Exhibit 10.3

 

NEITHER THE ISSUANCE AND SALE OF THIS WARRANT NOR THE SECURITIES INTO WHICH THIS
WARRANT IS EXERCISABLE (COLLECTIVELY, THE “SECURITIES”) HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED
BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.

 

 

Right to Purchase [●] shares of Common Stock of Comarco, Inc. (subject to
adjustment as provided herein)

 

COMMON STOCK PURCHASE WARRANT

 

No. [●]

Issue Date: [●], 20[●]

                                             

COMARCO, Inc., a corporation incorporated under the laws of the State of
California (together with any corporation which shall succeed or assume its
obligations, the “Company”), hereby certifies that, for value received, [●],
with an address at [●], or its successors, representatives and permitted assigns
(collectively, “Holder”), is entitled, subject to the terms set forth below, to
purchase from the Company at any time after the Issue Date until 5:00 p.m.
Eastern Time on [●], 20[●] 1 (the “Expiration Date”), up to [●] fully paid and
nonassessable shares (the “Shares”) of Common Stock (as defined herein) of the
Company at a per share exercise price of Five Cents (US$0.05). The afore
described exercise price per share, as adjusted from time to time as herein
provided, is referred to herein as the “Exercise Price.” The number and
character of Shares of Common Stock and the Exercise Price are subject to
adjustment as provided herein. The Company may reduce the Exercise Price of this
Warrant temporarily or permanently.

 

As used herein the following terms, unless the context otherwise requires, have
the following respective meanings:

 

(a)     “Common Stock” means (i) the Company’s common stock, $0.001 par value
per share, and (ii) the shares of common stock issuable upon conversion or
exchange of any Other Securities pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.

 

(b)     “Other Securities” means any capital stock (other than Common Stock) and
other securities of the Company or any other Person which Holder at any time
shall be entitled to receive, or shall have received, on the exercise of the
Warrant, in lieu of or in addition to the Common Stock of the Company, or which
at any time shall be issuable or shall have been issued in exchange for, or in
replacement of, Shares of Common Stock of the Company or Other Securities
pursuant to Section 4 hereof or otherwise.

 

(c)     “Warrant Shares” means the Shares of Common Stock issuable upon exercise
of this Warrant.

 

 

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Expiration Date will be the 8th anniversary of the Issue Date.

 

 
 

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1.            Exercise of Warrant.

 

1.1.          Number of Shares Issuable Upon Exercise. From and after the Issue
Date and through and including the Expiration Date, Holder shall be entitled to
receive, upon exercise of this Warrant in whole in accordance with the terms of
subsection 1.2 or upon exercise of this Warrant in part in accordance with
subsection 1.3, shares of Common Stock of the Company, subject to adjustment
pursuant to Section 4.

 

1.2.          Full Exercise. This Warrant may be exercised in full by Holder by
delivering to the Company an original or facsimile copy of the form of exercise
notice attached as Exhibit A hereto (the “Exercise Form”) duly executed by
Holder and payment, in cash, wire transfer or by certified or official bank
check payable to the order of the Company, in the amount obtained by multiplying
the number of Shares of Common Stock for which this Warrant is then exercisable
by the Exercise Price then in effect. The original Warrant is not required to be
surrendered to the Company until it has been fully exercised.

 

1.3.          Partial Exercise. This Warrant may be exercised in part (but not
for a fractional share) by Holder by delivering to the Company an Exercise Form
in the manner and at the place provided in Section 1.2 hereof, except that the
amount payable by Holder on such partial exercise shall be the amount obtained
by multiplying (a) the number of whole Shares of Common Stock designated by
Holder in the Exercise Form by (b) the Exercise Price then in effect. Upon the
surrender of the original Warrant by Holder for any such partial exercise, the
Company, at its sole expense, shall forthwith issue and deliver to, or upon the
order of, Holder a new Warrant of like tenor, in the name of Holder or as Holder
(upon payment by Holder of any applicable transfer taxes) may request in
compliance with applicable securities laws, the whole number of Shares of Common
Stock for which such Warrant may still be exercised.

 

1.4.          Fair Market Value. Fair Market Value of a Share of Common Stock as
of the date of an exercise pursuant to Section 1.2 or 1.3 above (the
“Determination Date”) shall mean:

 

(a)     If the Company’s Common Stock is traded on an exchange or on the NASDAQ
Global Market, NASDAQ Global Select Market, NASDAQ Capital Market, the New York
Stock Exchange or the NYSE Alternext, then the last reported sale price (as
reported on Bloomberg L.P.) of Common Stock on the trading day immediately
preceding the Determination Date;

 

(b)     If the Company’s Common Stock is not traded on an exchange or on the
NASDAQ Global Market, NASDAQ Global Select Market, NASDAQ Capital Market, the
New York Stock Exchange or the NYSE Alternext, but is traded on the
Over-the-Counter Bulletin Board or in the over-the-counter market or Pink
Sheets, then the last reported sale price (as reported on Bloomberg L.P.) of
Common Stock on the trading day immediately preceding the Determination Date;

 

(c)     Except as provided in clause (d) below and Section 3.1 hereof, if the
Company’s Common Stock is not publicly traded, then the Fair Market Value shall
be as Holder and the Company agree, or in the absence of such an agreement, by
arbitration in accordance with the rules then standing of the American
Arbitration Association, before a single arbitrator to be chosen from a panel of
persons qualified by education and training to pass on the matter to be decided;
or

 

(d)     If the Determination Date is the date of a liquidation, dissolution or
winding up, or any event deemed to be a liquidation, dissolution or winding up
pursuant to the Company’s certificate of incorporation, then the Fair Market
Value is equal to all such amounts to be payable per share to holders of the
Company’s Common Stock pursuant to the certificate of incorporation in the event
of such liquidation, dissolution or winding up, plus all other amounts to be
payable per share in respect of the Common Stock in liquidation under the
certificate of incorporation, assuming for the purposes of this clause (d) that
all of the Shares of Common Stock then issuable upon exercise of all of the
Warrants are outstanding at the Determination Date.

 

 
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1.5.          Company Acknowledgment. The Company will, at the time of the
exercise of the Warrant, upon the request of Holder, acknowledge in writing its
continuing obligation to afford to Holder any rights to which Holder shall
continue to be entitled after such exercise in accordance with the provisions of
this Warrant. If Holder shall fail to make any such request, such failure shall
not affect the continuing obligation of the Company to afford to Holder any such
rights.

 

1.6.          Delivery of Stock Certificates, etc. on Exercise; Buy-In. (a) The
Company agrees that, provided the full exercise price listed in the Exercise
Form is received in accordance with Section 1.2 hereof, the Shares of Common
Stock purchased upon exercise of this Warrant shall be deemed to be issued to
Holder as the record owner of such Shares as of the close of business on the
date on which the Exercise Form is delivered and payment made for such Shares.
As soon as practicable after the exercise of this Warrant in full or in part,
and in any event within three (3) business days thereafter (“Warrant Share
Delivery Date”), the Company, at its sole expense (including the payment by it
of any applicable issue taxes), will cause to be issued in the name of and
delivered to Holder, or as Holder (upon payment by Holder of any applicable
transfer taxes) may direct in compliance with applicable securities laws, a
certificate or certificates for the number of duly and validly issued, fully
paid and non-assessable Shares of Common Stock or Other Securities to which
Holder shall be entitled on such exercise, plus, in lieu of any fractional share
to which Holder would otherwise be entitled, cash equal to such fraction
multiplied by the then Fair Market Value of one full Share of Common Stock,
together with any other capital stock or other securities or property (including
cash, where applicable) to which Holder is entitled upon such exercise pursuant
to Section 1 hereof or otherwise. The Company understands that a delay in the
delivery of the Warrant Shares after the Warrant Share Delivery Date could
result in economic loss to Holder. As compensation to Holder for such loss, the
Company agrees to pay (as liquidated damages and not as a penalty) to Holder for
any late issuance of Warrant Shares after exercise of this Warrant the
proportionate amount of $25 per business day after the Warrant Share Delivery
Date for each $10,000 amount of the Exercise Price for which this Warrant is
exercised which are not timely delivered. The Company shall pay any payments
incurred under this Section in immediately available funds upon demand.
Notwithstanding the foregoing, and in addition to any other remedies which may
be available to Holder, in the event that the Company fails for any reason to
effect delivery of the Warrant Shares by the Warrant Share Delivery Date, Holder
may, in its sole and absolute discretion, revoke all or part of Holder’s Warrant
exercise by delivery of a notice to such effect to the Company, whereupon the
Company and Holder shall each be restored to their respective positions
immediately prior to the exercise of the relevant portion of this Warrant,
except that the liquidated damages described above shall be payable through the
date of notice of revocation or rescission is delivered to the Company.

 

(b)     In addition to any other rights available to the Holder, if the Company
fails to cause its transfer agent to transmit to the Holder a certificate or
certificates representing the shares issuable upon exercise of this Warrant
pursuant to an exercise on or before the Warrant Share Delivery Date, and if
after such date 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 shares issuable upon exercise of
this Warrant which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall (1) pay in cash to the Holder 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 shares issuable upon exercise of this Warrant
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 shares
issuable upon exercise of this Warrant 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 for 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
this Warrant as required pursuant to the terms hereof.

 

 
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1.7.         Automatic Exercise.   In the event this Warrant is exercisable
pursuant to the provisions of Section 2 hereof on a cashless basis as of the
close of the last trading day on or before the Expiration Date, then this
Warrant, to the extent not previously unexercised and subject to the limitation
in Section 9 of this Warrant, shall be deemed to have been automatically
exercised without the requirement of any notice or delivery of the Exercise
Form, pursuant to the terms of Section 2 of this Warrant.  Such Expiration Date
will be deemed the exercise date for purposes of determining the Warrant Share
Delivery Date and similar terms hereof.

 

2.            Exercise.

 

2.1         Payment upon exercise may be made at the option of Holder in its
absolute discretion either in (i) wire transfer payable to the order of the
Company equal to the applicable aggregate Exercise Price, (ii) by delivery of
Common Stock issuable upon exercise of the Warrants in accordance with Section
(b) below, or (iii) by a combination of any of the foregoing methods, for the
number of Common Stock specified in such form (as such exercise number shall be
adjusted to reflect any adjustment in the total number of shares of Common Stock
issuable to Holder per the terms of this Warrant) and Holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully-paid
and non-assessable Shares of Common Stock (or Other Securities) determined as
provided herein. Notwithstanding the immediately preceding sentence, payment
upon exercise may be made in the manner described in Section 2.2 below
commencing one year after the Issue Date, but only with respect to Warrant
Shares not included for unrestricted public resale in an effective registration
statement.

 

2.2         Subject to the provisions herein to the contrary, if the Fair Market
Value of one share of Common Stock is greater than the Exercise Price (at the
date of calculation as set forth below), in lieu of exercising this Warrant for
cash, Holder may elect to receive shares equal to the value (as determined
below) of this Warrant (or the portion thereof being cancelled) by delivery of a
properly endorsed Exercise Form delivered to the Company by any means described
in Section 15 hereof, in which event the Company shall issue to Holder a number
of shares of Common Stock computed using the following formula:

 

X=Y (A-B)

          A

 

Where    X= the number of shares of Common Stock to be issued to Holder        

Y=

the number of shares of Common Stock purchasable under the Warrant or, if only a
portion of the Warrant is being exercised, the portion of the Warrant being
exercised (at the date of such calculation)

 

 

A=

Fair Market Value

 

 

B=

Exercise Price (as adjusted to the date of such calculation)

 

 
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For purposes of Rule 144 promulgated under the 1933 Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction in the manner described above shall be deemed to have been
acquired by Holder, and the holding period for the Warrant Shares shall be
deemed to have commenced, on the date this Warrant was originally issued.

 

3.            Adjustment for Reorganization, Consolidation, Merger, etc.

 

3.1.       Fundamental Transaction. If, at any time while this Warrant is
outstanding, a Fundamental Transaction (as defined herein) occurs, then, upon
any subsequent exercise of this Warrant, Holder shall have the option to
receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the
option of Holder in its sole and absolute discretion, (a) 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 any
additional consideration (the “Alternate Consideration”) receivable upon or as a
result of such reorganization, reclassification, merger, consolidation or
disposition of assets by Holder of the number of Shares of Common Stock for
which this Warrant is exercisable immediately prior to such event or (b) if the
Company is acquired in (1) a transaction where the consideration paid to holders
of the Common Stock consists solely of cash, (2) a “Rule 13e-3 transaction” as
defined in Rule 13e-3 under the Exchange Act or (3) a transaction involving a
Person not traded on a national securities exchange, the Nasdaq Global Select
Market, the Nasdaq Global Market or the Nasdaq Capital Market, cash equal to the
Black-Scholes Value. 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 Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or surviving entity in such Fundamental Transaction
shall issue to Holder a new warrant consistent with the foregoing provisions and
evidencing Holder’s right to exercise such warrant into Alternate Consideration.
The terms of any agreement pursuant to which a Fundamental Transaction is
effected shall include terms requiring any such successor or surviving entity to
comply with the provisions of this Section 3.1 and ensuring that this Warrant
(or any such replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental Transaction. “Black-Scholes
Value” shall be determined in accordance with the Black-Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg L.P. using (i) a price per
share of Common Stock equal to the volume weighted average price (as determined
by Bloomberg L.P.) (“VWAP”) of the Common Stock for the trading day immediately
preceding the date of consummation of the applicable Fundamental Transaction,
(ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a
period equal to the remaining term of this Warrant as of the date of such
request and (iii) an expected volatility equal to the 100 day volatility
obtained from the HVT function on Bloomberg L.P. determined as of the trading
day immediately following the public announcement of the applicable Fundamental
Transaction.

 

(a)           A Fundamental Transaction is defined as the occurrence of any of
the following (each, a “Fundamental Transaction”):

 

(i)     The Company effects any merger or consolidation of the Company with or
into another entity where the other entity acquires more than 50% of the
outstanding shares in one or a series of related transactions;

 

 
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(ii)      The Company effects any sale or transfer of 40% in the aggregate, in
one or a series of related transactions, of the properties and assets of the
Company to another Person(s) in any rolling twelve (12) month period;

 

(iii)     any purchase, exchange or tender offer (whether by the Company or
another entity) is completed pursuant to which holders of an aggregate of 50% or
more of the outstanding Shares of Common Stock of the Company are permitted to
tender or exchange their Shares for other securities (whether of the Company or
another Person), cash or property;

 

(iv)     The Company consummates a stock purchase or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with one or more persons whereby such other persons
acquire more than the 50% of the outstanding Shares of Common Stock (not
including any Shares of Common Stock held by such other persons making or party
to, or associated or affiliated with, the other persons making or party to, such
stock purchase or other business combination);

 

(v)      any “person” or “group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the 1934 Act) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, in
one or a series of related transactions, of 50% or more of the aggregate Common
Stock of the Company; or

 

(vi)     The Company effects any reclassification of the Common Stock or any
share exchange pursuant to which more than 50% of the Common Stock of the
Company is effectively converted into or exchanged for other securities (whether
of the Company or another Person), cash or property. The foregoing provision
shall similarly apply to successive Fundamental Transactions of a similar nature
by any such successor or purchaser.

 

3.2        Continuation of Terms. Upon any reorganization, consolidation, merger
or transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the Other Securities and property receivable on
the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other
Securities, including, in the case of any such transfer, the Person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such Person shall have expressly assumed the terms of this Warrant as
provided in Section 4 hereof.

 

4.          Extraordinary Events Regarding Common Stock. In the event that the
Company shall (a) issue additional Shares of Common Stock as a dividend or other
distribution on outstanding Common Stock, (b) subdivide its outstanding Shares
of Common Stock or (c) combine its outstanding Shares of the Common Stock into a
smaller number of Shares of Common Stock, then, in each such event, the Exercise
Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Exercise Price by a fraction, the numerator of which shall
be the number of Shares of Common Stock outstanding immediately prior to such
event and the denominator of which shall be the number of Shares of Common Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Exercise Price then in effect. The Exercise Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described in this Section 4. The number of Shares of
Common Stock that Holder of this Warrant shall thereafter, on the exercise
hereof, be entitled to receive shall be adjusted to a number determined by
multiplying the number of Shares of Common Stock that would otherwise (but for
the provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the Exercise Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the
Exercise Price in effect on the date of such exercise.

 

 
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5.           Certificate as to Adjustments. In each case of any adjustment or
readjustment in the Shares of Common Stock (or Other Securities) issuable upon
exercise of the Warrants, the Company, at its sole expense, shall promptly cause
its Chief Financial Officer or other appropriate designee to compute such
adjustment or readjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment or readjustment and showing
in detail the facts upon which such adjustment or readjustment is based,
including a statement of the Exercise Price and the number of Shares of Common
Stock to be received upon exercise of this Warrant, in effect immediately prior
to such adjustment or readjustment and as adjusted or readjusted as provided in
this Warrant. The Company will forthwith mail a copy of each such certificate to
Holder and any Warrant Agent of the Company that is appointed pursuant to
Section 10 hereof.

 

6.           Reservation of Stock, etc. Issuable on Exercise of Warrant;
Financial Statements.   The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of the Warrants, all
Shares of Common Stock (or Other Securities) from time to time issuable upon the
exercise of this Warrant. This Warrant entitles Holder, upon written request, to
receive copies of all financial and other information distributed or required to
be distributed to holders of the Company’s Common Stock.

 

7.           Assignment; Exchange of Warrant. Subject to compliance with
applicable securities laws, this Warrant and the rights evidenced hereby may be
transferred by any registered Holder (a “Transferor”). On the surrender for
exchange of the original of this Warrant, with the Transferor’s endorsement in
the form of Exhibit B attached hereto (the “Transferor Endorsement Form”), and
together with an opinion of counsel reasonably satisfactory to the Company that
the transfer of this Warrant will be in compliance with applicable securities
laws, the Company will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a
“Transferee”), calling in the aggregate on the face or faces thereof for the
number of Shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor.

 

8.           Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

9.           [Reserved].

 

10.         Warrant Agent. The Company may, by written notice to Holder, appoint
an agent (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1 hereof,
exchanging this Warrant pursuant to Section 7 hereof and replacing this Warrant
pursuant to Section 8 hereof, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

 

11.         Transfer on the Company’s Books. Until this Warrant is transferred
on the books of the Company, the Company may treat the registered Holder as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

 

12.         Registration Rights.

 

12.1      Upon the request of the Holder (the “Request”), the Company shall
prepare and, as soon as possible after the Request, but in no event later than
the date that is forty-five (45) days after the Request, file with the SEC a
registration statement on Form S-1 (the “Registration Statement”) registering
the Warrant Shares. The Company shall use its best efforts to have the
Registration Statement declared effective by the SEC as soon as possible, but in
no event later than one hundred and fifty (150) days from the date of the
Request. The Company shall pay one hundred percent (100%) of all costs and
expenses related to the registration of the Warrant Shares.

 

 
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12.2      If a Registration Statement covering the Warrant Shares (i) is not
filed with the SEC by the Company within forty-five (45) days after the date of
the Request, or (ii) does not become effective within one hundred and fifty
(150) days after the date of the Request and remain effective for the
Registration Period (as hereinafter defined), the Company shall refund any and
all costs and expenses related to the registration of the Warrant Shares
previously paid by the Holder and the Company shall be liable for one hundred
percent (100%) of such costs and expenses, and pay to the Holder $1,000 per day
for the period during which one or more of these violations occurs. The Company
agrees that it will not challenge or dispute Holder’s remedies set forth in this
Section by asserting that such remedies constitute a penalty or should otherwise
not be enforced as written.

 

12.3     The Company shall use its best efforts to keep such Registration
Statement continuously effective until the earlier of (A) the date on which all
of the Warrant Shares have been sold by the Holder, (B) the date on which all of
the Warrant Shares become eligible for resale by the Holder without volume
limitations pursuant to Rule 144 under the Exchange Act and (C) the date on
which the Holder notifies the Company that keeping the Registration Statement
effective is unnecessary (the “Registration Period”). The Company shall promptly
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to such Registration Statement and any prospectus
used in connection therewith, as may be necessary to keep such Registration
Statement effective at all times until the expiration of the Registration
Period. The Company shall pay one hundred percent (100%) of all costs and
expenses related to keeping such Registration Statement effective.

 

12.4     The Company shall, not less than three (3) business days prior to the
filing of the Registration Statement or any related prospectus or any amendment
or supplement thereto, (i) furnish to the Holder or any holder under this
Agreement copies of the Registration Statement or prospectus proposed to be
filed, which documents will be subject to the review of the Holder or any holder
under this Agreement, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation. Furthermore, the Company shall advise the Holder or
any holder under this Agreement, within two (2) business days: (x) after it
shall receive notice or obtain knowledge of the issuance of any stop order by
the SEC delaying or suspending the effectiveness of the Registration Statement
or of the initiation or threat of any proceeding for that purpose, or any other
order issued by any state securities commission or other regulatory authority
suspending the qualification or exemption from qualification of any of the
Warrant Shares under state securities or “blue sky” laws; and it will promptly
use its best efforts to prevent the issuance of any stop order or other order or
to obtain its withdrawal at the earliest possible moment if such stop order or
other order should be issued; and (y) when the prospectus or any prospectus
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment thereto, when the same
has become effective.

 

 
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13.     Piggy-Back Registrations. If there is not an effective Registration
Statement covering all of the Warrant Shares and the Company shall determine to
prepare and file with the U.S. Securities and Exchange Commission (the
“Commission”) a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to the Holder written notice of such
determination and, if within fifteen (15) calendar days after receipt of such
notice, the Holder shall so request in writing, the Company shall include in
such registration statement all or any part of the Warrant Shares such Holder
requests to be registered, subject to customary underwriter cutbacks applicable
to all holders of registration rights. To the extent not all of the Warrant
Shares may be included for registration in the registration statement, as a
result of the Commission’s application of Rule 415 under the Securities Act,
priority in such registration statement will be given to the other Common Stock
included therein in preference to the Warrant Shares except no preference shall
be given to shares held by affiliates. The obligations of the Company under this
Section may be waived by the Holder entitled to registration rights under this
Section 13. The holders whose shares are included or required to be included in
such registration statement are granted the same rights, benefits, liquidated or
other damages and indemnification granted to other holders of securities
included in such registration statement. Notwithstanding anything to the
contrary herein, the registration rights granted to the Holder shall not be
applicable for such times as such Warrant Shares may be sold by the Holder
thereof without restriction pursuant to Section 144(b)(1) of the Securities Act.
In no event shall the liability of the Holder or permitted successor in
connection with any Warrant Shares included in any such registration statement
be greater in amount than the dollar amount of the net proceeds actually
received by such Holder upon the sale of the Warrant Shares sold pursuant to
such registration or such lesser amount applicable to other holders of
securities included in such registration statement.

 

14.      Severability. In case any one or more of the provisions hereof shall be
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

 

15.      Notices. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable overnight air courier service with charges prepaid,
or (iv) transmitted by hand delivery or facsimile, addressed as set forth below
or to such other address as such party shall have specified most recently by
written notice in accordance with this Section. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received), (b) on the first business day
following the date of mailing by reputable overnight air courier service, fully
prepaid, addressed to such address or (c) three (3) business days after in the
mail or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:

 

If to the Company, to:

 

Comarco, Inc.

28202 Cabot Road, Suite 300

Laguna Niguel, California 92677

Facsimile: (949) 599-1430

Attention: Tom Lanni, President and CEO

E-Mail: tlanni@comarco.com

 

 
9

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With a copy to (which copy shall not constitute notice):

 

Rutan & Tucker, LLP

611 Anton Blvd., Suite 1400

Costa Mesa, CA 92626

Facsimile: (714) 546-9035

Attention: Garett Sleichter

E-mail: gsleichter@rutan.com

 

If to Holder:

 

[_________________]

[_________________]

[_________________]

[_________________]

Facsimile: [_________________]
Attention: [_________________]

E-mail: [_________________]

 

With a copy to (which copy shall not constitute notice):

 

[_________________]

[_________________]

[_________________]

[_________________]

Facsimile: [_________________]
Attention: [_________________]

E-mail: [_________________]

 

16.     Amendment and Waiver. No provision of this Warrant may be amended or
otherwise modified except by a written document signed by the Company and
Holder. No provision of this Warrant may be waived except by a written document
executed by the party against whom the waiver is to be effective. A party’s
failure to enforce any provision of this Warrant shall neither be construed as a
waiver of such provision nor prevent the party from subsequently enforcing the
same or any other provision of this Warrant.

 

17.     Law Governing This Warrant. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party hereto
against the other concerning the transactions contemplated by this Warrant shall
be brought only in the state courts of New York or in the federal courts located
in the state and county of New York. The parties to this Warrant hereby
irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens. The prevailing party
shall be entitled to recover from the other party its reasonable attorney’s fees
and costs. In the event that any provision of this Warrant or any other
agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform to such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision of any agreement. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Warrant by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law.

 

[Signature page follows]

 

 
10

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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.

 

 

COMARCO, Inc. 

 

 

 

By:                                                                              

Name: 

Title: 

 

 
 

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Exhibit A

 

FORM OF EXERCISE NOTICE

(to be signed only on exercise of Warrant)

 

TO: COMARCO, Inc.

 

The undersigned, pursuant to the provisions set forth in the attached Warrant
(No. A-___), hereby irrevocably elects to purchase (check applicable box):

 

___     ________ Shares of the Common Stock covered by such Warrant; or

 

___     the maximum number of Shares of Common Stock covered by such Warrant
pursuant to the cashless exercise procedure set forth in Section 2 of the
Warrant.

 

The undersigned herewith makes payment of the full exercise price for such
Shares at the price per share provided for in the attached Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):

 

___     $__________ in lawful money of the United States; and/or

 

___     the cancellation of such portion of the attached Warrant as is
exercisable for a total of _______ Shares of Common Stock (using a Fair Market
Value of $_______ per share for purposes of this calculation); and/or

 

___     the cancellation of such number of Shares of Common Stock as is
necessary, in accordance with the formula set forth in Section 2 of the Warrant,
to exercise this Warrant with respect to the maximum number of Shares of Common
Stock purchasable pursuant to the cashless exercise procedure set forth in
Section 2 of the Warrant.

 

The undersigned requests that the certificates for such Shares be issued in the
name of and delivered pursuant to DTC instructions below or to
                                         whose address is
                                                              .

 

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the attached Warrant
shall be made pursuant to registration of the Common Stock under the 1933 Act,
or pursuant to an exemption from registration under the 1933 Act.

 

DTC Instructions:                                                        

 

  Dated:___________________

                                                                                   

(Signature must conform to name of holder as specified on the face of the Warrant)

 

                                                                                   

                                                                                   

(Address)

 

 
 

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Exhibit B

 

 

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

 

For value received, the undersigned hereby sells, assigns and transfers unto the
Person(s) named below under the heading “Transferees” the right represented by
the attached Warrant to purchase the percentage and number of Shares of Common
Stock of Comarco, Inc. to which the attached Warrant relates specified under the
headings “Percentage Transferred” and “Number Transferred,” respectively,
opposite the name(s) of such Person(s) and appoints each such Person Attorney to
transfer its respective right on the books of Comarco, Inc. with full power of
substitution in the premises.

 

 

Transferees

Percentage Transferred

Number Transferred

                 

 

 

Dated: ______________, ___________

 

 

 

Signed in the presence of:

 

                                                                                   

            (Name)

 

 

ACCEPTED AND AGREED:

[TRANSFEREE]

 

 

                                                                                   

            (Name)

                                                                                   

(Signature must conform to name of holder as specified on the face of the warrant)

 

 

 

                                                                                   

                                                                                   

(address)

 

                                                                                   

                                                                                   

(address)