EXHIBIT 10.3

 

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR
OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

 

COMMON STOCK PURCHASE WARRANT

 

To Purchase ______________ Shares of Common Stock of

 

APOGEE TECHNOLOGY, INC.

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) CERTIFIES that, for value
received, ______________ (the “Holder”), is entitled, upon the terms and subject
to the limitations on exercise and the conditions hereinafter set forth, at any
time on or after the date of issuance of this Warrant (the “Initial Exercise
Date”) and on or prior to the five year anniversary of the Initial Exercise Date
(the “Termination Date”) but not thereafter, to subscribe for and purchase from
Apogee Technology, Inc., a Delaware corporation (the “Company”), up to
______________ shares (the “Warrant Shares”) of Common Stock, par value $0.01
per share, of the Company (the “Common Stock”).  The purchase price of one share
of Common Stock (the “Exercise Price”) under this Warrant shall be $5.70(1),
subject to adjustment hereunder.  Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the “Purchase Agreement”), dated August 24, 2004 among the
Company and the purchasers signatory thereto.

 

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(1)           120% of the Per Share Purchase Price.

 

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1.     TITLE TO WARRANT.  PRIOR TO THE TERMINATION DATE AND SUBJECT TO
COMPLIANCE WITH APPLICABLE LAWS AND SECTION 7 OF THIS WARRANT, THIS WARRANT AND
ALL RIGHTS HEREUNDER ARE TRANSFERABLE, IN WHOLE OR IN PART, TO UP TO THREE (3)
PERSONS IN ANY 12 MONTH PERIOD, AT THE OFFICE OR AGENCY OF THE COMPANY BY THE
HOLDER IN PERSON OR BY DULY AUTHORIZED ATTORNEY, UPON SURRENDER OF THIS WARRANT
TOGETHER WITH THE ASSIGNMENT FORM ANNEXED HERETO PROPERLY ENDORSED.  THE
TRANSFEREE SHALL SIGN AN INVESTMENT LETTER IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY.

 

2.     AUTHORIZATION OF SHARES.  THE COMPANY COVENANTS THAT ALL WARRANT SHARES
WHICH MAY BE ISSUED UPON THE EXERCISE OF THE PURCHASE RIGHTS REPRESENTED BY THIS
WARRANT WILL, UPON EXERCISE OF THE PURCHASE RIGHTS REPRESENTED BY THIS WARRANT,
BE DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE AND FREE FROM
ALL TAXES, LIENS AND CHARGES IN RESPECT OF THE ISSUE THEREOF (OTHER THAN TAXES
IN RESPECT OF ANY TRANSFER OCCURRING CONTEMPORANEOUSLY WITH SUCH ISSUE).

 

3.     EXERCISE OF WARRANT.

 

(a)  Exercise of the purchase rights represented by this Warrant may be made at
any time or times on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company of a duly executed facsimile copy of
the Notice of Exercise Form annexed hereto, at the office of the Company (or
such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder appearing on the
books of the Company); provided, however, within 5 Trading Days of the date said
Notice of Exercise is delivered to the Company, the Holder shall have
surrendered this Warrant to the Company and the Company shall have received
payment of the aggregate Exercise Price of the shares thereby purchased by wire
transfer or cashier’s check drawn on a United States bank.  Certificates for
shares purchased hereunder shall be delivered to the Holder within 3 Trading
Days from the latest to occur of delivery to the Company of the Notice of
Exercise Form, surrender of this Warrant and payment of the aggregate Exercise
Price as set forth above (“Warrant Share Delivery Date”).  This Warrant shall be
deemed to have been exercised on the date the Exercise Price is received by the
Company.  The Warrant Shares shall be deemed to have been issued, and Holder or
any other person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price and
all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior
to the issuance of such shares, have been paid.  If the Company fails to deliver
to the Holder a certificate or certificates representing the Warrant Shares
pursuant to this Section 3(a) by the Warrant Share Delivery Date, then the
Holder will have the right to rescind such exercise.  In addition to any other
rights available to the Holder, if the Company fails to deliver to the Holder a
certificate or certificates representing the Warrant Shares pursuant to an
exercise by the Warrant Share Delivery Date, and if after such day the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall (1) pay in cash to the Holder

 

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the amount by which (x) the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased exceeds (y) the
amount obtained by multiplying (A) the number of Warrant Shares that the Company
was required to deliver to the Holder in connection with the exercise at issue
times (B) the price at which the sell order giving rise to such purchase
obligation was executed, and (2) at the option of the Holder, either reinstate
the portion of the Warrant and equivalent number of Warrant Shares for which
such exercise was not honored or deliver to the Holder the number of shares of
Common Stock that would have been issued had the Company timely complied with
its exercise and delivery obligations hereunder.  For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (1) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In, together
with applicable confirmations and other evidence reasonably requested by the
Company.  Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required pursuant to the
terms hereof.

 

(b)           If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant.

 

(c)           The Holder shall not have the right to exercise any portion of
this Warrant, pursuant to Section 3(a) or otherwise, to the extent that after
giving effect to such issuance after exercise, the Holder (together with the
Holder’s affiliates), as set forth on the applicable Notice of Exercise, would
beneficially own in excess of 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to such issuance.  For purposes of
the foregoing sentence, the number of shares of Common Stock beneficially owned
by the Holder and its affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude the number of
shares of Common Stock which would be issuable upon (A) exercise of the
remaining, nonexercised portion of this Warrant beneficially owned by the Holder
or any of its affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without
limitation, any other Warrants) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its affiliates.  Except as set forth in the preceding sentence,
for purposes of this Section 3(c), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act, it being acknowledged by
Holder that the Company is not representing to Holder that such calculation is
in compliance with Section 13(d) of the Exchange Act and Holder is solely
responsible for

 

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any schedules required to be filed in accordance therewith.  To the extent that
the limitation contained in this Section 3(c) applies, the determination of
whether this Warrant is exercisable (in relation to other securities owned by
the Holder) and of which a portion of this Warrant is exercisable shall be in
the sole discretion of such Holder, and the submission of a Notice of Exercise
shall be deemed to be such Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by such Holder) and of which
portion of this Warrant is exercisable, in each case subject to such aggregate
percentage limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination.  For purposes of this Section 3(c),
in determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice by the Company
or the Company’s Transfer Agent setting forth the number of shares of Common
Stock outstanding.  Upon the written or oral request of the Holder, the Company
shall within two Trading Days confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding.  In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant,
by the Holder or its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported.

 

(d) If at any time after one year from the date of issuance of this Warrant
there is no effective Registration Statement registering the resale of the
Warrant Shares by the Holder at such time, this Warrant may also be exercised at
such time by means of a “cashless exercise” in which the Holder shall be
entitled to receive a certificate for the number of Warrant Shares equal to the
quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A)  =                 the Closing Price on the Trading Day immediately
preceding the date of such election;

 

(B)  =                   the Exercise Price of this Warrant, as adjusted; and

 

(X)  =                  the number of Warrant Shares issuable upon exercise of
this Warrant in accordance with the terms of this Warrant by means of a cash
exercise rather than a cashless exercise.

 

(e) Subject to the provisions of this Section 3, if after the 12 month
anniversary of the Effective Date, the Closing Price for each of ten (10)
consecutive Trading Days (the “Measurement Period”, which period shall not have
commenced until after such Effective Date) exceeds 175% of the Exercise Price
(the “Threshold Price”) (subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of the Purchase Agreement), then the
Company may, within two (2) Trading Days of such period, call for cancellation
of all or any portion of this Warrant for which a Notice of Exercise has not yet
been delivered (such right, a “Call”).  To exercise this right, the Company must
deliver to the Holder an irrevocable written notice (a “Call Notice”),

 

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indicating therein the portion of unexercised portion of this Warrant to which
such notice applies.  If the conditions set forth below for such Call are
satisfied from the period from the date of the Call Notice through and including
the Call Date (as defined below), then any portion of this Warrant subject to
such Call Notice for which a Notice of Exercise shall not have been received
from and after the date of the Call Notice will be cancelled at 6:30 p.m. (New
York City time) on the fifteenth (15th) Trading Day after the date the Call
Notice is received by the Holder (such date, the “Call Date”).  Any unexercised
portion of this Warrant to which the Call Notice does not pertain will be
unaffected by such Call Notice.  In furtherance thereof, the Company covenants
and agrees that it will honor all Notices of Exercise with respect to Warrant
Shares subject to a Call Notice that are tendered from the time of delivery of
the Call Notice through 6:30 p.m. (New York City time) on the Call Date.  The
parties agree that any Notice of Exercise delivered following a Call Notice
shall first reduce to zero the number of Warrant Shares subject to such Call
Notice prior to reducing the remaining Warrant Shares available for purchase
under this Warrant.  For example, if (x) this Warrant then permits the Holder to
acquire 100 Warrant Shares, (y) a Call Notice pertains to 75 Warrant Shares, and
(z) prior to 6:30 p.m. (New York City time) on the Call Date the Holder tenders
a Notice of Exercise in respect of 50 Warrant Shares, then (1) on the Call Date
the right under this Warrant to acquire 25 Warrant Shares will be automatically
cancelled, (2) the Company, in the time and manner required under this Warrant,
will have issued and delivered to the Holder 50 Warrant Shares in respect of the
exercise following receipt of the Call Notice, and (3) the Holder may, until the
Termination Date, exercise this Warrant for 25 Warrant Shares (subject to
adjustment as herein provided and subject to subsequent Call Notices).  Subject
again to the provisions of this Section 3(e), the Company may deliver subsequent
Call Notices for any portion of this Warrant for which the Holder shall not have
delivered a Notice of Exercise.  Notwithstanding anything to the contrary set
forth in this Warrant, the Company may not deliver a Call Notice or require the
cancellation of this Warrant (and any Call Notice will be void), unless, from
the beginning of the ten (10) consecutive Trading Days used to determine whether
the Common Stock has achieved the Threshold Price through the Call Date, (i) the
Company shall have honored in accordance with the terms of this Warrant all
Notices of Exercise delivered by 6:30 p.m. (New York City time) on the Call
Date, (ii) the Registration Statement shall be effective as to all Warrant
Shares and the prospectus thereunder available for use by the Holder for the
resale of all such Warrant Shares and (iii) the Common Stock shall be listed or
quoted for trading on the Trading Market.  The Company’s right to Call the
Warrant shall be exercised ratably among the Purchasers based on each
Purchaser’s initial purchase of Common Stock pursuant to the Purchase Agreement.

 

4.     NO FRACTIONAL SHARES OR SCRIP.  NO FRACTIONAL SHARES OR SCRIP
REPRESENTING FRACTIONAL SHARES SHALL BE ISSUED UPON THE EXERCISE OF THIS
WARRANT.  AS TO ANY FRACTION OF A SHARE WHICH HOLDER WOULD OTHERWISE BE ENTITLED
TO PURCHASE UPON SUCH EXERCISE, THE COMPANY SHALL PAY A CASH ADJUSTMENT IN
RESPECT OF SUCH FINAL FRACTION IN AN AMOUNT EQUAL TO SUCH FRACTION MULTIPLIED BY
THE EXERCISE PRICE.

 

5.     CHARGES, TAXES AND EXPENSES.  ISSUANCE OF CERTIFICATES FOR WARRANT SHARES
SHALL BE MADE WITHOUT CHARGE TO THE HOLDER FOR ANY ISSUE OR TRANSFER TAX OR
OTHER INCIDENTAL EXPENSE IN RESPECT OF THE ISSUANCE OF SUCH CERTIFICATE, ALL OF
WHICH TAXES AND EXPENSES SHALL BE PAID BY THE COMPANY, AND SUCH CERTIFICATES
SHALL BE

 

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issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the event certificates for Warrant Shares
are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder; and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.

 

6.     CLOSING OF BOOKS.  THE COMPANY WILL NOT CLOSE ITS STOCKHOLDER BOOKS OR
RECORDS IN ANY MANNER WHICH PREVENTS THE TIMELY EXERCISE OF THIS WARRANT,
PURSUANT TO THE TERMS HEREOF.

 

7.     TRANSFER, DIVISION AND COMBINATION.

 

(a)   Subject to compliance with any applicable securities laws and the
conditions set forth in Sections 1 and 7(e) hereof and to the provisions of
Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer.  Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.

 

(b)   This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney.  Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.

 

(c)   The Company shall prepare, issue and deliver at its own expense (other
than transfer taxes) the new Warrant or Warrants under this Section 7.

 

(d)   The Company agrees to maintain, at its aforesaid office, books for the
registration and the registration of transfer of the Warrants.

 

(e)   If, at the time of the surrender of this Warrant in connection with any
transfer of this Warrant, the transfer of this Warrant shall not be registered
pursuant to an effective registration statement under the Securities Act and
under applicable state securities or blue sky laws, the Company may require, as
a condition of allowing such transfer (i) that the Holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be in form, substance and

 

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scope customary for opinions of counsel in comparable transactions) to the
effect that such transfer may be made without registration under the Securities
Act and under applicable state securities or blue sky laws, (ii) that the holder
or transferee execute and deliver to the Company an investment letter in form
and substance acceptable to the Company and (iii) that the transferee be an
“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or
(a)(8) promulgated under the Securities Act or a qualified institutional buyer
as defined in Rule 144A(a) under the Securities Act.

 

8.     NO RIGHTS AS SHAREHOLDER UNTIL EXERCISE.  THIS WARRANT DOES NOT ENTITLE
THE HOLDER TO ANY VOTING RIGHTS OR OTHER RIGHTS AS A SHAREHOLDER OF THE COMPANY
PRIOR TO THE EXERCISE HEREOF.  UPON THE SURRENDER OF THIS WARRANT AND THE
PAYMENT OF THE AGGREGATE EXERCISE PRICE (OR UPON A CASHLESS EXERCISE PURSUANT TO
SECTION 3(D)), THE WARRANT SHARES SO PURCHASED SHALL BE AND BE DEEMED TO BE
ISSUED TO SUCH HOLDER AS THE RECORD OWNER OF SUCH SHARES AS OF THE CLOSE OF
BUSINESS ON THE LATER OF THE DATE OF SUCH SURRENDER OR PAYMENT.

 

9.     LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT.  THE COMPANY COVENANTS
THAT UPON RECEIPT BY THE COMPANY OF EVIDENCE REASONABLY SATISFACTORY TO IT OF
THE LOSS, THEFT, DESTRUCTION OR MUTILATION OF THIS WARRANT OR ANY STOCK
CERTIFICATE RELATING TO THE WARRANT SHARES, AND IN CASE OF LOSS, THEFT OR
DESTRUCTION, OF INDEMNITY OR SECURITY REASONABLY SATISFACTORY TO IT (WHICH, IN
THE CASE OF THE WARRANT, SHALL NOT INCLUDE THE POSTING OF ANY BOND), AND UPON
SURRENDER AND CANCELLATION OF SUCH WARRANT OR STOCK CERTIFICATE, IF MUTILATED,
THE COMPANY WILL MAKE AND DELIVER A NEW WARRANT OR STOCK CERTIFICATE OF LIKE
TENOR AND DATED AS OF SUCH CANCELLATION, IN LIEU OF SUCH WARRANT OR STOCK
CERTIFICATE.

 

10.   SATURDAYS, SUNDAYS, HOLIDAYS, ETC.  IF THE LAST OR APPOINTED DAY FOR THE
TAKING OF ANY ACTION OR THE EXPIRATION OF ANY RIGHT REQUIRED OR GRANTED HEREIN
SHALL BE A SATURDAY, SUNDAY OR A LEGAL HOLIDAY, THEN SUCH ACTION MAY BE TAKEN OR
SUCH RIGHT MAY BE EXERCISED ON THE NEXT SUCCEEDING DAY NOT A SATURDAY, SUNDAY OR
LEGAL HOLIDAY.

 

11.   ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES; STOCK SPLITS,
ETC.  THE NUMBER AND KIND OF SECURITIES PURCHASABLE UPON THE EXERCISE OF THIS
WARRANT AND THE EXERCISE PRICE SHALL BE SUBJECT TO ADJUSTMENT FROM TIME TO TIME
UPON THE HAPPENING OF ANY OF THE FOLLOWING.  IN CASE THE COMPANY SHALL (I) PAY A
DIVIDEND IN SHARES OF COMMON STOCK OR MAKE A DISTRIBUTION IN SHARES OF COMMON
STOCK TO HOLDERS OF ITS OUTSTANDING COMMON STOCK, (II) SUBDIVIDE ITS OUTSTANDING
SHARES OF COMMON STOCK INTO A GREATER NUMBER OF SHARES, (III) COMBINE ITS
OUTSTANDING SHARES OF COMMON STOCK INTO A SMALLER NUMBER OF SHARES OF COMMON
STOCK, OR (IV) ISSUE ANY SHARES OF ITS CAPITAL STOCK IN A RECLASSIFICATION OF
THE COMMON STOCK, THEN THE NUMBER OF WARRANT SHARES PURCHASABLE UPON EXERCISE OF
THIS WARRANT IMMEDIATELY PRIOR THERETO SHALL BE ADJUSTED SO THAT THE HOLDER
SHALL BE ENTITLED TO RECEIVE THE KIND AND NUMBER OF WARRANT SHARES OR OTHER
SECURITIES OF THE COMPANY WHICH IT WOULD HAVE OWNED OR HAVE BEEN ENTITLED TO
RECEIVE HAD SUCH WARRANT BEEN EXERCISED IN ADVANCE THEREOF.  UPON EACH SUCH
ADJUSTMENT OF THE KIND AND NUMBER OF WARRANT SHARES OR OTHER SECURITIES OF THE
COMPANY WHICH ARE PURCHASABLE HEREUNDER, THE HOLDER SHALL THEREAFTER BE ENTITLED
TO PURCHASE THE NUMBER OF WARRANT SHARES OR OTHER SECURITIES RESULTING FROM SUCH
ADJUSTMENT AT AN EXERCISE PRICE PER WARRANT SHARE OR OTHER SECURITY OBTAINED BY
MULTIPLYING THE EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH ADJUSTMENT BY
THE NUMBER OF WARRANT SHARES PURCHASABLE PURSUANT HERETO IMMEDIATELY PRIOR TO
SUCH ADJUSTMENT AND DIVIDING BY THE NUMBER OF WARRANT SHARES OR OTHER SECURITIES
OF THE COMPANY THAT

 

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are purchasable pursuant hereto immediately after such adjustment.  An
adjustment made pursuant to this paragraph shall become effective immediately
after the effective date of such event retroactive to the record date, if any,
for such event.

 

12.   REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR DISPOSITION OF
ASSETS.  IN CASE THE COMPANY SHALL REORGANIZE ITS CAPITAL, RECLASSIFY ITS
CAPITAL STOCK, CONSOLIDATE OR MERGE WITH OR INTO ANOTHER CORPORATION (WHERE THE
COMPANY IS NOT THE SURVIVING CORPORATION OR WHERE THERE IS A CHANGE IN OR
DISTRIBUTION WITH RESPECT TO THE COMMON STOCK OF THE COMPANY), OR SELL, TRANSFER
OR OTHERWISE DISPOSE ALL OR SUBSTANTIALLY ALL OF ITS PROPERTY, ASSETS OR
BUSINESS TO ANOTHER CORPORATION AND, PURSUANT TO THE TERMS OF SUCH
REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR DISPOSITION OF
ASSETS, SHARES OF COMMON STOCK OF THE SUCCESSOR OR ACQUIRING CORPORATION, OR ANY
CASH, SHARES OF STOCK OR OTHER SECURITIES OR PROPERTY OF ANY NATURE WHATSOEVER
(INCLUDING WARRANTS OR OTHER SUBSCRIPTION OR PURCHASE RIGHTS) IN ADDITION TO OR
IN LIEU OF COMMON STOCK OF THE SUCCESSOR OR ACQUIRING CORPORATION (“OTHER
PROPERTY”), ARE TO BE RECEIVED BY OR DISTRIBUTED TO THE HOLDERS OF COMMON STOCK
OF THE COMPANY, THEN THE HOLDER SHALL HAVE THE RIGHT THEREAFTER TO RECEIVE, UPON
EXERCISE OF THIS WARRANT, THE NUMBER OF SHARES OF COMMON STOCK OF THE SUCCESSOR
OR ACQUIRING CORPORATION OR OF THE COMPANY, IF IT IS THE SURVIVING CORPORATION,
AND OTHER PROPERTY RECEIVABLE UPON OR AS A RESULT OF SUCH REORGANIZATION,
RECLASSIFICATION, MERGER, CONSOLIDATION OR DISPOSITION OF ASSETS BY A HOLDER OF
THE NUMBER OF SHARES OF COMMON STOCK FOR WHICH THIS WARRANT IS EXERCISABLE
IMMEDIATELY PRIOR TO SUCH EVENT. IN CASE OF ANY SUCH REORGANIZATION,
RECLASSIFICATION, MERGER, CONSOLIDATION OR DISPOSITION OF ASSETS, THE SUCCESSOR
OR ACQUIRING CORPORATION (IF OTHER THAN THE COMPANY) SHALL EXPRESSLY ASSUME THE
DUE AND PUNCTUAL OBSERVANCE AND PERFORMANCE OF EACH AND EVERY COVENANT AND
CONDITION OF THIS WARRANT TO BE PERFORMED AND OBSERVED BY THE COMPANY AND ALL
THE OBLIGATIONS AND LIABILITIES HEREUNDER, SUBJECT TO SUCH MODIFICATIONS AS MAY
BE DEEMED APPROPRIATE (AS DETERMINED IN GOOD FAITH BY RESOLUTION OF THE BOARD OF
DIRECTORS OF THE COMPANY) IN ORDER TO PROVIDE FOR ADJUSTMENTS OF WARRANT SHARES
FOR WHICH THIS WARRANT IS EXERCISABLE WHICH SHALL BE AS NEARLY EQUIVALENT AS
PRACTICABLE TO THE ADJUSTMENTS PROVIDED FOR IN THIS SECTION 12.  FOR PURPOSES OF
THIS SECTION 12, “COMMON STOCK OF THE SUCCESSOR OR ACQUIRING CORPORATION” SHALL
INCLUDE STOCK OF SUCH CORPORATION OF ANY CLASS WHICH IS NOT PREFERRED AS TO
DIVIDENDS OR ASSETS OVER ANY OTHER CLASS OF STOCK OF SUCH CORPORATION AND WHICH
IS NOT SUBJECT TO REDEMPTION AND SHALL ALSO INCLUDE ANY EVIDENCES OF
INDEBTEDNESS, SHARES OF STOCK OR OTHER SECURITIES WHICH ARE CONVERTIBLE INTO OR
EXCHANGEABLE FOR ANY SUCH STOCK, EITHER IMMEDIATELY OR UPON THE ARRIVAL OF A
SPECIFIED DATE OR THE HAPPENING OF A SPECIFIED EVENT AND ANY WARRANTS OR OTHER
RIGHTS TO SUBSCRIBE FOR OR PURCHASE ANY SUCH STOCK.  THE FOREGOING PROVISIONS OF
THIS SECTION 12 SHALL SIMILARLY APPLY TO SUCCESSIVE REORGANIZATIONS,
RECLASSIFICATIONS, MERGERS, CONSOLIDATIONS OR DISPOSITION OF ASSETS.

 

13.   VOLUNTARY ADJUSTMENT BY THE COMPANY.  THE COMPANY MAY AT ANY TIME DURING
THE TERM OF THIS WARRANT REDUCE THE THEN CURRENT EXERCISE PRICE TO ANY AMOUNT
AND FOR ANY PERIOD OF TIME DEEMED APPROPRIATE BY THE BOARD OF DIRECTORS OF THE
COMPANY.

 

14.   NOTICE OF ADJUSTMENT.  WHENEVER THE NUMBER OF WARRANT SHARES OR NUMBER OR
KIND OF SECURITIES OR OTHER PROPERTY PURCHASABLE UPON THE EXERCISE OF THIS
WARRANT OR THE EXERCISE PRICE IS ADJUSTED, AS HEREIN PROVIDED, THE COMPANY SHALL
GIVE NOTICE THEREOF TO THE HOLDER, WHICH NOTICE SHALL STATE THE NUMBER OF
WARRANT SHARES (AND OTHER SECURITIES OR PROPERTY) PURCHASABLE UPON THE EXERCISE
OF THIS WARRANT AND THE EXERCISE PRICE OF SUCH WARRANT SHARES (AND OTHER

 

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securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.

 

15.   NOTICE OF CORPORATE ACTION.  IF AT ANY TIME:

 

(a)   the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend or other distribution, or any
right to subscribe for or purchase any evidences of its indebtedness, any shares
of stock of any class or any other securities or property, or to receive any
other right, or

 

(b)   there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with (other than a consolidation or
merger in which the Company is the surviving corporation), or any sale, transfer
or other disposition of all or substantially all the property, assets or
business of the Company to, another corporation or,

 

(c)   there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;

 

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days’ prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)
in the case of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up, at least 20
days’ prior written notice of the date when the same shall take place.  Such
notice in accordance with the foregoing clause also shall specify (i) the date
on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be
entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their Warrant Shares for securities or other property
deliverable upon such disposition, dissolution, liquidation or winding up.  Each
such written notice shall be sufficiently given if addressed to Holder at the
last address of Holder appearing on the books of the Company and delivered in
accordance with Section 17(d).

 

16.   AUTHORIZED SHARES.  THE COMPANY COVENANTS THAT DURING THE PERIOD THE
WARRANT IS OUTSTANDING, IT WILL RESERVE FROM ITS AUTHORIZED AND UNISSUED COMMON
STOCK A SUFFICIENT NUMBER OF SHARES TO PROVIDE FOR THE ISSUANCE OF THE WARRANT
SHARES UPON THE EXERCISE OF ANY PURCHASE RIGHTS UNDER THIS WARRANT.  THE COMPANY
FURTHER COVENANTS THAT ITS ISSUANCE OF THIS WARRANT SHALL CONSTITUTE FULL
AUTHORITY TO ITS OFFICERS WHO ARE CHARGED WITH THE DUTY OF EXECUTING STOCK
CERTIFICATES TO EXECUTE AND ISSUE THE NECESSARY CERTIFICATES FOR THE WARRANT
SHARES UPON THE EXERCISE OF THE PURCHASE RIGHTS UNDER THIS WARRANT.  THE COMPANY
WILL TAKE ALL SUCH REASONABLE ACTION AS MAY BE NECESSARY TO ASSURE THAT SUCH
WARRANT SHARES MAY BE ISSUED AS

 

9

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provided herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be listed.

 

Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment.  Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory body or bodies
having jurisdiction thereof.

 

17.   MISCELLANEOUS.

 

(a)   Jurisdiction.  All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement.

 

(b)   Restrictions.  The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant, if not registered, will have restrictions
upon resale imposed by state and federal securities laws.

 

(c)   Nonwaiver and Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date.  If the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the
Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

 

(d)   Notices.  Any notice, request or other document required or permitted to
be given or delivered to the Holder by the Company shall be delivered in
accordance with the notice provisions of the Purchase Agreement; provided that
upon any permitted

 

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assignment of this Warrant, the assignee shall promptly provide the Company with
its contact information.

 

(e)   Limitation of Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

 

(f)    Remedies.  Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant.  The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.

(g)   Successors and Assigns.  Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder.  The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.

 

(h)   Amendment.  This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.

 

(i)    Severability.  Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.

 

(j)    Headings.  The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

11

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.

 

Dated:  August ____, 2004

 

 

APOGEE TECHNOLOGY, INC.

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

12

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NOTICE OF EXERCISE

 

To:          Apogee Technology, Inc.

 

(1)   The undersigned hereby elects to purchase _________ Warrant Shares of the
Company pursuant to the terms of the attached Warrant (only if exercised in
full), and tenders herewith payment of the exercise price in full, together with
all applicable transfer taxes, if any.

 

(2)   Payment shall take the form of (check applicable box):

 

[  ] in lawful money of the United States; or

 

[ ] the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 3(d), 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(d).

 

(3)   Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:

 

 

 

 

The Warrant Shares shall be delivered to the following:

 

 

 

 

 

 

 

 

 

 

 

(4)  Accredited Investor.  The undersigned is an “accredited investor” as
defined in Regulation D under the Securities Act of 1933, as amended.

 

 

[PURCHASER]

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

 

 

Dated:

 

 

 

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ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)

 

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to

 

 

 

whose address is

 

 

 

 

 

 

 

 

Dated:

 

,

 

 

 

 

 

Holder’s Signature:

 

 

 

 

 

 

 

Holder’s Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Guaranteed:

 

 

 

NOTE:  The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

 

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