WARRANT (A WARRANT)

 

 

Right to

Purchase

1,400,000

Units

 

THIS CERTIFIES THAT, for value received, ________________________, (the “Holder”) or its registered assigns, is entitled to purchase from Oasys Mobile, Inc. (f/k/a Summus, Inc.), a Delaware corporation (the “Company”), at any time or from time to time during the period specified in Section 2 hereof, One Million Four Hundred Thousand (1,400,000) Units for the purchase price of $1.10 per unit (the “Purchase Price”), each Unit consisting of (i) one (1) fully paid and nonassessable share of the Company's common stock, par value $.001 per share (the “Common Stock”), and (ii) a warrant to purchase .285714 of a share of Common Stock (or 400,000 shares of Common Stock if this Warrant is exercised in full) in the form attached hereto (the “C-2 Warrant”). The term “Common Shares,” as used herein, refers to the shares of Common Stock purchasable pursuant to this Warrant, but not the C-2 Warrant. The number of Units purchasable pursuant to this Warrant are subject to adjustment as provided in Section 4 hereof. The term “Warrants” means this Warrant and the other warrants issued to the Holder and its affiliates pursuant to that certain Securities Purchase Agreement, dated November 18, 2005, by and among the Company and the Buyers listed on the execution page thereof (the “Purchase Agreement”).

 

This Warrant is subject to the following terms, provisions, and conditions:

 

1.    Manner of Exercise; Issuance of Certificates; Payment for Shares.

 

(a)    Subject to the provisions hereof, this Warrant may be exercised by the Holder, in whole or in part, by the surrender of this Warrant, together with a completed exercise agreement in the form attached hereto (the “Exercise Agreement”), to the Company during normal business hours on any business day at the Company's principal executive offices (or such other office or agency of the Company as it may designate by notice to the Holder), and upon (i) payment to the Company in cash, by certified or official bank check or by wire transfer for the

 

account of the Company of the Purchase Price for the Units specified in the Exercise Agreement. The Units so purchased shall be deemed to be issued to the Holder or such holder's designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered, the completed Exercise Agreement shall have been delivered, and payment shall have been made for such shares as set forth above. In the event of any exercise of the rights represented by this Warrant in accordance with and subject to the terms and conditions hereof, either (i) certificates for the Common Shares and the C-2 Warrant shall be dated the date of such exercise and delivered to the Holder hereof within a reasonable time, not exceeding two (2) trading days after such exercise or, (ii) only with respect to the Common Shares, if the Company’s transfer agent is a participant in the Deposit Withdrawal Agent Commission (“DWAC”) system, the Common Shares shall be issued and delivered to the Depository Trust Company account on the Holder’s behalf via the DWAC system within a reasonable time, not exceeding two (2) trading days after such exercise (the date of delivery pursuant to (i) or (ii) above, as applicable, being referred to herein as the “Delivery Date”) and the Holder hereof shall be deemed for all purposes to be the holder of the Common Shares and the C-2 Warrant so purchased as of the date of such exercise. The certificates so delivered shall be in such denominations as may be requested by the Holder and shall be registered in the name of the Holder. In the event that this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the holder a new Warrant representing the number of Units with respect to which this Warrant shall not then have been exercised.

 

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

 

available remedies at law or in equity, if the Company fails to deliver certificates for the Common Shares within three (3) business days after this Warrant is exercised, then the Company shall pay to the holder in cash a penalty (the “Delivery Payment”) equal to 2% of the number of Common Shares that the holder is entitled to multiplied by the Market Price (as hereinafter defined) for each day that the Company fails to deliver certificates for the Common Shares. For example, if the holder is entitled to 100,000 Common Shares and the Market Price is $2.00, then the Company shall pay to the holder $4,000 for each day that the Company fails to deliver certificates for the Common Shares. The Delivery Payment shall be paid to the holder by the fifth day of the month following the month in which it has accrued.

 

(c)    Notwithstanding anything in this Warrant to the contrary, in no event shall the Holder of this Warrant be entitled to exercise a number of Warrants (or portions thereof) in excess of the number of Warrants (or portions thereof) upon exercise of which the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which, but for this proviso, may be deemed beneficially owned through the ownership of the unexercised Warrants and the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein) and (ii) the number of shares of Common Stock issuable upon exercise of the Warrants (or portions thereof) with respect to which the determination described herein is being made, would result in beneficial ownership by the Holder and its affiliates of more than 9.9% of the outstanding shares of Common Stock, provided, however, that upon the Holder of this Warrant providing the Company with sixty-one (61) days notice (the “Waiver Notice”) that the Holder would like to waive this Section 1(c) with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 1(c) will be of no force or effect with regard to all or a portion of the Warrant referenced in the Waiver Notice; provided, further, that this provision shall be of no further force or effect during the sixty-one (61) days immediately preceding the expiration of the term of this Warrant. For purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided in clause (i) hereof. Notwithstanding anything in this Warrant to the contrary, the restrictions on exercise of this Warrant set forth in this section shall not be amended without (i) the written consent of the Holder and the Company and (ii) the approval of the holders of a majority of the Common Stock present, or represented by proxy, and voting at any meeting called to vote on the amendment of such restriction.

 

2.    Period of Exercise. This Warrant is exercisable at any time or from time to time on or after the date hereof and shall expire at 5:00 p.m., New York City time, on June 30, 2007, plus one (1) additional day for each day that (a) the registration statement (the “Registration Statement”) to be filed pursuant to the Registration Rights Agreement (as defined in Section 7(a) below) is not effective (or, to the extent a post-effective amendment or additional registration statement is to be filed to cover the additional 400,000 shares issuable hereunder, then such extension (i.e., one day for each day after the date hereof until effectiveness) shall apply solely with respect to such additional number of shares and the C-2 Warrants associated therewith) or (b) sales of Common Stock may not be made by the Holder pursuant to the Registration Statement (the “Expiration Date”); provided that, upon notice to the Company given at least ten (10) trading days prior to the Expiration Date, and ten (10) trading days prior to the end of each

 

calendar quarter thereafter, at the Holder’s option, the Expiration Date may be extended for an additional calendar quarter, but in no event beyond June 30, 2008, provided that the maturity date of the Debentures issued pursuant to the Purchase Agreement shall be extended for a period coincident with each such 90-day extension of the Expiration Date; and provided, further, that on the Expiration Date, if the Holder pays an extension fee of $1.09 per share (the “Extension Fee”), to the Company in cash, by certified or official bank check or by wire transfer for the account of the Company (which Extension Fee is non-refundable), the Expiration Date shall be extended for a period of two (2) years with respect to that number of Units determined by dividing (i) the aggregate amount of the Extension Fee paid by (ii) $1.09; provided, further, that if the Expiration Date has been extended pursuant to the terms of this Section 2 upon payment of the Extension Fee to the Company, the Purchase Price per Unit shall thereafter equal $0.01. The Company may cause Holder to exercise this Warrant or forfeit its right to exercise this Warrant in the event that (a) the average Market Price of the Common Stock exceeds $4.00 for a period of twenty-two (22) consecutive trading days, the Common Stock trades at least 300,000 shares for each trading day during such twenty-two (22) day period and (c) the Registration Statement has been declared effective by the Commission and sales may continue to be made thereunder. Notwithstanding the foregoing, beginning on July 31, 2006, for each twenty (20) consecutive Qualified Trading Day (as defined below) period in which the VWAP (as defined below) of the Common Stock equals or exceeds $1.65 per share (the “Trigger Price”) on each such day, then the number of Units issuable upon exercise of this Warrant (but including only shares of Common Stock included in the Units or issuable upon exercise of the C-2 Warrant that are then covered by an effective registration statement) shall be reduced by twenty-five percent (25%) as of 5:00 p.m., Eastern time, on the tenth (10^th) trading day following each such 20-day period (provided that the VWAP per share equals or exceeds the Trigger Price on such tenth (10^th) trading day), subject to extension at the option of the Holder through the payment of the Extension Fee in accordance with the terms and conditions set forth above. The Trigger Price is subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications or otherwise. Each twenty (20) consecutive Qualified Trading Day period, together with the ten (10) trading day waiting period associated therewith, is hereinafter referred to as an “Early Expiration Period.” No trading day utilized in any Early Expiration Period may be included in any other Early Expiration Period. As a result, no Early Expiration Period may commence until at least the thirty-first (31^st) trading day following the commencement of the prior Early Expiration Period. “Qualified Trading Day” means a trading day on which (i) the volume of shares of Common Stock equals at least 150,000 and (ii) the Registration Statement is effective and sales of Common Stock may be made pursuant thereto. “VWAP” means the daily volume weighted average price of the Common Stock on the principal trading market for such security as reported by Bloomberg, L.P. using the VWAP function.

 

3.    Certain Agreements of the Company. The Company hereby covenants and agrees as follows:

 

(a)    Shares to be Fully Paid. All Common Shares will, upon issuance in accordance with the terms of this Warrant, be validly issued, fully paid, and nonassessable and free from all taxes, liens, and charges with respect to the issue thereof.

 

(b)    Reservation of Shares. Until the Expiration Date, as such date may be extended hereunder, the Company shall at all times have authorized, and reserved for the purpose of issuance upon exercise of this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of this Warrant, in accordance with Section 4.7 of the Purchase Agreement.

 

(c)    Listing. The Company shall promptly secure the listing of the shares of Common Stock issuable upon exercise of this Warrant upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system.

 

(d)    Certain Actions Prohibited. The Company will not, by amendment of its charter 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 to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose of this Warrant. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Purchase Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

 

(e)    Successors and Assigns. This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation, or acquisition of all or substantially all the Company's assets.

 

4.    Antidilution Provisions. Until the Expiration Date, as such date may be extended hereunder, the Purchase Price and the number of Units purchasable pursuant to this Warrant shall be subject to adjustment from time to time as provided in this Section 4. In the event that any adjustment of the Purchase Price as required herein results in a fraction of a cent, such Purchase Price shall be rounded up to the nearest cent.

 

(a)    Adjustment of Purchase Price and Number of Shares upon Issuance of Common Stock. Except as otherwise provided in Paragraphs 4(c) and 4(e) hereof, if and whenever on or after the date of issuance of this Warrant, the Company issues or sells, or in accordance with Paragraph 4(b) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) less than the Purchase Price on the date of issuance (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Purchase Price will be reduced to the price equal to the consideration per share paid in connection with such Dilutive Issuance.

 

(b)    Effect on Purchase Price of Certain Events. For purposes of determining the adjusted Purchase Price under Paragraph 4(a) hereof, the following will be applicable:

 

(i)    Issuance of Rights or Options. If the Company in any manner issues or grants any warrants, rights or options, whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”) (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”) and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Purchase Price on the date of issuance or grant of such Options, then the maximum total number of shares of Common Stock issuable upon the exercise of all such Options will, as of the date of the issuance or grant of such Options, be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For purposes of the preceding sentence, the “price per share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise of all such Options, plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Purchase Price will be made upon the actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.

 

(ii)    Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options) and the price per share for which Common Stock is issuable upon such conversion or exchange is less than the Purchase Price on the date of issuance, then the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities will, as of the date of the issuance of such Convertible Securities, be deemed to be outstanding and to have been issued and sold by the Company for such price per share. For the purposes of the preceding sentence, the “price per share for which Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Purchase Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

 

(iii)    Change in Option Price or Conversion Rate. If there is a change at any time in (i) the amount of additional consideration payable to the Company upon the exercise of any Options; (ii) the amount of additional consideration, if any, payable to the Company upon the conversion or exchange of any Convertible Securities; or (iii) the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock (other than under or by reason of provisions designed to protect against dilution), the Purchase Price in effect at the time of such change will be readjusted to the Purchase Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold.

 

(iv)    Treatment of Expired Options and Unexercised Convertible Securities. If, in any case, the total number of shares of Common Stock issuable upon exercise of any Option or upon conversion or exchange of any Convertible Securities is not, in fact, issued and the rights to exercise such Option or to convert or exchange such Convertible Securities shall have expired or terminated, the Purchase Price then in effect will be readjusted to the Purchase Price which would have been in effect at the time of such expiration or termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination (other than in respect of the actual number of shares of Common Stock issued upon exercise or conversion thereof), never been issued.

 

(v)    Calculation of Consideration Received. If any Common Stock, Options or Convertible Securities are issued, granted or sold for cash, the consideration received therefor for purposes of this Warrant will be the amount received by the Company therefor, before deduction of reasonable commissions, underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance, grant or sale. In case any Common Stock, Options or Convertible Securities are issued or sold for a consideration part or all of which shall be other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Market Price thereof as of the date of receipt. In case any Common Stock, Options or Convertible Securities are issued in connection with any acquisition, merger or consolidation in which the Company is the surviving corporation, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving corporation as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined in good faith by the Board of Directors of the Company.

 

(vi)    Exceptions to Adjustment of Purchase Price. No adjustment to the Purchase Price will be made (i) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the date of issuance of this Warrant; (ii) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any employee benefit plan, stock option plan or restricted

 

stock plan of the Company now existing or to be implemented in the future, so long as the issuance of such stock or options is approved by a majority of the independent members of the Board of Directors of the Company or a majority of the members of a committee of independent directors established for such purpose; or (iii) upon the exercise of the Warrants.

 

(c)    Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a greater number of shares, then, after the date of record for effecting such subdivision, the Purchase Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a smaller number of shares, then, after the date of record for effecting such combination, the Purchase Price in effect immediately prior to such combination will be proportionately increased.

 

(d)    Adjustment in Number of Units. Upon each adjustment of the Purchase Price pursuant to the provisions of this Section 4, the number of Units issuable upon exercise of this Warrant shall be adjusted by multiplying a number equal to the Purchase Price in effect immediately prior to such adjustment by the number of Units issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Purchase Price.

 

(e)    Consolidation, Merger or Sale. If, at any time when this Warrant is outstanding, there shall be any merger (other than a merger solely for the purpose of reincorporating in another jurisdiction), consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Company shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Company or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Company other than in connection with a plan of complete liquidation of the Company (each, a “Change of Control Transaction”), then Holder shall thereafter have the right to receive upon exercise of this Warrant upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon such exercise such stock, securities or assets which Holder would have been entitled to receive in such transaction had this Warrant been exercised in full immediately prior to such transaction (without regard to any limitations on exercise contained herein), including any rights (including election rights) that Holder would have had if Holder were a stockholder at any time prior to the consummation of the Change of Control Transaction, and in any such case appropriate provisions shall be made with respect to the rights and interests of Holder to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Purchase Price and of the number of Units issuable upon conversion of this Warrant) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion of this Warrant. The Company shall not effect any transaction described in this subparagraph (e) unless (i) it first gives, to the extent practical, thirty (30) days’ prior written notice (but in any event at least fifteen (15) business days prior written notice) of the record date of the special meeting of stockholders to approve, or if there is no such record date, the consummation of, such Change of

 

Control Transaction (during which time Holder shall be entitled to Exercise this Warrant), which notice shall be given concurrently with the first public announcement of such transaction, and (ii) the resulting successor or acquiring entity (if not the Company) and, if an entity different from the successor or acquiring entity, the entity whose capital stock or assets the holders of the Common Stock are entitled to receive as a result of such Change of Control Transaction, assumes by written instrument the obligations of the Borrower under this Warrant (including under this subparagraph (e)). The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

 

(f)    Distribution of Assets. In case the Company shall declare or make any distribution of its assets (including cash) to holders of Common Stock as a partial liquidating dividend, by way of return of capital or otherwise, then, after the date of record for determining stockholders entitled to such distribution, but prior to the date of distribution, the holder of this Warrant shall be entitled upon exercise of this Warrant for the purchase of any or all of the shares of Common Stock subject hereto, to receive the amount of such assets which would have been payable to the holder had such holder been the holder of such shares of Common Stock on the record date for the determination of stockholders entitled to such distribution.

 

(g)    Notice of Adjustment. Upon the occurrence of any event which requires any adjustment of the Purchase Price, then, and in each such case, the Company shall give notice thereof to the holder of this Warrant, which notice shall state the Purchase Price resulting from such adjustment and the increase or decrease in the number of Units purchasable at such price upon exercise, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Such calculation shall be certified by the chief financial officer of the Company.

 

(h)    Minimum Adjustment of Purchase Price. No adjustment of the Purchase Price shall be made in an amount of less than 1% of the Purchase Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Purchase Price.

 

(i)    No Fractional Shares. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant. If the exercise of this Warrant would result in a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon exercise of the Warrant shall be the next higher number of shares.

 

(j)    Other Notices. In case at any time:

 

(i)    the Company shall declare any dividend upon the Common Stock payable in shares of stock of any class or make any other distribution (including dividends or distributions payable in cash out of retained earnings) to the holders of the Common Stock;

 

(ii)    the Company shall offer for subscription pro rata to the holders of the Common Stock any additional shares of stock of any class or other rights;

 

(iii)    there shall be any capital reorganization of the Company, or reclassification of the Common Stock, or consolidation or merger of the Company with or into, or sale of all or substantially all its assets to, another corporation or entity; or

 

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

 

then, in each such case, the Company shall give to the holder of this Warrant (a) notice of the date on which the books of the Company shall close or a record shall be taken for determining the holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights or for determining the holders of Common Stock entitled to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a reasonable approximation thereof by the Company) when the same shall take place. Such notice shall also specify the date on which the holders of Common Stock shall be entitled to receive such dividend, distribution, or subscription rights or to exchange their Common Stock for stock or other securities or property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be given at least 30 days prior to the record date or the date on which the Company's books are closed in respect thereto. Failure to give any such notice or any defect therein shall not affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above.

 

(k)    Certain Events. If any event occurs of the type contemplated by the adjustment provisions of this Section 4 but not expressly provided for by such provisions, the Company will give notice of such event as provided in Section 4(g) hereof, and the Company's Board of Directors will make an appropriate adjustment in the Purchase Price and the number of shares of Common Stock acquirable upon exercise of this Warrant so that the rights of the Holder shall be neither enhanced nor diminished by such event.

 

(l)    Certain Definitions.

 

(i)    “Market Price,” as of any date, (i) means the average of the last reported sale prices for the shares of Common Stock on the OTCBB for the five (5) trading days immediately preceding such date as reported by Bloomberg Financial Markets or an equivalent reliable reporting service mutually acceptable to and hereafter designated by the holder of this Warrant and the Company (“Bloomberg”), or (ii) if the OTCBB is not the principal trading market for the shares of Common Stock, the average of the last reported sale prices on the principal trading market for the Common Stock during the same period as reported by Bloomberg, or (iii) if market value cannot be calculated as of such date on any of the foregoing bases, the Market Price shall be the fair market value as reasonably determined in good faith by (a) the Board of Directors of the Company or, at the option of a majority-in-interest of the holders of the outstanding Warrants by (b) an independent investment bank of nationally recognized standing in the

 

valuation of businesses similar to the business of the Company. The manner of determining the Market Price of the Common Stock set forth in the foregoing definition shall apply with respect to any other security in respect of which a determination as to market value must be made hereunder.

 

(ii)    “Common Stock,” for purposes of this Section 4, includes the Common Stock, par value $.001 per share, and any additional class of stock of the Company having no preference as to dividends or distributions on liquidation, provided that the shares purchasable pursuant to this Warrant shall include only shares of Common Stock, par value $.001 per share, in respect of which this Warrant is exercisable, or shares resulting from any subdivision or combination of such Common Stock, or in the case of any reorganization, reclassification, consolidation, merger, or sale of the character referred to in Section 4(e) hereof, the stock or other securities or property provided for in such section.

 

5.    Issue Tax. The issuance of certificates for Common Shares upon the exercise of this Warrant shall be made without charge to the holder of this Warrant or such shares for any issuance tax or other costs in respect thereof, provided that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than the holder of this Warrant.

 

6.    No Rights or Liabilities as a Shareholder. This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Company. No provision of this Warrant, in the absence of affirmative action by the Holder to purchase Units, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of such holder for the Purchase Price or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

7.    Transfer, Exchange, and Replacement of Warrant.

 

(a)    Transfer. This Warrant and the rights granted to the Holder are transferable, in whole or in part, upon surrender of this Warrant, together with a properly executed assignment in the form attached hereto, at the office or agency of the Company referred to in Section 8 below. Until due presentment for registration of transfer on the books of the Company, the Company may treat the registered Holder as the owner and Holder for all purposes, and the Company shall not be affected by any notice to the contrary. The Common Shares are subject to registration rights in accordance with the provisions of that certain Registration Rights Agreement, dated November 18, 2005, by and among the Company and the other signatories thereto (the “Registration Rights Agreement”).

 

(b)    Warrant Exchangeable for Different Denominations. This Warrant is exchangeable, upon the surrender hereof by the Holder at the office or agency of the Company referred to in Section 8 below, for new Warrants of like tenor representing in the aggregate the right to purchase the number of shares of Common Stock which may be purchased hereunder, each of such new Warrants to represent the right to purchase such number of shares as shall be designated by the Holder at the time of such surrender.

 

(c)    Replacement of Warrant. Upon 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, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

(d)    Cancellation; Payment of Expenses. Upon the surrender of this Warrant in connection with any transfer, exchange, or replacement as provided in this Section 7, this Warrant shall be promptly canceled by the Company. The Company shall pay all taxes (other than securities transfer taxes) and all other expenses (other than legal expenses, if any, incurred by the Holder or transferees) and charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 7.

 

(e)    Register. The Company shall maintain, at its principal executive offices (or such other office or agency of the Company as it may designate by notice to the Holder), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee and each prior owner of this Warrant.

 

8.    Notices. All notices, requests, and other communications required or permitted to be given or delivered hereunder to the holder of this Warrant shall be in writing, and shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier, postage prepaid and addressed, to such holder at the address shown for such holder on the books of the Company, or at such other address as shall have been furnished to the Company by notice from such holder. All notices, requests, and other communications required or permitted to be given or delivered hereunder to the Company shall be in writing, and shall be personally delivered, or shall be sent by certified or registered mail or by recognized overnight mail courier, postage prepaid and addressed, to the office of the Company at 434 Fayetteville Street, Suite 600, Raleigh, North Carolina 27601, Attention: Chief Executive Officer, Facsimile: 919 ###-###-####, or at such other address as shall have been furnished to the holder of this Warrant by notice from the Company. Any such notice, request, or other communication may be sent by facsimile, but shall in such case be subsequently confirmed by a writing personally delivered or sent by certified or registered mail or by recognized overnight mail courier as provided above. All notices, requests, and other communications shall be deemed to have been given either at the time of the receipt thereof by the person entitled to receive such notice at the address of such person for purposes of this Section 8, or, if mailed by registered or certified mail or with a recognized overnight mail courier upon deposit with the United States Post Office or such overnight mail courier, if postage is prepaid and the mailing is properly addressed, as the case may be.

 

9.    Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF DELAWARE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS). BOTH PARTIES IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS AND THE STATE COURTS LOCATED IN

 

DELAWARE WITH RESPECT TO ANY SUIT OR PROCEEDING BASED ON OR ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY AND IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH SUIT OR PROCEEDING MAY BE DETERMINED IN SUCH COURTS. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTIES HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS WARRANT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO THIS WARRANT, OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND THE PARTIES HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT EITHER PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

10.    Miscellaneous.

 

(a)    Amendments. This Warrant and any provision hereof may only be amended by an instrument in writing signed by the Company and the Holder.

 

(b)    Descriptive Headings. The descriptive headings of the several sections of this Warrant are inserted for purposes of reference only, and shall not affect the meaning or construction of any of the provisions hereof.

 

(c)    Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holder of this Warrant by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Warrant will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Warrant, that the holder of this Warrant shall be entitled, in addition to all other available remedies in law or in equity, to an injunction or injunctions to prevent or cure any breaches of the provisions of this Agreement and to enforce specifically the terms and provisions of this Warrant, without the necessity of showing economic loss and without any bond or other security being required.

 

 

 

 

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

 

 

OASYS MOBILE, INC.       By: ____________________________ Gary E. Ban Chief Executive Officer

 

Dated as of July 27, 2006

Dated: ________ __, 200_

To: OASYS MOBILE, INC.

 

The undersigned, pursuant to the provisions set forth in the within Warrant, hereby agrees to purchase ________ Units covered by such Warrant, and makes payment herewith in full therefor at the price per Unit provided by such Warrant in cash or by certified or official bank check in the amount of ________________________. Please issue a certificate or certificates for such shares of Common Stock and a C-2 Warrant or C-2 Warrants in the name of and pay any cash for any fractional share to:

 

Name:_____________________________ Signature:__________________________ Address:__________________________             _______________________             _______________________     Note: The above signature should            correspond exactly with the name on            the face of the within Warrant.

 

and, if said number of shares of Common Stock shall not be all the Units purchasable under the within Warrant, a new Warrant is to be issued in the name of said undersigned covering the balance of the shares purchasable thereunder less any fraction of a share paid in cash.

 

 

 

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers all the rights of the undersigned under the within Warrant, with respect to the number of Units covered thereby set forth hereinbelow, to:

 

Name of Assignee	Address	No of Shares

, and hereby irrevocably constitutes and appoints ______________ ________________________ as agent and attorney-in-fact to transfer said Warrant on the books of the within-named corporation, with full power of substitution in the premises.

 

Dated: ________ __, 200_

 

In the presence of:

 

_________________________

 

Name:__________________________________ Signature:_______________________________ Title of Signing Officer or Agent (if any): _______________________________________ Address:________________________________                 ________________________________ Note: The above signature should            correspond exactly with the name on            the face of the within Warrant.