash settlement to the
registered holder in lieu of issuance of the Warrant Shares. Upon a “cashless
exercise”, the Holder shall be entitled to receive a certificate (or book entry)
for the number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:

 

  (A) = the VWAP on the Business Day immediately preceding the date on which the
registered holder elects to exercise the Warrant by means of a “cashless
exercise,” as set forth in the applicable Election to Purchase;

 

  (B) = the Exercise Price of the Warrant, as it may have been adjusted
hereunder; and

 

  (X) = the number of Warrant Shares that would be issuable upon exercise of the
Warrant in accordance with the terms of the Warrant if such exercise were by
means of a cash exercise rather than a cashless exercise.

 

Upon receipt of an Election to Purchase for a cashless exercise, the Warrant
Agent will promptly deliver a copy of the Election to Purchase to the Company to
confirm the number of Warrant Shares issuable in connection with the cashless
exercise. The Company shall calculate and transmit to the Warrant Agent, and the
Warrant Agent shall have no obligation under this section to calculate, the
number of Warrant Shares issuable in connection with the cashless exercise.

 

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on NYSE
AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market or the New York Stock Exchange (each, a “Trading Market”), the
daily volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then
listed or quoted for trading on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by OTC Markets,
Inc. (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so
reported, or (d) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the
holders of a majority in interest of the Warrants then outstanding and
reasonably acceptable to the Company, the fees and expenses of which shall be
paid by the Company.

 

16

 

The Exercise Price, if applicable, and the number of Warrant Shares purchasable
upon the exercise of each Warrant shall be subject to adjustment as provided
pursuant to Section 4 of the Warrant Agreement.

 

Upon due presentment for registration of transfer or exchange of this Warrant
Certificate at the stock transfer division of the Warrant Agent, the Company
shall execute, and the Warrant Agent shall countersign and deliver, as provided
in Section 5 of the Warrant Agreement, in the name of the designated transferee
one or more new Warrant Certificates of any authorized denomination evidencing
in the aggregate a like number of unexercised Warrants, subject to the
limitations provided in the Warrant Agreement.

 

Neither this Warrant Certificate nor the Warrants evidenced hereby entitles the
registered holder thereof to any of the rights of a shareholder of the Company,
including, without limitation, the right to receive dividends, or other
distributions, exercise any preemptive rights to vote or to consent or to
receive notice as shareholders in respect of the meetings of shareholders or the
election of directors of the Company or any other matter.

 

The Warrant Agreement and this Warrant Certificate may be amended as provided in
the Warrant Agreement including, under certain circumstances described therein,
without the consent of the holder of this Warrant Certificate or the Warrants
evidenced thereby.

 

THIS WARRANT CERTIFICATE AND ALL RIGHTS HEREUNDER AND UNDER THE WARRANT
AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS FORMED AND TO BE
PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS
OF LAW PROVISIONS THEREOF TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE
OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

This Warrant Certificate shall not be entitled to any benefit under the Warrant
Agreement or be valid or obligatory for any purpose, and no Warrant evidenced
hereby may be exercised, unless this Warrant Certificate has been countersigned
by the manual signature of the Warrant Agent.

 

17

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

Dated as of May __, 2014

 

  ENERPULSE TECHNOLOGIES, INC.       By:     Name:  Joseph E. Gonnella   Title:
 Chief Executive Officer

 

Securities Transfer Corporation,

as Warrant Agent

 

By:      Name:  Kevin Halter Jr.   Title:  President  

 

 

 

 

[REVERSE]

 

Instructions for Exercise of Warrant

 

To exercise the Warrants evidenced hereby, the holder or Participant must, by
5:00 P.M., New York time, on the specified Exercise Date, deliver to the Warrant
Agent at its stock transfer division, a certified or official bank check or a
bank wire transfer in immediately available funds, in each case payable to the
Warrant Agent at Account No. ____, in an amount equal to the Exercise Price in
full for the Warrants exercised. In addition, the Warrant holder or Participant
must provide the information required below and deliver this Warrant Certificate
to the Warrant Agent at the address set forth below and the Book-Entry Warrants
to the Warrant Agent in its account with the Depository designated for such
purpose. The Warrant Certificate and this Election to Purchase must be received
by the Warrant Agent by 5:00 P.M., New York time, on the specified Exercise
Date.

 

ELECTION TO PURCHASE

TO BE EXECUTED IF WARRANT HOLDER DESIRES

TO EXERCISE THE WARRANTS EVIDENCED HEREBY

 

 

The undersigned hereby irrevocably elects to exercise, on __________, ____ (the
“Exercise Date”), _____________ Warrants, evidenced by this Warrant Certificate,
to purchase, _________________ shares (the “Warrant Shares”) of Common Stock,
par value of $0.001 per share (the “Common Stock”) of Enerpulse Technologies,
Inc., a Nevada corporation (the “Company”), and represents that on or before the
Exercise Date

 

£ such holder has tendered payment for such Warrant Shares by certified or
official bank check or bank wire transfer in immediately available funds to the
order of the Company c/o Securities Transfer Corporation, 2591 Dallas Parkway,
Suite 102, Frisco, TX 75034, in the amount of $_____________ in accordance with
the terms hereof, or

 

£ [if permitted] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection 3.3.7 of the
Warrant Agreement, to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise procedure set
forth in subsection 3.3.7.

 

The undersigned requests that said number of Warrant Shares be in fully
registered form, registered in such names and delivered, all as specified in
accordance with the instructions set forth below.

 

If said number of Warrant Shares is less than all of the Warrant Shares
purchasable hereunder, the undersigned requests that a new Warrant Certificate
evidencing the remaining balance of the Warrants evidenced hereby be issued and
delivered to the holder of the Warrant Certificate unless otherwise specified in
the instructions below.

 

19

 

 

 

 

 

Dated: ______________ __, ____

 

  Name         (Please Print)             / / /  / - /  /  /- /  /   /  /  /  
(Insert Social Security or Other Identifying Number of Holder)           Address
                      Signature    

 

This Warrant may only be exercised by presentation to the Warrant Agent at one
of the following locations:

 

By hand at:

 

Securities Transfer Corporation

2591 Dallas Parkway
Suite 102
Frisco, TX 75034
Attn: Kevin Halter Jr.

 

 

By mail at:

 

Securities Transfer Corporation

2591 Dallas Parkway
Suite 102
Frisco, TX 75034
Attn: Kevin Halter Jr.

 

The method of delivery of this Warrant Certificate is at the option and risk of
the exercising holder and the delivery of this Warrant Certificate will be
deemed to be made only when actually received by the Warrant Agent. If delivery
is by mail, registered mail with return receipt requested, properly insured, is
recommended. In all cases, sufficient time should be allowed to assure timely
delivery.

 

(Instructions as to form and delivery of Warrant Shares and/or Warrant
Certificates)

 

Name in which Warrant Shares       are to be registered if other than       in
the name of the registered holder       of this Warrant Certificate:            
  Address to which Warrant Shares       are to be mailed if other than to the  
    address of the registered holder of       this Warrant Certificate as shown
on       the books of the Warrant Agent:           (Street Address)            
          (City and State) (Zip Code)           Name in which Warrant
Certificate       evidencing unexercised Warrants, if any,       are to be
registered if other than in the       name of the registered holder of this    
  Warrant Certificate:      

 

20

 

 

Address to which certificate representing unexercised Warrants, if any, are to
be mailed if other than to the address of  the registered holder of this Warrant
 Certificate as shown on the books of  the Warrant Agent:           (Street
Address)                   (City and State) (Zip Code)           Dated:        
          Signature           Signature must conform in all respects to the name
of the holder as specified on the face of this Warrant Certificate.  If Warrant
Shares, or a Warrant Certificate evidencing unexercised Warrants, are to be
issued in a name other than that of the registered holder hereof or are to be
delivered to an address other than the address of such holder as shown on the
books of the Warrant Agent, the above signature must be guaranteed by a an
Eligible Guarantor Institution (as that term is defined in Rule 17Ad-15 of the
Securities Exchange Act of 1934, as amended). SIGNATURE GUARANTEE           Name
of Firm                                                        Address
                                                                 Area Code    
and Number                                                        Authorized    
Signature                                                            Name
                                                                    Title
                                                                     
Dated:                                                               , 200___  
 

 

21

 

 

ASSIGNMENT

 

(FORM OF ASSIGNMENT TO BE EXECUTED IF WARRANT HOLDER

DESIRES TO TRANSFER WARRANTS EVIDENCED HEREBY)

 

FOR VALUE RECEIVED, _________________ hereby sell(s), assign(s) and Transfer(s)
unto

________________________________________________________

__________________________________

_______________________________________

 

(Please print name and address (Please insert social security or including zip
code of assignee) other identifying number of assignee)

 

the rights represented by the within Warrant Certificate and does hereby
irrevocably constitute and appoint ____________ Attorney to transfer said
Warrant Certificate on the books of the Warrant Agent with full power of
substitution in the premises.

 

    Dated:                 Signature           (Signature must conform in all
respects to the name of the holder as specified on the face of this Warrant
Certificate and must bear a signature guarantee by an Eligible Guarantor
Institution (as that term is defined in Rule 17Ad-15 of the Securities Exchange
Act of 1934, as amended). SIGNATURE GUARANTEE     Name of Firm
                                                       Address
                                                                 Area Code    
and Number                                                        Authorized    
Signature                                                            Name
                                                                    Title
                                                                     
Dated:                                                 , 20___    

 

 

 

22