Document:

Exhibit 10.2

 

APOGEE TECHNOLOGY,
INC. AND CERTAIN OF ITS SUBSIDIARIES

MASTER SECURITY AGREEMENT

 

To:                              Laurus
Master Fund, Ltd.

c/o M&C Corporate Services Limited

P.O. Box 309 GT

Ugland House

South Church Street

George Town

Grand Cayman, Cayman Islands

 

Date: August 9, 2005

 

To Whom It May Concern:

 

1.             To
secure the payment of all Obligations (as hereafter defined), Apogee Technology, Inc.,
a Delaware corporation (the “Company”), each of the other undersigned parties
(other than Laurus Master Fund, Ltd., (“Laurus”)) and each other entity that is
required to enter into this Master Security Agreement (each an “Assignor” and,
collectively, the “Assignors”) hereby assigns and grants to Laurus a continuing
security interest in all of the following property now owned or at any time
hereafter acquired by such Assignor, or in which such Assignor now has or at
any time in the future may acquire any right, title or interest (the “Collateral”):
all cash, cash equivalents, accounts, accounts receivable, deposit accounts, inventory,
equipment, goods, fixtures, documents, instruments (including, without
limitation, promissory notes), contract rights, general intangibles (including,
without limitation, payment intangibles and an absolute right to license on
terms no less favorable than those current in effect among such Assignor’s
affiliates), chattel paper, supporting obligations, investment property
(including, without limitation, all partnership interests, limited liability
company membership interests and all other equity interests owned by any
Assignor), letter-of-credit rights, trademarks, trademark applications,
tradestyles, patents, patent applications, copyrights, copyright applications
and other intellectual property in which such Assignor now has or hereafter may
acquire any right, title or interest, all proceeds and products thereof
(including, without limitation, proceeds of insurance) and all additions,
accessions and substitutions thereto or therefor.  In the event any Assignor wishes to finance
the acquisition in the ordinary course of business of any hereafter acquired
equipment and has obtained a written commitment from an unrelated third party
financing source to finance such equipment, Laurus shall release its security
interest on such hereafter acquired equipment so financed by such third party
financing source.  Except as otherwise
defined herein, all capitalized terms used herein shall have the meanings
provided such terms in the Securities Purchase Agreement referred to below.

 

2.             The
term “Obligations” as used herein shall mean and include all debts, liabilities
and obligations owing by each Assignor to Laurus arising under, out of, or in
connection with: (i) that certain Securities Purchase Agreement dated as
of the date hereof by and between the Company and Laurus (the “Securities
Purchase Agreement”) and (ii) the Related Agreements

 

 

referred to in the Securities
Purchase Agreement (the Securities Purchase Agreement and each Related
Agreement, as each may be amended, modified, restated or supplemented from time
to time, collectively, the “Documents”), and in connection with any documents,
instruments or agreements relating to or executed in connection with the
Documents or any documents, instruments or agreements referred to therein or
otherwise, and in connection with any other indebtedness, obligations or
liabilities of each such Assignor to Laurus, whether now existing or hereafter
arising, direct or indirect, liquidated or unliquidated, absolute or
contingent, due or not due and whether under, pursuant to or evidenced by a
note, agreement, guaranty, instrument or otherwise, including, without
limitation, obligations and liabilities of each Assignor for post-petition
interest, fees, costs and charges that accrue after the commencement of any
case by or against such Assignor under any bankruptcy, insolvency,
reorganization or like proceeding (collectively, the “Debtor Relief Laws”) in
each case, irrespective of the genuineness, validity, regularity or
enforceability of such Obligations, or of any instrument evidencing any of the
Obligations or of any collateral therefor or of the existence or extent of such
collateral, and irrespective of the allowability, allowance or disallowance of
any or all of the Obligations in any case commenced by or against any Assignor
under any Debtor Relief Law.

 

3.             Each
Assignor hereby jointly and severally represents, warrants and covenants to
Laurus that:

 

(a)           it
is a corporation, partnership or limited liability company, as the case may be,
validly existing, in good standing and formed under the respective laws of its
jurisdiction of formation set forth on Schedule A, and each Assignor will
provide Laurus thirty (30) days’ prior written notice of any change in any of
its respective jurisdiction of formation;

 

(b)           its
legal name is as set forth in its Certificate of Incorporation or other
organizational document (as applicable) as amended through the date hereof and
as set forth on Schedule A, and it will provide Laurus thirty (30) days’
prior written notice of any change in its legal name;

 

(c)           its
organizational identification number (if applicable) is as set forth on Schedule A
hereto, and it will provide Laurus thirty (30) days’ prior written notice of
any change in its organizational identification number;

 

(d)           it
is the lawful owner of its Collateral and it has the sole right to grant a
security interest therein and will defend the Collateral against all claims and
demands of all persons and entities;

 

(e)           it
will keep its Collateral free and clear of all attachments, levies, taxes,
liens, security interests and encumbrances of every kind and nature (“Encumbrances”),
except (i) Encumbrances securing the Obligations and (ii) Encumbrances
securing indebtedness of each such Assignor not to exceed $100,000 in the
aggregate for all such Assignors so long as all such Encumbrances are removed
or otherwise released to Laurus’ satisfaction within ten (10) days of the
creation thereof;

 

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(f)            it
will, at its and the other Assignors’ joint and several cost and expense keep
the Collateral in good state of repair (ordinary wear and tear excepted) and
will not waste or destroy the same or any part thereof other than ordinary
course discarding of items no longer used or useful in its or such other
Assignors’ business;

 

(g)           it
will not, without Laurus’ prior written consent, sell, exchange, lease or
otherwise dispose of any Collateral, whether by sale, lease or otherwise,
except for the sale of inventory in the ordinary course of business and for the
disposition or transfer in the ordinary course of business during any fiscal
year of obsolete and worn-out equipment or equipment no longer necessary for
its ongoing needs, having an aggregate fair market value of not more than
$100,000 and only to the extent that:

 

(i)            the
proceeds of each such disposition are used to acquire replacement Collateral
which is subject to Laurus’ first priority perfected security interest, or are
used to repay the Obligations or to pay general corporate expenses; or

 

(ii)           following
the occurrence of an Event of Default which continues to exist the proceeds of
which are remitted to Laurus to be held as cash collateral for the Obligations.

 

(h)           it
will insure or cause the Collateral to be insured in Laurus’ name (as an additional
insured and loss payee) against loss or damage by fire, theft, burglary,
pilferage, loss in transit and such other hazards as Laurus shall specify in
amounts and under policies by insurers acceptable to Laurus and all premiums
thereon shall be paid by such Assignor and the policies delivered to
Laurus.  If any such Assignor fails to do
so, Laurus may procure such insurance and the cost thereof shall be promptly
reimbursed by the Assignors, jointly and severally, and shall constitute
Obligations;

 

(i)            it
will at all reasonable times allow Laurus or Laurus’ representatives free
access to and the right of inspection of the Collateral; and

 

(j)            such
Assignor (jointly and severally with each other Assignor) hereby indemnifies
and saves Laurus harmless from all loss, costs, damage, liability and/or
expense, including reasonable attorneys’ fees, that Laurus may sustain or incur
to enforce payment, performance or fulfillment of any of the Obligations and/or
in the enforcement of this Master Security Agreement or in the prosecution or
defense of any action or proceeding either against Laurus or any Assignor
concerning any matter growing out of or in connection with this Master Security
Agreement, and/or any of the Obligations and/or any of the Collateral except to
the extent caused by Laurus’ own gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and nonappealable
decision).

 

4.             The
occurrence of any of the following events or conditions shall constitute an “Event
of Default” under this Master Security Agreement:

 

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(a)           any
covenant or any other term or condition of this Master Security Agreement is
breached in any material respect and such breach, to the extent subject to
cure, shall continue without remedy for a period of fifteen (15) days after the
occurrence thereof;

 

(b)           any
representation or warranty, or statement made or furnished to Laurus under this
Master Security Agreement by any Assignor or on any Assignor’s behalf should
prove to any time be false or misleading in any material respect on the date as
of which made or deemed made;

 

(c)           the
loss, theft, substantial damage, destruction, sale or encumbrance to or of any
of the Collateral or the making of any levy, seizure or attachment thereof or
thereon except to the extent:

 

(i)            such
loss is covered by insurance proceeds which are used to replace the item or
repay Laurus; or

 

(ii)           said
levy, seizure or attachment does not secure indebtedness in excess of $200,000
in the aggregate for all Assignors and such levy, seizure or attachment has
been removed or otherwise released within ten (10) days of the creation or
the assertion thereof;

 

(d)           an
Event of Default shall have occurred under and as defined in any Document.

 

5.             Upon
the occurrence of any Event of Default and at any time thereafter, Laurus may
declare all Obligations immediately due and payable and Laurus shall have the
remedies of a secured party provided in the Uniform Commercial Code as in
effect in the State of New York, this Agreement and other applicable law.  Upon the occurrence of any Event of Default
and at any time thereafter, Laurus will have the right to take possession of
the Collateral and to maintain such possession on any Assignor’s premises or to
remove the Collateral or any part thereof to such other premises as Laurus may
desire.  Upon Laurus’ request, each
Assignor shall assemble the Collateral and make it available to Laurus at a
place of Laurus’ choosing; provided that any related shipping costs will be
initially paid by Laurus and subsequently subtracted from the proceeds of any
sale. If any notification of intended disposition of any Collateral is required
by law, such notification, if mailed, shall be deemed properly and reasonably
given if mailed at least ten (10) days before such disposition, postage
prepaid, addressed to the applicable Assignor either at such Assignor’s address
shown herein or at any address appearing on Laurus’ records for such
Assignor.  Any proceeds of any disposition
of any of the Collateral shall be applied by Laurus to the payment of all
expenses in connection with the sale of the Collateral, including reasonable
attorneys’ fees and other legal expenses and disbursements and the reasonable
expenses of retaking, holding, preparing for sale, selling, and the like, and
any balance of such proceeds may be applied by Laurus toward the payment of the
Obligations in such order of application as Laurus may elect, and each Assignor
shall be liable for any deficiency.  For
the avoidance of doubt, following the occurrence and during the continuance of
an Event of Default, Laurus shall have the immediate right to withdraw any and
all monies contained in any deposit

 

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account in the name of any
Assignor and controlled by Laurus and apply same to the repayment of the
Obligations (in such order of application as Laurus may elect).

 

6.             If
any Assignor defaults in the performance or fulfillment of any of the terms,
conditions, promises, covenants, provisions or warranties on such Assignor’s
part to be performed or fulfilled under or pursuant to this Master Security
Agreement, Laurus may, at its option without waiving its right to enforce this
Master Security Agreement according to its terms, immediately or at any time
thereafter and without notice to any Assignor, perform or fulfill the same or
cause the performance or fulfillment of the same for each Assignor’s joint and
several account and at each Assignor’s joint and several cost and expense, and
the cost and expense thereof (including reasonable attorneys’ fees) shall be
added to the Obligations and shall be payable on demand with interest thereon
at the highest rate permitted by law, or, at Laurus’ option, debited by Laurus
from any other deposit accounts in the name of any Assignor and controlled by
Laurus.

 

7.             Each
Assignor appoints Laurus, any of Laurus’ officers, employees or any other
person or entity whom Laurus may designate as such Assignor’s attorney, with
power to execute such documents in each such Assignor’s behalf and to supply
any omitted information and correct patent errors in any documents executed by
any Assignor or on any Assignor’s behalf; to file financing statements against
such Assignor covering the Collateral (and, in connection with the filing of
any such financing statements, describe the Collateral as “all assets and all
personal property, whether now owned and/or hereafter acquired” (or any
substantially similar variation thereof)); to sign such Assignor’s name on
public records; and to do all other things Laurus deem necessary to carry out
this Master Security Agreement.  Each
Assignor hereby ratifies and approves all acts of the attorney and neither
Laurus nor the attorney will be liable for any acts of commission or omission,
nor for any error of judgment or mistake of fact or law other than gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).  This power being coupled with an interest, is
irrevocable so long as any Obligations remains unpaid.

 

8.             No
delay or failure on Laurus’ part in exercising any right, privilege or option
hereunder shall operate as a waiver of such or of any other right, privilege,
remedy or option, and no waiver whatever shall be valid unless in writing,
signed by Laurus and then only to the extent therein set forth, and no waiver
by Laurus of any default shall operate as a waiver of any other default or of
the same default on a future occasion. 
Laurus’ books and records containing entries with respect to the
Obligations shall be admissible in evidence in any action or proceeding, shall
be binding upon each Assignor for the purpose of establishing the items therein
set forth and shall constitute prima facie proof thereof.  Laurus shall have the right to enforce any
one or more of the remedies available to Laurus, successively, alternately or
concurrently.  Each Assignor agrees to
join with Laurus in executing such documents or other instruments to the extent
required by the Uniform Commercial Code in form satisfactory to Laurus and in
executing such other documents or instruments as may be required or deemed
necessary by Laurus for purposes of affecting or continuing Laurus’ security
interest in the Collateral.

 

9.             THIS
MASTER SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH

 

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STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.  All of
the rights, remedies, options, privileges and elections given to Laurus
hereunder shall inure to the benefit of Laurus’ successors and assigns.  The term “Laurus” as herein used shall
include Laurus, any parent of Laurus’, any of Laurus’ subsidiaries and any
co-subsidiaries of Laurus’ parent, whether now existing or hereafter created or
acquired, and all of the terms, conditions, promises, covenants, provisions and
warranties of this Agreement shall inure to the benefit of each of the
foregoing, and shall bind the representatives, successors and assigns of each
Assignor.

 

10.           Each
Assignor hereby consents and agrees that the state of federal courts located in
the County of New York, State of New York shall have exclusive jurisdiction to
hear and determine any claims or disputes between Assignor, on the one hand,
and Laurus, on the other hand, pertaining to this Master Security Agreement or
to any matter arising out of or related to this Master Security Agreement,
provided, that Laurus and each Assignor acknowledges that any appeals from
those courts may have to be heard by a court located outside of the County of
New York, State of New York, and further provided, that nothing in this Master
Security Agreement shall be deemed or operate to preclude Laurus from bringing
suit or taking other legal action in any other jurisdiction to collect, the
Obligations, to realize on the Collateral or any other security for the
Obligations, or to enforce a judgment or other court order in favor of
Laurus.  Each Assignor expressly submits
and consents in advance to such jurisdiction in any action or suit commenced in
any such court, and each Assignor hereby waives any objection which it may have
based upon lack of personal jurisdiction, improper venue or forum  non
conveniens.  Each Assignor hereby
waives personal service of the summons, complaint and other process issues in
any such action or suit and agrees that service of such summons, complaint and
other process may be made by registered or certified mail addressed to such
assignor at the address set forth on the signature lines hereto and that
service so made shall be deemed completed upon the earlier of such Assignor’s
actual receipt thereof or five (5) days after deposit in the U.S. mails,
proper postage prepaid.

 

The parties desire that their disputes be resolved by
a judge applying such applicable laws. 
Therefore, to achieve the best combination of the benefits of the
judicial system and of arbitration, the parties hereto waive all rights to
trial by jury in any action, suite, or proceeding brought to resolve any
dispute, whether arising in contract, tort, or otherwise between Laurus, and/or
any Assignor arising out of, connected with, related or incidental to the relationship
established between them in connection with this Master Security Agreement or
the transactions related hereto.

 

11.           It
is understood and agreed that any person or entity that desires to become an
Assignor hereunder, or is required to execute a counterpart of this Master
Security Agreement after the date hereof pursuant to the requirements of any
Document, shall become an Assignor hereunder by (x) executing a Joinder
Agreement in form and substance satisfactory to Laurus, (y) delivering supplements
to such exhibits and annexes to such Documents as Laurus shall reasonably
request and (z) taking all actions as specified in this Master Security
Agreement as would have been taken by such Assignor had it been an original
party to this Master Security Agreement, in each case with all documents
required above to be delivered to Laurus and with all documents and actions
required above to be taken to the reasonable satisfaction of Laurus.

 

6

 

12.           All
notices from Laurus to any Assignor shall be sufficiently given if mailed or
delivered to such Assignor’s address set forth below.

 

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
  APOGEE
  TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACKNOWLEDGED:

  
	
   

  	
   

  
	
   

  	
  LAURUS
  MASTER FUND, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title

  

 

7

 

SCHEDULE A

 

	
  Entity

  	
   

  	
  Jurisdiction of

  Formation

  	
   

  	
  Employer Identification

  Number

  	
   

  
	
  Apogee Technology, Inc.

  	
   

  	
  Delaware

  	
   

  	
   

  	
   

  
	
  Dubla, Inc.

  	
   

  	
  Delaware

  	
   

  	
  N/AExhibit 10.3

 

REDACTED VERSION

 

THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS.  THIS WARRANT AND THE
COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
APOGEE TECHNOLOGY, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Right to Purchase up to the Applicable Warrant Share
Amount referred to below of Common Stock of

Apogee Technology, Inc. 

(subject to adjustment as provided herein)

 

COMMON STOCK
PURCHASE WARRANT

 

	
  No.

  	
   

  	
   

  	
   

  	
  Issue Date: August 9, 2005

  

 

APOGEE TECHNOLOGY, INC., a corporation organized under
the laws of the State of Delaware (the “Company”), hereby certifies that, for
value received, LAURUS MASTER FUND, LTD., or assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company
(as defined herein) from and after the Issue Date of this Warrant and at any
time or from time to time before 5:00 p.m., New York time, through the
close of business August 9, 2012 (the “Expiration Date”), up to the
Applicable Warrant Share Amount (as defined below) of fully paid and
nonassessable shares of Common Stock (as hereinafter defined), $0.01 par value
per share, at the applicable Exercise Price (as defined below) per share.  The number and character of such shares of
Common Stock and the applicable Exercise Price per share are subject to
adjustment as provided herein.

 

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

 

(a)           The term “Applicable Warrant
Share Amount” shall mean (i) (x) on any date on or prior to the one
hundred twentieth day after the date hereof or (y) in the event that, on or
prior to the one hundred twentieth (120) day after the date hereof or all
outstanding obligations (including without limitation all principal, interest,
fees and other amounts) of the Company under that certain Secured Convertible
Term Note, dated the date hereof, issued by the Company in favor of the Holder
(as amended, modified or supplemented from time to time, the “Note”) have been
repaid in full in cash pursuant to

 

Portions
of this Exhibit have been redacted, as indicated by ******** these portions
have been provided to the Securities and Exchange Commission pursuant to a
request for confidential treatment.

 

 

the terms and conditions set forth in Section 2.3
of the Note, 85,000 shares of Common Stock (subject to adjustment as provided
herein) and (y) in all other cases 500,000 shares of Common Stock (subject to
adjustment as provided herein).

 

(b)           The term “Company” shall
include Apogee Technology, Inc. and any corporation which shall succeed,
or assume the obligations of, Apogee Technology, Inc. hereunder.

 

(c)           The term “Common Stock”
includes (i) the Company’s Common Stock, par value $0.01 per share; and (ii) any
other securities into which or for which any of the securities described in the
preceding clause (i) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.

 

(d)           The term “Other Securities”
refers to any stock (other than Common Stock) and other securities of the
Company or any other person (corporate or otherwise) which the holder of the
Warrant 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 Common Stock, or
which at any time shall be issuable or shall have been issued in exchange for
or in replacement of Common Stock or Other Securities pursuant to Section 4
or otherwise.

 

(e)           The “Exercise Price”
applicable under this Warrant shall be a price of $1.22 [120% of the average
closing price of Common Stock for the ten (10) trading days immediately
prior to the date hereof] for each share of Common Stock acquired hereunder
(subject to adjustment as provided herein).

 

1.             Exercise of Warrant.

 

1.1.          Number of Shares Issuable upon Exercise.  From and after the date hereof through and
including the Expiration Date, the Holder shall be entitled to receive, upon
exercise of this Warrant in whole or in part, by delivery of an original or fax
copy of an exercise notice in the form attached hereto as Exhibit A (the “Exercise
Notice”), shares of Common Stock of the Company, subject to adjustment pursuant
to Section 4.

 

1.2.          Fair Market Value.  For purposes hereof, the “Fair Market Value”
of a share of Common Stock as of a particular date (the “Determination Date”)
shall mean:

 

(a)           If the Company’s Common Stock is traded on the
American Stock Exchange or another national exchange or is quoted on the
National or SmallCap Market of The Nasdaq Stock Market, Inc.(“Nasdaq”),
then the closing or last sale price, respectively, reported for the last
business day immediately preceding the Determination Date.

 

(b)           If the Company’s Common Stock is not traded on the
American Stock Exchange or another national exchange or on the Nasdaq but is
traded on the NASD Over the Counter Bulletin Board then the mean of the average
of the closing bid and asked prices reported for the last business day
immediately preceding the Determination Date.

 

2

 

(c)           Except as provided in clause (d) below, if the
Company’s Common Stock is not publicly traded, then as the Holder and the
Company agree or in the absence of agreement by arbitration in accordance with
the rules then in effect 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.

 

(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 charter, then
all amounts to be payable per share to holders of the Common Stock pursuant to
the charter 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 charter, assuming for the purposes of this clause (d) that
all of the shares of Common Stock then issuable upon exercise of the Warrant
are outstanding at the Determination Date.

 

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

 

1.4.          Trustee for Warrant Holders.  In the event that a bank or trust company
shall have been appointed as trustee for the holders of this Warrant pursuant
to Subsection 3.2, such bank or trust company shall have all the powers
and duties of a warrant agent (as hereinafter described) and shall accept, in
its own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this Section 1.

 

2.             Procedure for Exercise.

 

2.1.          Delivery of Stock Certificates, Etc., on Exercise.  The Company agrees that the shares of Common
Stock purchased upon exercise of this Warrant shall be deemed to be issued to
the Holder as the record owner of such shares as of the close of business on
the date on which this Warrant shall have been surrendered and payment made for
such shares in accordance herewith.  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, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Holder, or as such Holder
(upon payment by such 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 nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other

 

3

 

securities and property
(including cash, where applicable) to which such Holder is entitled upon such
exercise pursuant to Section 1 or otherwise.

 

2.2.          Exercise. 
Payment may be made in cash, wire transfer, by certified or official
bank check payable to the order of the Company equal to the applicable
aggregate Exercise Price, for the number of Common Shares specified in such
Exercise Notices (as such number shall be adjusted to reflect any adjustment in
the total number of shares of Common Stock issuable to the Holder per the terms
of this Warrant) and the Holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully paid and non-assessable shares
of Common Stock determined as provided herein.

 

3.             Effect of Reorganization, Etc.; Adjustment of
Exercise Price.

 

3.1.          Reorganization, Consolidation, Merger, Etc.  In case at any time or from time to time, the
Company shall, other than in connection with
**********************************************************************: (a) effect
a reorganization, (b) consolidate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other person
pursuant to a specific plan or arrangement to dissolve the Company, then, in
each such case, as a condition to the consummation of such a transaction,
proper and adequate provision shall be made by the Company whereby the Holder,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and
property (including cash) to which such Holder would have been entitled upon
such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto, all
subject to further adjustment thereafter as provided in Section 4.

 

3.2.          Dissolution. 
In the event of any dissolution of the Company following the transfer of
all or substantially all of its properties or assets, the Company, concurrently
with any distributions made to holders of its Common Stock, shall at its
expense deliver or cause to be delivered to the Holder the stock and other
securities and property (including cash, where applicable) receivable by the
Holder  pursuant to Section 3.1, or,
if the Holder shall so instruct the Company, to a bank or trust company
specified by the Holder and having its principal office in New York, NY as
trustee for the Holder  (the “Trustee”).

 

3.3.          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 shares of stock and 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 such stock or 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

 

4

 

person shall have expressly
assumed the terms of this Warrant as provided in Section 4.  In the event this Warrant does not continue
in full force and effect after the consummation of the transactions described
in this Section 3, then the Company’s securities and property (including
cash, where applicable) receivable by the Holder  will be delivered to the Holder or the
Trustee as contemplated by Section 3.2.

 

4.             Extraordinary Events Regarding Common Stock.  In the event that the Company shall (a) issue
additional shares of the Common Stock as a dividend or other distribution on
outstanding Common Stock or any preferred stock issued by the Company (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 the 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 herein
in this Section 4.  The number of
shares of Common Stock set forth in the definition of Applicable Warrant Share
Amount above that the Holder shall thereafter, on the exercise hereof as
provided in Section 1, 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 (taking into account the provisions of this Section 4).

 

5.             Certificate as to Adjustments.  In each case of any adjustment or
readjustment of the shares of Common Stock (or Other Securities) issuable on
the exercise of this Warrant as set forth in the definition of Applicable
Warrant Share Amount above, the Company at its expense will 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 (a) the consideration received or receivable by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or deemed to be
outstanding, and (c) 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 the Holder  and any Warrant agent of the Company (appointed
pursuant to Section 11 hereof).

 

6.             Reservation of Stock, Etc., Issuable on
Exercise of Warrant.  The Company
will at all times reserve and keep available, solely for issuance and delivery
on the exercise of this Warrant, shares of Common Stock (or Other Securities)
from time to time issuable on the exercise of this Warrant.

 

5

 

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 hereof (a “Transferor”) in whole or in
part.  On the surrender for exchange of
this Warrant, with the Transferor’s endorsement in the form of Exhibit B
attached hereto (the “Transferor Endorsement Form”) and together with evidence
reasonably satisfactory to the Company demonstrating compliance with applicable
securities laws, which shall include, without limitation, the provision of a
legal opinion from the Transferor’s counsel (at the Company’s expense) that
such transfer is exempt from the registration requirements of applicable
securities laws, the Company at its expense (but with payment by the Transferor
of any applicable transfer taxes) will issue and deliver to or on the order of
the Transferor thereof a new Warrant 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.             Registration Rights.  The Holder 
has been granted certain registration rights by the Company.  These registration rights are set forth in a
Registration Rights Agreement entered into by the Company and Holder dated as
of the date hereof, as the same may be amended, modified and/or supplemented
from time to time.

 

10.           Maximum Exercise.  Notwithstanding anything contained herein to
the contrary, the Holder shall not be entitled to exercise this Warrant in
connection with that number of shares of Common Stock which would exceed the
difference between (i) 4.99% of the issued and outstanding shares of
Common Stock and (ii) the number of shares of Common Stock beneficially
owned by the Holder  For the purposes of
the immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act, as amended, and
Regulation 13d-3 thereunder.  The
conversion limitation described in this Section 10 shall automatically
become null and void following notice to the Company upon the occurrence and
during the continuance of an Event of Default under and as defined in the Note,
or upon 75 days prior notice to the Company, except that at no time shall the
number of shares of Common Stock beneficially owned by the Holder exceed 19.99%
of the outstanding shares of Common Stock. 
Notwithstanding anything contained herein to the contrary, the number of
shares of Common Stock issuable by the Company and acquirable by the Holder at
a price below $[insert the greater of book or market value] per share pursuant
to the terms of this Warrant, the Note, the Purchase Agreement (as defined in
the Note), any Related Agreement (as defined in the Purchase Agreement) or
otherwise, shall not exceed an aggregate of 2,367,666 shares of Common Stock
(subject to appropriate adjustment for stock splits, stock dividends, or other
similar recapitalizations affecting the Common Stock) (the “Maximum Common Stock

 

6

 

Issuance”),
unless the issuance of Common Stock hereunder in excess of the Maximum Common
Stock Issuance shall first be approved by the Company’s shareholders.  If at any point in time and from time to time
the number of shares of Common Stock issued pursuant to the terms of this
Warrant, the Note, the Purchase Agreement or any Related Agreement, together
with the number of shares of Common Stock that would then be issuable by the
Company to the Holder in the event of a conversion or exercise pursuant to the
terms of this Warrant, the Note, the Purchase Agreement, any Related Agreement
or otherwise, would exceed the Maximum Common Stock Issuance but for this Section 10,
the Company shall promptly call a shareholders meeting to solicit shareholder
approval for the issuance of the shares of Common Stock hereunder in excess of
the Maximum Common Stock Issuance.

 

11.           Warrant Agent.  The Company may, by written notice to the
each Holder of the Warrant, appoint an agent for the purpose of issuing Common
Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, 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 agent.

 

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

 

13.           Notices, Etc.  All notices and other communications from the
Company to the Holder  shall be mailed by
first class registered or certified mail, postage prepaid, at such address as
may have been furnished to the Company in writing by such Holder or, until any
such Holder furnishes to the Company an address, then to, and at the address
of, the last Holder  who has so furnished
an address to the Company.

 

14.           Miscellaneous.  This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.  THIS WARRANT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  ANY ACTION BROUGHT 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 OF NEW YORK;
PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION AND
BRING AN ACTION OUTSIDE THE STATE OF NEW YORK. 
The individuals executing this Warrant on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury.  The prevailing party shall be entitled to
recover from the other party its reasonable attorneys’ fees and costs.  In the event that any provision of this
Warrant 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 with 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

 

7

 

other provision of this
Warrant.  The headings in this Warrant
are for purposes of reference only, and shall not limit or otherwise affect any
of the terms hereof.  The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision hereof. 
The Company acknowledges that legal counsel participated in the
preparation of this Warrant and, therefore, stipulates that the rule of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Warrant to favor any party
against the other party.

 

[BALANCE OF PAGE
INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

 

8

 

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

 

 

	
   

  	
  APOGEE TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  WITNESS:

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

9

 

Exhibit A

 

FORM OF SUBSCRIPTION

(To Be Signed Only On Exercise Of Warrant)

 

TO:         Apogee
Technology, Inc.

 

Attention:              Chief
Financial Officer

 

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

 

	
  o

  	
          
  shares of the Common Stock covered by such Warrant; or

  
	
   

  	
   

  
	
  o

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

  

 

The undersigned herewith makes payment of the full
Exercise Price for such shares at the price per share provided for in such
Warrant, which is $           .  Such payment takes the form of 

 

	
   

  	
  $            in lawful money of the United States

  

 

The undersigned requests that the certificates for
such shares be issued in the name of, and delivered 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 within Warrant shall be made pursuant to registration of the Common Stock
under the Securities Act of 1933, as amended (the “Securities Act”) or pursuant
to an exemption from registration under the Securities Act.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform to name of holder
  as

  specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  

 

A-1

 

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 within Warrant to purchase the percentage and
number of shares of Common Stock of Apogee Technology, Inc. into which the
within 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 Apogee Technology, Inc. with full power of substitution in the
premises.

 

	
  Transferees

  	
   

  	
  Address

  	
   

  	
  Percentage

  Transferred

  	
   

  	
  Number

  Transferred

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature must conform to name of holder
  as

  specified on the face of the Warrant)

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SIGNED IN THE PRESENCE OF:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Name)

  
	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  
	
  [TRANSFEREE]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name)

  	
   

  	
   

  
						

 

B-1

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