Document:

BEMA GOLD CORPORATION
 
(the “Company”)  

INCENTIVE STOCK OPTION
PLAN 

APRIL 18, 1995 

Amended June 11, 2003  

	1.  	   	Shares
Subject to Plan  

1.1 The Board of Directors
may, from time to time, in its discretion grant to employees, directors, officers and
others providing substantial services to the Company or any of its associated, affiliated,
controlled or subsidiary companies (collectively called “Eligible Persons”), the
right or option to purchase common shares without nominal or par value in the capital of
the Company such number of shares being subject to adjustment under paragraph 7 hereof. No
option shall be granted to any person except on approval of the Board of Directors. The
maximum number of shares available for option under this Plan shall be 31,000,000 shares
in aggregate, provided that the total number of common shares to be optioned to any one
optionee shall not exceed 5% of the issued common shares of the Company at the time of
grant. For the purposes of the Plan, associated companies, affiliated companies,
controlled companies and subsidiary companies will have the meanings set forth under
Section 1 of the Securities Act (Ontario). 

	2. 	  	Purchase
Price 

2.1 The purchase price of any
shares in respect of which an option may be granted under the Plan shall be fixed by the
Board of Directors but shall not be less than the fair market value of the shares at the
time the option is granted. “Fair market value” means the closing price of the
common shares of the Company on the Toronto Stock Exchange if the common shares are then
listed for trading thereon (and if not so listed, on any stock exchange on which the
common shares may then be listed) on the last trading day before the day on which the
option is granted. If no shares have been traded on such day, the fair market value shall
be the closing price on the last previous day for which a trade was reported by the
Toronto Stock Exchange or such other applicable exchange. 

	3. 	  	Option
Term 

3.1 The shares subject to each
option shall become purchasable in whole or in part at such time or times as may be
determined by the Board of Directors. Each option shall not be exercisable after the
expiration of ten (10) years from the date granted and may expire on such earlier date or
dates as may be fixed by the Board of Directors. Any shares not purchased prior to the
expiration of an option granted hereunder may thereafter be reallocated in accordance with
the provisions of the Plan. 

	4. 	  	Non-Transferable 

4.1 Any option granted under
the Plan shall be non-transferable by the person to whom it was granted otherwise than by
will or the laws of descent and distribution and shall be exercisable during the
person’s lifetime, only by him. 

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	5. 	  	Effect
of Termination of Employment or Death 

5.1 If an optionee dies while
employed by the Company, any option held by him at the date of death shall become
exercisable in whole or in part by the person(s) to whom the optionee’s rights under
the option shall pass by the optionee’s will or the laws of descent and distribution.
All such options shall be exercisable for one (1) year after the date of death or prior to
the expiration of the option period in respect thereof, whichever is sooner. 

5.2 If an optionee ceases to
be employed by the Company for cause or if an Optionee is removed from office as a
director or becomes disqualified from being a director by law, any option or the
unexercised portion thereof granted to such optionee shall terminate forthwith. If an
optionee ceases to be employed by the Company otherwise than by reason of death or
termination for cause, or if an optionee ceases to be a director other than by reason of
death, removal or disqualification, any option or unexercised portion thereof held by such
optionee at the effective date thereof may be exercised in whole or in part for a period
that is the earlier of: (i) ninety (90) days thereafter; or (ii) the expiration date fixed
by the Board of Directors; or (iii) the date the option expires in accordance with its
terms. 

	6. 	  	No
Rights As Shareholder 

6.1 No person shall have any
of the rights of a shareholder in respect of shares subject to an option until such shares
shall have been paid for in full and issued. 

	7. 	  	Adjustment
to Shares 

7.1 Subject to the policies,
rules and regulations of any lawful authority having jurisdiction (including any exchange
with which the shares of the Company are listed for trading), the number of shares in
respect of which options may be granted under the Plan shall be increased or decreased
proportionately in the event of the subdivision or consolidation of the shares of the
Company and, in the event of any such subdivision or consolidation, an appropriate
adjustment shall be made so as to change the number of shares deliverable upon the
exercise of the unexercised portion of any option theretofore granted, without change in
the total price applicable to the unexercised portion of any option but with the
corresponding adjustment in the price for each share covered thereby. 

7.2 In the event the Company
is re-organized, amalgamated or merged with or consolidated into another corporation or in
the event there is a change in control of the Company, the Board of Directors may make
such provisions as it deems appropriate for the exercise of outstanding options or
continuance of outstanding options to prevent any increase or decrease in the number of
shares deliverable upon their exercise. 

	8.	  	Effect
of Take-Over Bid 

8.1 If a bona fide offer (the
“Offer”) is made to an optionee or to shareholders generally or to a class of
shareholders which includes an option for shares of the Company, which Offer, if accepted
in whole or in part, would result in the offeror exercising control over the Company
within the meaning of subsection 1(3) of the Securities Act (Ontario) (as amended from
time to time), then the  

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Company shall, immediately upon
receipt of notice of the Offer, notify each optionee currently holding an option of the
Offer, with full particulars thereof; whereupon such option may be exercised in whole or
in part by the optionee so as to permit the optionee to tender the shares received upon
such exercise pursuant to the Offer. If the Offer is not completed within the time
specified therein, at the option of the optionee, the optioned shares may be returned by
the optionee to the Company and reinstated as authorized but unissued shares and the
terms of the option as set forth in the Plan shall again apply to the option.  

	9. 	  	Written
Agreement 

9.1 A written agreement shall
be entered into between the Company and each person to whom an option is granted hereunder
which agreement shall set out the option price and the terms and conditions on which the
option may be exercised, all in accordance with the provisions of the Plan. The agreement
shall be in such form as the Board of Directors may from time to time approve and may
contain such terms as may be considered necessary in order that the option will comply
with any provisions respecting stock options in the income tax or other laws in force in
any country or jurisdiction or which the person to whom the option is granted may from
time to time be a resident or citizen. 

	10.	  	Amendment
of the Plan 

10.1 Subject to the policies,
rules and regulations of any lawful authority having jurisdiction (including any exchange
with which the shares of the Company are listed for trading), the Board of Directors may
at any time, without further action by the shareholders, amend the Plan or any option
granted hereunder in such respects as it may consider advisable and, without limiting the
generality of the foregoing, it may do so to ensure that the options granted hereunder
will comply with any provisions respecting stock options in the income tax and other laws
in force in any country or jurisdiction of which a person to whom an option has been
granted may from time to time be resident or a citizen, or it may at any time, without
action by shareholders, terminate the Plan. However, no option shall be amended until such
amendment is approved by the Toronto Stock Exchange. The Board of Directors may not,
however, without the consent of the option holder, alter or impair any of the rights or
obligations under an option theretofore granted. 

10.2 The Plan shall not be
amended to increase the maximum number of shares issuable under the Plan without
shareholder approval. No common shares shall be issued under any Amendment to this Plan
unless and until the amended Plan has been approved by the Toronto Stock Exchange. 

	11. 	  	Termination
of Plan 

11.1 The Plan may be abandoned
or terminated in whole or in part at any time by the Board of Directors, except with
respect to any option then outstanding under the Plan. 

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	12. 	  	Administration
of the Plan 

12.1 Within the foregoing
limitations and subject to section 12.2, the Board of Directors is authorized to provide
for the grant and exercise of options on such terms (which may vary as between options) as
it shall determine. All decisions and interpretations made by the Board of Directors shall
be binding and conclusive on the Company and on all persons eligible to participate in the
Plan. No member of the Board shall be liable for any action taken or for any determination
made in good faith in the administration, interpretation, construction or application of
the Plan. 

12.2 All of the powers
exercisable hereunder by the Board of Directors may, to the extent permitted by applicable
law and authorized by resolution of the Board, be exercised by an Executive Committee of
the Board of Directors. 

	13. 	  	Effective
Date and Necessary Approvals 

13.1 No options granted
pursuant to the Plan or any Amendment may be exercised by the optionees until the
shareholders of the Company have approved the Plan or any Amendment by the affirmative
vote of a majority of the voting shares of the Company at a general meeting of
shareholders. 

13.2 Reservation under the
Plan of more than 10% of the Company’s issued share capital for stock options
(including shares reserved for issuance under other established or proposed share
compensation arrangements) to insiders and their associates (as defined in the Securities
Act (Ontario), or issuance to insiders and their associates within a one year period of
more than 10% of the Company’s issued share capital, or the issuance to any one
insider and his/her associates, within a one year period of more than 5% of the
Company’s issued share capital, requires an affirmative vote from the majority of
disinterested shareholders at a general meeting. 

13.3 The obligations of the
Company to sell and deliver the common shares on the exercise of the options is subject to
the approval of any securities authorities or stock exchange on which the common shares of
the Company are listed for trading which may be required in connection with the
authorization, issuance or sale of such common shares by the Company. 

	14. 	  	Options
to U.S. Persons 

14.1 Common shares shall not
be issued with respect to an option unless the exercise of such option and the issuance
and delivery of such shares shall comply with all relevant provisions of law, including,
without limitation, any applicable state securities laws, the United States Securities
Act of 1933, as amended (the ” 1933 Act”), the rules and regulations thereunder
and the requirements of any stock exchange or automated inter-dealer quotation system of
a registered national securities association upon which such shares may then be listed,
and such issuance shall be further subject to the approval of counsel for the Company
with respect to such compliance, including the availability of an exemption from
registration for the issuance and sale of such shares. The inability of the Company to
obtain from any regulatory body the authority deemed by the Company to be necessary  

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for the lawful issuance and sale of
any shares under this Plan, or the unavailability of an exemption from registration for
the issuance and sale of any shares under this Plan, shall relieve the Company of any
liability with respect to the non-issuance or sale of such shares.  

        If
the common shares issuable upon exercise of the options have not been registered under the
1933 Act, as a condition to the exercise of an option, the Company may require the
optionee to represent and warrant in writing at the time of such exercise that the shares
are being purchased only for investment and without any then present intention to sell or
distribute such shares. At the option of the Company, a stop-transfer order against such
shares may be placed on the stock books and records of the Company, and a legend
indicating that the stock may not be pledged, sold or otherwise transferred unless an
opinion of counsel is provided stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on the certificates representing such shares
in order to assure an exemption from registration. The Company also may require such other
documentation as may from time to time be necessary to comply with federal and state
securities laws. The Company has no obligation to undertake registration of options or the
shares of stock issuable upon the exercise of options.FORM OF WARRANT

 

EXHIBIT 4.1

NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE
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 COMPLIANCE WITH APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

STRATASYS, INC.

WARRANT

	 	 	 
	Warrant No. A—      (2003)	 	
Dated: August 22, 2003

     Stratasys, Inc., a Delaware corporation (the “Company”), hereby certifies
that, for value received,                             or its
registered assigns (the “Holder”), is entitled to purchase from the Company up
to a total of                               shares of common stock, $0.01 par
value per share (the “Common Stock”), of the Company (each such share, a
“Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price
equal to $41.45 per share (as adjusted from time to time as provided in Section
9, the “Exercise Price”), at any time and from time to time from and after the
date hereof and through and including the date that is five years and six
months from the date of issuance hereof (the “Expiration Date”), and subject to
the following terms and conditions. This Warrant (this “Warrant”) is one of a
series of similar warrants issued pursuant to that certain Securities Purchase
Agreement, dated as of the date hereof, by and among the Company and the
Purchasers identified therein (the “Purchase Agreement”). All such warrants
are referred to herein, collectively, as the “Warrants.”

     1.     Definitions. In addition to the terms defined elsewhere in this
Warrant, capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement.

     2.     Registration of Warrant. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “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 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.

 

 

     3.     Registration of Transfers. The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Transfer Agent or to the Company at its address specified herein. Upon
any such registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a “New Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.

     4.     Exercise and Duration of Warrants.

               (a) This Warrant shall be exercisable by the registered Holder at any time
and from time to time on or after the date hereof to and including the
Expiration Date. At 6:30 P.M., New York City time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become void
and of no value; provided that, if the average of the Closing Prices for the
five Trading Days immediately prior to (but not including) the Expiration Date
exceeds the Exercise Price on the Expiration Date, then this Warrant shall be
deemed to have been exercised in full (to the extent not previously exercised)
on a “cashless exercise” basis at 6:30 P.M. New York City time on the
Expiration Date if a “cashless exercise” may occur at such time pursuant to
Section 10 below; provided, however, that the Company shall have no obligations
under Section 5 below with respect to the issuance of any such shares unless
and until the Company shall have received an Exercise Notice (as defined in
Section 5(b) below) with respect to such shares; and provided, further, that
the Company shall have no obligation to issue or deliver a certificate with
respect to such shares unless it shall have received an Exercise Notice with
respect to such Shares within 60 days after the Expiration Date, in which case
all rights of Holder hereunder shall terminate. Notwithstanding anything to
the contrary herein, the Expiration Date shall be extended for each day
following the Effective Date that the Registration Statement is not effective.

               (b) A Holder may exercise this Warrant by delivering to the Company (i) an
exercise notice, in the form attached hereto (the “Exercise
Notice”),
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares as to which this Warrant is being exercised
(which may take the form of a “cashless exercise” if so indicated in the
Exercise Notice and if a “cashless exercise” may occur at such time pursuant to
this Section 10 below), and the date such items are delivered to the Company
(as determined in accordance with the notice provisions hereof) is an “Exercise
Date.” The Holder shall not be required to deliver the original Warrant in
order to effect an exercise hereunder. Execution and delivery of the Exercise
Notice shall have the same effect as cancellation of the original Warrant and
issuance of a New Warrant evidencing the right to purchase the remaining number
of Warrant Shares.

     5.     Delivery of Warrant Shares.

               (a) Upon exercise of this Warrant, the Company shall promptly (but in no
event later than three Trading Days after the Exercise Date) issue or cause to
be issued and cause

2

 

to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise, free of restrictive legends unless a registration
statement covering the resale of the Warrant Shares and naming the Holder as a
selling stockholder thereunder is not then effective and the Warrant Shares are
not freely transferable without volume restrictions pursuant to Rule 144 under
the Securities Act. The Holder, or any Person so designated by the Holder to
receive Warrant Shares, shall be deemed to have become holder of record of such
Warrant Shares as of the Exercise Date.

               (b) This Warrant is exercisable, either in its entirety or, from time to
time, for a portion of the number of Warrant Shares. Upon surrender of this
Warrant following one or more partial exercises, the Company shall issue or
cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares.

               (c) In addition to any other rights available to a Holder, if the Company
fails to deliver to the Holder a certificate representing Warrant Shares by the
third Trading Day after the date on which delivery of such certificate is
required by this Warrant, and if after such third Trading Day the Holder
purchases (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 that
the Holder anticipated receiving from the Company (a
“Buy-In”), then the
Company shall, within three Trading Days after the Holder’s request and in the
Holder’s discretion, either (i) pay cash to the Holder in an amount equal to
the Holder’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased (the “Buy-In
Price”), at which point
the Company’s obligation to deliver such certificate (and to issue such Common
Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Common Stock and pay
cash to the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common Stock, times (B)
the Closing Price on the date of the event giving rise to the Company’s
obligation to deliver such certificate.

               (d) The Company’s obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional, irrespective
of any action or inaction by the Holder to enforce the same, any waiver or
consent with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or
any violation or alleged violation of law by the Holder or any other Person,
and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. 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.

     6.     Charges, Taxes and Expenses. Issuance and delivery of certificates
for shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any

3

 

issue or transfer tax, withholding tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the Holder or an
Affiliate thereof. The Holder shall be responsible for all other tax liability
that may arise as a result of holding or transferring this Warrant or receiving
Warrant Shares upon exercise hereof.

     7.     Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary
and reasonable bond or indemnity, if requested. Applicants for a New Warrant
under such circumstances shall also comply with such other reasonable
regulations and procedures and pay such other reasonable third-party costs as
the Company may prescribe.

     8.     Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from preemptive rights or any
other contingent purchase rights of persons other than the Holder (after giving
effect to the adjustments and restrictions of Section 9, if any). The Company
covenants that all Warrant Shares so issuable and deliverable shall, upon
issuance and the payment of the applicable Exercise Price in accordance with
the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable. The Company will take all such action as may be necessary to
assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements
of any securities exchange or automated quotation system upon which the Common
Stock may be listed.

     9.     Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9.

               (a) Stock Dividends and Splits. If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock 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 clause (i) of
this paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution, and any adjustment pursuant to clause (ii) or (iii) of this
paragraph shall become effective immediately after the effective date of such
subdivision or combination.

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               (b) Pro Rata Distributions. If the Company, at any time while this
Warrant is outstanding, distributes to holders of Common Stock (i) evidences of
its indebtedness, (ii) any security (other than a distribution of Common Stock
covered by the preceding paragraph), (iii) rights or warrants to subscribe for
or purchase any security, or (iv) any other asset (in each case, “Distributed
Property”), then in each such case the Exercise Price in effect immediately
prior to the record date fixed for determination of stockholders entitled to
receive such distribution shall be adjusted (effective on such record date) to
equal the product of such Exercise Price times a fraction of which the
denominator shall be the average of the Closing Prices for the five Trading
Days immediately prior to (but not including) such record date and of which the
numerator shall be such average less the then fair market value of the
Distributed Property distributed in respect of one outstanding share of Common
Stock, as determined by the Company’s independent certified public accountants
that regularly examine the financial statements of the Company, which shall be
definitive, absent manifest error.

               (c) Fundamental Transactions. If, at any time while this Warrant is
outstanding, (i) the Company effects any merger or consolidation of the Company
with or into another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions,
(iii) 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 (iv)
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 (other than as a result of
a subdivision or combination of shares of Common Stock covered by Section 9(a)
above) (in any such case, a “Fundamental Transaction”), then the Holder shall
have the right thereafter to receive, upon exercise of this Warrant, the same
amount and kind of securities, cash or property as it would have been entitled
to receive upon the occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of the number of
Warrant Shares then issuable upon exercise in full of this Warrant (the
“Alternate Consideration”). The aggregate Exercise Price for this Warrant will
not be affected by any such Fundamental Transaction, but the Company shall
apportion such aggregate Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. At the Holder’s request, any successor to the Company
or surviving entity in such Fundamental Transaction shall issue to the Holder a
new warrant consistent with the foregoing provisions and evidencing the
Holder’s right to purchase the Alternate Consideration for the aggregate
Exercise Price upon exercise thereof. 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
paragraph (c) and insuring that the Warrant (or any such replacement security)
will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction. If any Fundamental Transaction closed before the third
anniversary of the date hereof constitutes or results in a Change of Control,
then at the request of the Holder delivered before the 45th day after the
closing of such Fundamental Transaction, the Company (or any such successor or
surviving entity) will purchase

5

 

the Warrant from the Holder for a purchase price, payable in cash within
five Trading Days after such request, equal to the Black-Scholes value of the
remaining unexercised portion of this Warrant on the date of such Fundamental
Transaction.

               (d) Subsequent Equity Sales.

		
	 	              (i) If, at any time before the date that is 18 months after the date
hereof, the Company or any Subsidiary issues additional shares of Common
Stock or rights, warrants, options or other securities or debt
convertible, exercisable or exchangeable for shares of Common Stock or
otherwise entitling any Person to acquire shares of Common Stock
(collectively, “Common Stock Equivalents”) at an effective price yielding
gross proceeds to the Company per share of Common Stock (the “Effective
Price”) less than the Exercise Price (as adjusted hereunder to such
date), then the Exercise Price shall be reduced to equal the Effective
Price. If, at any time on or after the date that is 18 months after the
date hereof and before the third anniversary of the date hereof, the
Company or any Subsidiary issues Common Stock or Common Stock Equivalents
at an Effective Price less than the Exercise Price (as adjusted hereunder
to such date), then the Exercise Price shall be reduced to equal the
product of (A) the Exercise Price in effect immediately prior to such
issuance of Common Stock or Common Stock Equivalents times (B) a
fraction, the numerator of which is the sum of (1) the number of shares
of Common Stock outstanding immediately prior to such issuance, plus (2)
the number of shares of Common Stock which the aggregate Effective Price
of the Common Stock issued (or deemed to be issued) would purchase at the
Exercise Price, and the denominator of which is the aggregate number of
shares of Common Stock outstanding or deemed to be outstanding
immediately after such issuance. If the Company issues Common stock or
Common Stock Equivalents on or after the third anniversary of the date
hereof, there shall be no adjustment of the Exercise Price pursuant to
this Section 9(d). For purposes of this paragraph, in connection with
any issuance of any Common Stock Equivalents, (A) the maximum number of
shares of Common Stock potentially issuable at any time upon conversion,
exercise or exchange of such Common Stock Equivalents (the “Deemed
Number”) shall be deemed to be outstanding upon issuance of such Common
Stock Equivalents, (B) the Effective Price applicable to such Common
Stock shall equal the minimum dollar value of consideration payable to
the Company to purchase such Common Stock Equivalents and to convert,
exercise or exchange them into Common Stock (net of any discounts, fees,
commissions and other expenses), divided by the Deemed Number, and (C) no
further adjustment shall be made to the Exercise Price upon the actual
issuance of Common Stock upon conversion, exercise or exchange of such
Common Stock Equivalents.
	 
	 	              (ii) If, at any time while this Warrant is outstanding, the Company
or any Subsidiary issues Common Stock Equivalents with an Effective Price
or a number of underlying shares that floats or resets or otherwise
varies or is subject to adjustment based (directly or indirectly) on
market prices of the Common Stock (a “Floating Price Security”), then for
purposes of applying the preceding paragraph in connection with any
subsequent exercise, the Effective Price will be determined separately on
each Exercise Date and will be deemed to equal the lowest Effective Price
at which any holder of such

6

 

		
	 	Floating Price Security is entitled to acquire Common Stock on such
Exercise Date (regardless of whether any such holder actually acquires
any shares on such date).
	 
	 	              (iii) Notwithstanding the foregoing, no adjustment will be made
under this paragraph (d) in respect to any issuance of Common Stock (A)
upon exercise or conversion of any options or other securities described
in Schedule 3.1(f) of the Purchase Agreement (provided that such exercise
or conversion occurs in accordance with the terms thereof, without
amendment or modification, and that the applicable exercise or conversion
price or ratio is described in such schedule) or otherwise pursuant to
any employee benefit plan described in Schedule 3.1(f) of the Purchase
Agreement or hereafter adopted by the Company and approved by its
stockholders, (B) in connection with any issuance of shares or grant of
options to employees, officers, directors or consultants of the Company
pursuant to a stock option plan or other stock incentive plan duly
adopted by the Company’s board of directors or in respect of the issuance
of Common Stock upon exercise of any such options, or (C) the issuance of
up to a total of 75,000 shares of Common Stock and Common Stock
Equivalents in transactions and to persons other than those described in
the preceding clauses (A) and (B) during the period in which adjustments
may be made under this paragraph (d).

               (e) Number of Warrant Shares. Simultaneously with any adjustment to the
Exercise Price pursuant to paragraphs (a) or (b) of this Section, the number of
Warrant Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price in
effect immediately prior to such adjustment.

               (f) Calculations. All calculations under this Section 9 shall be made to
the nearest cent or the nearest 1/100th of a share, as applicable. The number
of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.

               (g) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly compute
such adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the
adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the
facts upon which such adjustment is based. Upon written request, the Company
will promptly deliver a copy of each such certificate to the Holder and to the
Company’s Transfer Agent.

               (h) Notice of Corporate Events. If the Company (i) declares a dividend or
any other distribution of cash, securities or other property in respect of its
Common Stock, including without limitation any granting of rights or warrants
to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any agreement
contemplating or solicits stockholder approval for any Fundamental Transaction
or (iii) authorizes the voluntary dissolution, liquidation or winding up of the
affairs of the Company,

7

 

then the Company shall deliver to the Holder a notice describing the
material terms and conditions of such transaction, at least 20 calendar days
prior to the applicable record or effective date on which a Person would need
to hold Common Stock in order to participate in or vote with respect to such
transaction, and the Company will take all steps reasonably necessary in order
to insure that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with respect to such
transaction; provided, however, that the failure to deliver such notice or any
defect therein shall not affect the validity of the corporate action required
to be described in such notice.

     10.     Payment of Exercise Price. The Holder shall pay the Exercise Price in
immediately available funds; provided, however, that the Holder may satisfy its
obligation to pay the Exercise Price through a “cashless exercise,” in which
event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:

	 	 	 	 	 
	 	 	 	 	X = Y [(A-B)/A]
	 	 	 	 	 
	 	
where:	 	 	 
	 	 	 	 	 
	 	 	 	 	X = the number of Warrant Shares to be
issued to the Holder.
	 	 	 	 	 
	 	 	 	 	Y = the number of Warrant Shares with
respect to which this Warrant is being
exercised.
	 	 	 	 	 
	 	 	 	 	A = the average of the Closing Prices for
the five Trading Days immediately prior to
(but not including) the Exercise Date.
	 	 	 	 	 
	 	 	 	 	B = the Exercise Price.

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

     11.     Limitation on Exercise.

               (a)     Notwithstanding anything to the contrary contained herein, the number
of shares of Common Stock that may be acquired by the Holder upon any exercise
of this Warrant (or otherwise in respect hereof) shall be limited to the extent
necessary to insure that, following such exercise (or other issuance), the
total number of shares of Common Stock then beneficially owned by such Holder
and its Affiliates and any other Persons whose beneficial ownership of Common
Stock would be aggregated with the Holder’s for purposes of Section 13(d) of
the Exchange Act, does not exceed 4.999% (the “Maximum Percentage”) of the
total number of issued and outstanding shares of Common Stock (including for
such purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
Each delivery of an Exercise Notice hereunder will constitute a

8

 

representation by the Holder that it has evaluated the limitation set
forth in this paragraph and determined that issuance of the full number of
Warrant Shares requested in such Exercise Notice is permitted under this
paragraph. The Company’s obligation to issue shares of Common Stock in excess
of the limitation referred to in this Section shall be suspended (and shall not
terminate or expire notwithstanding any contrary provisions hereof) until such
time, if any, as such shares of Common Stock may be issued in compliance with
such limitation, but in no event later than the Expiration Date. By written
notice to the Company, the Holder may waive the provisions of this Section or
increase or decrease the Maximum Percentage to any other percentage specified
in such notice, but (i) any such waiver or increase will not be effective until
the 61st day after such notice is delivered to the Company, and (ii) any such
waiver or increase or decrease will apply only to the Holder and not to any
other holder of Warrants.

               (b)      Notwithstanding anything to the contrary contained herein, the maximum
number of shares of Common Stock that the Company shall be required to issue
pursuant to the Transaction Documents equals 1,160,248 shares (the “Issuable
Maximum”). If, at the time any Holder requests an exercise of any of the
Warrants, the Actual Minimum exceeds the Issuable Maximum, then the Company
shall issue to the Holder requesting such exercise or conversion a number of
shares of Common Stock not exceeding such Holder’s pro-rata portion of the
Issuable Maximum (based on such Holder’s share (vis-à-vis other Holders) of the
aggregate purchase price paid under the Purchase Agreement and taking into
account any Underlying Shares previously issued to such Holder), this Warrant
shall terminate with respect to such Holder, and the Company shall have no
further obligations to issue shares of Common Stock or otherwise under this
Warrant. For the purposes hereof, “Actual Minimum” shall mean, as of any date,
the maximum aggregate number of shares of Common Stock then issued or
potentially issuable in the future pursuant to the Transaction Documents,
including any Underlying Shares issuable upon exercise in full of all Warrants,
without giving effect to any limits on the number of shares of Common Stock
that may be owned by a Holder at any one time.

               12.     Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
If any fraction of a Warrant Share would, except for the provisions of this
Section, be issuable upon exercise of this Warrant, the number of Warrant
Shares to be issued will be rounded up to the nearest whole share.

               13.     Notices. Any and all notices or other communications or deliveries
hereunder (including without limitation any Exercise Notice) shall be in
writing and shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section prior to 6:30 p.m. (New York
City time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading Day
or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the
Trading Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices or
communications shall be as set forth in the Purchase Agreement.

9

 

     14.     Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon 30 days’ notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or stockholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder’s
last address as shown on the Warrant Register.

     15.     Miscellaneous.

               (a) Subject to the restrictions on transfer set forth on the first page
hereof, this Warrant may be assigned by the Holder. This Warrant may not be
assigned by the Company except to a successor in the event of a Fundamental
Transaction. This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. Subject to the
preceding sentence, nothing in this Warrant shall be construed to give to any
Person other than the Company and the Holder any legal or equitable right,
remedy or cause of action under this Warrant. This Warrant may be amended only
in writing signed by the Company and the Holder and their successors and
assigns.

               (b) The Company will not, by amendment of its governing documents 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 action as may be necessary or
appropriate in order to protect the rights of the Holder against impairment.
Without limiting the generality of the foregoing, the Company (i) will not
increase the par value of any Warrant Shares above the amount payable therefor
on such exercise, (ii) will take all such action as may be reasonably necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable Warrant Shares on the exercise of this Warrant, and
(iii) will not close its stockholder books or records in any manner which
interferes with the timely exercise of this Warrant.

               (C) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK,
BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING

10

 

SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING 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
AGREEMENT 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 MANNER PERMITTED BY LAW.
THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

               (d) The headings herein are for convenience only, do not constitute a part
of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.

               (e) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

11

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.

	 	 	 	 	 
	 	 	STRATASYS, INC.
	 	 	 	 	 
	 	 	 	 	 
	 	 	
By:	 	

	 	 	
Name:	 	

	 	 	
Title:	 	

12

 

FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to purchase shares of
Common Stock under the foregoing Warrant)

To: STRATASYS, INC.

The undersigned is the Holder of Warrant No.         (the “Warrant”) issued by
Stratasys, Inc., a Delaware corporation (the “Company”). Capitalized terms
used herein and not otherwise defined have the respective meanings set forth in
the Warrant.

1.     The Warrant is currently exercisable to purchase a total of             Warrant Shares.

2.     The undersigned Holder hereby exercises its right to purchase             Warrant Shares pursuant to the Warrant.

3.     The Holder intends that payment of the Exercise Price shall be made as (check one):

____     “Cash
Exercise” under
Section 10      

____     “Cashless Exercise” under Section 10

	4.	If the holder has elected a Cash Exercise, the holder shall pay the sum of $         to the Company in accordance with
the terms of the Warrant.

5.     Pursuant to this exercise, the Company shall deliver to the holder            Warrant Shares in accordance with the
terms of the Warrant.

6.     Following this exercise, the Warrant shall be exercisable to purchase a total of             Warrant Shares.

	 	 	 	 	 
	Dated:         ,      	 	Name of Holder:
	 	 	 	 	 
	 	 	
(Print)
	 	________________________
	 
	 	 	
By: _______________________________

	 	 	
Name:
	 	
________________________
	 	 	
Title:
	
________________________
	 	 	 	 	 
	 	 	(Signature must conform in all respects to
	 	 	name of holder as specified on the face of the
	 	 	Warrant)

 

 

FORM OF ASSIGNMENT

          [To be completed and signed only upon transfer of Warrant]

          FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto               the right represented by the within
Warrant to purchase         shares of Common Stock of Stratasys, Inc. to
which the within Warrant relates and appoints          attorney to
transfer said right on the books of Stratasys, Inc. with full power of
substitution in the premises.

	 	 	 
	Dated:        ,     	 	 
	 	 	 
	 	 	

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

	 	 	
Address of Transferee
	 	 	 
	 	 	

	 	 	 
	 	 	

	 	 	 
	In the presence of:

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