Unassociated Document




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 TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES

 

SHORT
TERM WARRANT




To
Purchase $________ Stated Value of Preferred Stock and Long Term
Warrants

 

DDS
Technologies USA, Inc.

 

THIS
SHORT TERM WARRANT (the “Short
Term 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 hereof (the
“Initial
Exercise Date”) and on
or prior to the earlier of the close of business on the one year anniversary of
the Initial Exercise Date (the “Termination
Date”) but
not thereafter, to subscribe for and purchase, for an exercise price equal to
the Stated Value of such Preferred Stock (the “Exercise
Price”), from
DDS Technologies USA, Inc., a Nevada corporation (the “Company”), (a)
up to $_____________[amount equal to initial purchase of Preferred Stock] Stated
Value of Preferred Stock at an initial conversion price equal to $0.85 (the
“Preferred
Stock Conversion Price”)
(subject to adjustment hereunder and thereunder) (the “Preferred
Stock”) and
(b) Long Term Warrants at an exercise price of $1.00
per share
(the “Warrant
Exercise Price”)
(subject to adjustment hereunder and thereunder) (the “Warrant”). Upon
the purchase hereunder of Preferred Stock, the Holder shall receive a Warrant to
purchase a number of shares of Common Stock equal to 35% of the shares of Common
Stock issuable upon conversion of such Preferred Stock. The Preferred Stock and
Warrant shall be in the form of the Preferred Stock and Warrants (with the same
rights, privileges and preferences set forth in the Transaction Documents,
including without limitation, the Certificate of Designation and the Long Term
Warrant) issued pursuant to the Purchase Agreement, mutatis
mutandis;
provided,
however, the
Conversion Price set forth in Section 6(b) of the Certificate of Designation
shall be equal to the Preferred Stock Conversion Price and the Exercise Price
set forth in Section 2(b) of the Long Term Warrant shall be equal to the Warrant
Exercise Price. The
Preferred Stock and the Warrant shall be collectively referred to as the
“Securities.” The
Warrant Exercise Price and the Preferred Stock Conversion Price shall be
collectively referred to herein as the “Conversion
Price.”

 







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Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in that certain Securities Purchase Agreement (the “Purchase
Agreement”), dated
April 12, 2005, among the Company and the Purchasers signatory
thereto.

 

Section
2. Exercise.

 

a)  Exercise
of this Short Term Warrant.
Exercise of the purchase rights represented by this Short Term Warrant may be
made, in whole or in part, 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 (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) and the payment of the Stated Value thereby purchased by wire
transfer or cashier’s check drawn on a United States bank. Upon exercise of the
Short Term Warrant, the Company shall issue shares of Preferred Stock with a
Stated Value equal to the amount paid by the Holder and the Warrant to purchase
a number of shares of Common Stock equal to 35% of the shares of Common Stock
issuable upon conversion of such Preferred Stock.

 

b)  Mechanics
of Exercise.


 

i.  Authorization
of Preferred Stock and the Warrant. The
Company covenants that during the period this Short Term Warrant is outstanding,
it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of all of the shares of Common
Stock underlying the Preferred Stock and Warrant (the collectively,
“Conversion
Shares”). The
Company further covenants that its issuance of this Short Term Warrant shall
constitute full authority to its officers who are charged with the duty of
executing certificates to execute and issue the necessary certificates for the
Securities upon the exercise of the purchase rights under this Short Term
Warrant and certificates upon conversion and exercise of the Securities. The
Company covenants that the Securities which may be issued upon the exercise of
the purchase rights represented by this Short Term Warrant and the Conversion
Shares issuable thereunder will, upon exercise of the purchase rights
represented by this Short Term 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). The Company will take all such
reasonable action as may be necessary to assure that the Securities and
Conversion Shares may be issued as 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.

 

ii.  Delivery
of Certificates Upon Exercise.
Certificates for the Securities purchased hereunder shall be delivered to the
Holder within 7 Trading Days from the delivery to the Company of the Notice of
Exercise Form, surrender of this Short Term Warrant and payment of the Stated
Value as set forth above (“Security
Delivery Date”). This
Short Term Warrant shall be deemed to have been exercised on the date the
payment of the Exercise Price is received by the Company. The Securities 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
security for all purposes, as of the date the Short Term 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 2(b)(v) prior to the
issuance of such security, have been paid. 

 







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iii.  Delivery
of New Short Term Warrants Upon Exercise. If this
Short Term Warrant shall have been exercised in part, the Company shall, at the
time of delivery of the certificate or certificates representing the Securities,
deliver to Holder a new Short Term Warrant evidencing the rights of Holder to
purchase the unpurchased Securities called for by this Short Term Warrant, which
new Short Term Warrant shall in all other respects be identical with this Short
Term Warrant.

 

iv.  Rescission
Rights. If the
Company fails to deliver to the Holder a certificate or certificates
representing the Securities pursuant to this Section 2(b)(iv) by the Security
Delivery Date, then the Holder will have the right to rescind such exercise.


 

v.  Charges,
Taxes and Expenses.
Issuance of certificates for Securities 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 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 Securities are to be issued in a name other than the
name of the Holder, this Short Term 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.

 

vi.  Closing
of Books. The
Company will not close its records in any manner which prevents the timely
exercise of this Short Term Warrant, pursuant to the terms hereof or the
conversion of the Securities pursuant to the terms hereof.

 

Section
3. Certain
Adjustments.

 

a)  Stock
Dividends and Splits. If the
Company, at any time while this Short Term Warrant is outstanding: (A) pays a
stock dividend or otherwise make a distribution or distributions on shares of
its Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company pursuant to the Securities), (B)
subdivides outstanding shares of Common Stock into a larger number of shares,
(C) combines (including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by reclassification
of shares of the Common Stock any shares of capital stock of the Company, then
in each case the Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to this Section 3(a)
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

 







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b)  Subsequent
Equity Sales. If the
Company or any Subsidiary thereof, as applicable, at any time while this Short
Term Warrant is outstanding, shall offer, sell, grant any option to purchase or
offer, sell or grant any right to reprice its securities, or otherwise dispose
of or issue (or announce any offer, sale, grant or any option to purchase or
other disposition) any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock, at an effective price per share less
than the then Conversion Price (such lower price, the “Base
Share Price” and
such issuances collectively, a “Dilutive
Issuance”), as
adjusted hereunder (if the holder of the Common Stock or Common Stock
Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices
or otherwise, or due to warrants, options or rights per share which is issued in
connection with such issuance, be entitled to receive shares of Common Stock at
an effective price per share which is less than the Conversion Price, such
issuance shall be deemed to have occurred for less than the Conversion Price on
such date of the Dilutive Issuance), then, the Conversion Price shall be reduced
and only reduced to equal the Base Share Price and the number of shares of
Common Stock issuable upon exercise of the Warrant issuable hereunder shall be
increased such that the aggregate Warrant Exercise Price payable hereunder,
after taking into account the decrease in the Warrant Exercise Price, shall be
equal to the aggregate Warrant Exercise Price prior to such adjustment. Such
adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or
issued under this Section 3(b) in respect of an Exempt Issuance. The Company
shall notify the Holder in writing, no later than the Trading Day following the
issuance of any Common Stock or Common Stock Equivalents subject to this
section, indicating therein the applicable issuance price, or of applicable
reset price, exchange price, conversion price and other pricing terms (such
notice the “Dilutive
Issuance Notice”). For
purposes of clarification, whether or not the Company provides a Dilutive
Issuance Notice pursuant to this Section 3(b), upon the occurrence of any
Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
entitled to receive a number of securities based upon the Base Share Price
regardless of whether the Holder accurately refers to the Base Share Price in
the Notice of Exercise. 

 

c)  Pro
Rata Distributions. If the
Company, at any time while this Short Term Warrant is outstanding, distributes
to all holders of Common Stock (and not to Holders) evidences of its
indebtedness or assets (including cash and cash dividends) or rights or warrants
to subscribe for or purchase any security other than the Common Stock (which
shall be subject to Section 3(b), then in each such case the Conversion Price
shall be adjusted by multiplying such Conversion 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 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












d)  Fundamental
Transaction. If, at
any time while this Short Term Warrant is outstanding, (A) the Company effects
any merger or consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets in one or a
series of related transactions, (C) any tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other
securities, cash or property, or (D) the Company effects any reclassification 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 (in any such case, a “Fundamental
Transaction”), then,
upon any subsequent exercise of this Short Term Warrant the Holder shall have
the right to receive upon conversion or exercise of the Securities, as
applicable, for each Conversion Share that would have been issuable upon such
exercise and then subsequent conversion immediately prior to the occurrence of
such Fundamental Transaction, at the option of the Holder, (a) upon conversion
or exercise of the Securities, 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 a Holder of the number of shares of
Common Stock for which the underlying Securities are convertible immediately
prior to such event or (b) if the Company is acquired in an all cash
transaction, cash equal to the value of this Short Term Warrant as determined in
accordance with the Black-Scholes option pricing formula. For purposes of any
such deemed conversion, the determination of the Conversion 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
Conversion 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 Holder shall be given the same choice as to the Alternate Consideration it
receives upon any conversion or exercise of the Securities underlying this Short
Term 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 the Holder a new short
term warrant consistent with the foregoing provisions and evidencing the
Holder’s right to exercise such short term warrant right ultimately 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(d)
and insuring that this Short Term Warrant (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction.

 







5












e)  Calculations. All
calculations and adjustments to the Conversion Price under this Section 3 shall
be made to the nearest cent or the nearest 1/100th of a share, as the case may
be. For purposes of this Section 3, the number of shares of Common Stock deemed
to be issued and outstanding as of a given date shall be the sum of the number
of shares of Common Stock (excluding treasury shares, if any) issued and
outstanding..

 

f)  Voluntary
Adjustment By Company. The
Company may at any time during the term of this Short Term Warrant reduce the
then current Conversion Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.

 

g)  Notice
to Holders.

 

i.  Adjustment
to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to this Section 3, the
Company shall promptly mail to each Holder a notice setting forth the Conversion
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment. 

 

ii.  Notice
to Allow Exercise by Holder. If (A)
the Company shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash dividend on or
a redemption of the Common Stock; (C) the Company shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property; (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company; then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the Short Term
Warrant Register of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided, that
the failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. The Holder is entitled to exercise this Short Term Warrant
during the 20-day period commencing on the date of such notice to the effective
date of the event triggering such notice.

 







6












Section
4. Transfer
of Short Term Warrant.

 

a)  Transferability. Subject
to compliance with any applicable securities laws and the conditions set forth
in Sections 5(a) and 4(e) hereof and to the provisions of Section 4.1 of the
Purchase Agreement, this Short Term Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Short Term Warrant at
the principal office of the Company, together with a written assignment of this
Short Term 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 Short Term
Warrant or Short Term 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 Short Term Warrant evidencing the portion
of this Short Term Warrant not so assigned, and this Short Term Warrant shall
promptly be cancelled. A Short Term Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Securities without having a new
Short Term Warrant issued. 

 

b)  New
Short Term Warrants. This
Short Term Warrant may be divided or combined with other Short Term Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Short Term
Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section 4(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver
a new Short Term Warrant or Short Term Warrants in exchange for the Short Term
Warrant or Short Term Warrants to be divided or combined in accordance with such
notice.

 







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c)  Short
Term Warrant Register. The
Company shall register this Short Term Warrant, upon records to be maintained by
the Company for that purpose (the “Short
Term Warrant Register”), in
the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Short Term Warrant as the absolute owner
hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary

 

d)  Transfer
Restrictions.
If, at the
time of
the surrender of this Short
Term Warrant in
connection with any transfer of this Short
Term Warrant, the
transfer of this Short
Term 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
Short
Term Warrant, as the
case may be, furnish to the Company a written opinion of counsel (which opinion
shall be in form, substance and 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.

 

Section
5. Miscellaneous.

 

a)  Title
to the Short Term Warrant. Prior
to the Termination Date and subject to compliance with applicable laws and
Section 4 of this Short Term Warrant, this Short Term Warrant and all rights
hereunder are transferable, in whole or in part, at the office or agency of the
Company by the Holder in person or by duly authorized attorney, upon surrender
of this Short Term 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.

 

b)  No
Rights as Shareholder Until Exercise. This
Short Term 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 Short Term Warrant and the payment of the aggregate principal,
the Securities 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.

 

c)  Loss,
Theft, Destruction or Mutilation of Short Term 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 Short
Term Warrant or any stock certificate relating to the Securities, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it (which, in the case of the Short Term Warrant, shall not include the posting
of any bond), and upon surrender and cancellation of such Short Term Warrant or
stock certificate, if mutilated, the Company will make and deliver a new Short
Term Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Short Term Warrant or stock
certificate.

 







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d)  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.

 

e)  Authorized
Shares.


 

The
Company covenants that during the period the Short Term 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 shares of Common Stock
issuable upon conversion and exercise, as applicable, of the Securities. The
Company further covenants that its issuance of this Short Term Warrant shall
constitute full authority to its officers who are charged with the duty of
executing certificates to execute and issue the necessary certificates for the
Securities upon the exercise of the purchase rights under this Short Term
Warrant. The Company will take all such reasonable action as may be necessary to
assure that such Securities and Conversion Shares may be issued as 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
Short Term Warrant or the Securities, 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 Short Term Warrant and the Securities against impairment. Without limiting
the generality of the foregoing, the Company will (a) take all such action as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Securities upon the exercise of this
Short Term Warrant and Conversion Shares upon conversion and exercise of the
Securities, and (b) 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 Short Term Warrant and the Securities.

 

Before
taking any action which would result in an adjustment in the Securities for
which this Short Term Warrant is exercisable or in the Conversion 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.

 







9












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

 

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

 

h)  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 Short Term 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.

 

i)  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.

 

j)  Limitation
of Liability. No
provision hereof, in the absence of any affirmative action by Holder to exercise
this Short Term Warrant or purchase Securities, 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.

 

k)  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 Short Term 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 Short Term Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.

 

l)  Successors
and Assigns. Subject
to applicable securities laws, this Short Term 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 Short Term Warrant are intended to be for the
benefit of all Holders from time to time of this Short Term Warrant and shall be
enforceable by any such Holder or holder of Securities.

 

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

 







10












n)  Severability.
Wherever possible, each provision of this Short Term Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Short Term 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 Short Term Warrant.

 

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

 




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








11


















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

 




Dated:
April __, 2005

 


	
      DDS
      TECHNOLOGIES USA, INC.

       

	
      By:__________________________________________

      Name:

      Title:

























12


















NOTICE
OF EXERCISE




TO: DDS
TECHNOLOGIES USA, INC.




(1)  The
undersigned hereby elects to purchase $________ Stated Value of Preferred Stock
and Warrants to purchase _____ shares of Common Stock of DDS Technologies USA,
Inc. pursuant to the terms of the attached Short Term Warrant 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 lawful money of the United States; or

 

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

 

_______________________________






The
Securities shall be delivered to the following:




                _______________________________

           
_______________________________

                _______________________________




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




[SIGNATURE
OF HOLDER]



Name of
Investing Entity:
________________________________________________________________

Signature
of Authorized Signatory of Investing Entity:
________________________________________________

Name of
Authorized Signatory:
___________________________________________________________________

Title of
Authorized Signatory:
____________________________________________________________________

Date:
______________________________________________________________________________________

















13
















 

ASSIGNMENT
FORM




(To
assign the foregoing warrant, execute

this form
and supply required information. 

Do not
use this form to exercise the Short Term Warrant.)










FOR VALUE
RECEIVED, the foregoing Short Term 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 Short Term 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 Short Term
Warrant.