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Exhibit 99.4
Warrant Agreement dated August 14, 1998 between Bionutrics,
Inc., a Nevada corporation (the "Company"), and AC Humko Corp., a
Delaware corporation and its permitted transferees (hereinafter
referred to as "Holder")
Whereas Holder is purchasing certain securities of the Company
pursuant to that certain stock purchase agreement dated August 14, 1998 (the
"Purchase Agreement"); and
Whereas pursuant to the terms of the Purchase Agreement the
Company has agreed to issue Holder certain warrants to purchase shares of the
Company's Common Stock (as defined in section 8.8); and
Now therefore for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agrees as
follows:
1. Grant. The Company hereby grants to Holder warrants to
purchase up to an aggregate of two million shares of Common Stock ("Warrants")
at the Exercise Price (as defined in section 2), subject to adjustment as
provided in section 8, during the period commencing on the date hereof and
ending at 5:30 p.m. Eastern Standard Time two years thereafter ("Exercise
Period").
2. Exercise Price.
The term "Exercise Price" for 2 million shares of Common Stock
shall be $2.00 per share as may be adjusted from time to time pursuant to
Section 8.
3. Warrant Certificate. The warrant certificate delivered
pursuant to this Warrant Agreement shall be in the form set forth in exhibit A
with such appropriate insertions, omissions, substitutions and other variations
as required or permitted by this Warrant Agreement (the "Warrant Certificate").
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4. Exercise of Warrants. The Warrants are exercisable at the Exercise
Price and payable to the Company at its executive offices located at 0000 Xxxx
Xxxxxxxxx Xxxx, Xxx. 000, Xxxxxxx, XX 00000, attn: Chief Financial Officer (or
such other officer as designated to Holder by the Company) by certified or
official bank check in New York Clearing House funds or wire transfer. Upon
surrender of a Warrant Certificate, submission of an executed Form of Election
to Purchase in the form set forth in Exhibit B and payment of the Exercise
Price, Holder shall be entitled to receive a certificate for the shares of
Common Stock so purchased. The purchase rights represented by the Warrant
Certificate are exercisable at the option of Holder in whole or in part, but not
as to fractional shares of the Common Stock underlying the Warrants provided the
Company shall pay cash in respect of any fraction of a share that would
otherwise be issuable in an amount equal to the same fraction of the market
price per share of the shares of Common Stock underlying the Warrants on the
date of the exercise, as reasonably determined by the Company.
5. Issuance of Certificates. Upon the exercise of Warrants the Company
shall promptly issue to Holder a certificate for the shares of Common Stock
underlying the Warrant Certificate. If Holder purchases less than all the shares
of Common Stock purchasable under the Warrant Certificate, the Company shall
cancel the Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the shares of
Common Stock. Holder shall be deemed the record holder of the shares of Common
Stock on the date of exercise of the Warrant pursuant to section 4, irrespective
of the date of delivery of the Common Stock certificate.
6. Restriction On Transfer of Warrants. Holder may not sell, assign,
pledge, hypothecate or otherwise transfer any rights under the Warrants except
in compliance with all
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securities laws. Subject to the above, this Warrant Agreement and the Warrants
are transferable in the same manner and with the same effect as in the case of a
negotiable instrument payable to a specified person. The Company, however, may
treat the registered holder thereof as the owner hereof for all purposes until
the Warrant Certificate is surrendered for transfer as hereinafter provided.
Upon surrender of the Warrant Certificate at the principal office of the
Company, together with a written assignment thereof duly executed by the holder
hereof or his agent or attorney, the Company shall execute and deliver a new
Warrant Certificate in the name of the assignee or assignees and in the
denominations specified in such instrument of assignment. The Company shall pay
all expenses, taxes and other charges payable in connection with the
preparation, execution and delivery of Warrant Certificate under this section,
except that in case such new Warrant is registered in a name or names other than
the name of the holder of this Warrant Agreement all stock transfer taxes
payable upon the execution and delivery of such Warrant Certificate shall be
paid by the holder hereof at the time of the presentation thereof. In such case
the holder hereof shall deliver at the time of such presentation evidence,
satisfactory to the Company, that such taxes have been paid.
7. Registration Under the Securities Act of 1933. Neither the Warrants
nor the shares of Common Stock issuable upon exercise of the Warrants have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or any applicable state securities or blue sky laws. Upon exercise of the
Warrants, the Company may cause a legend in substantially the form set forth
below to be placed on each certificate representing the shares of Common Stock
issued.
The shares of stock represented by this certificate have not
been registered under the Securities Act of 1993, as amended
(the "Securities Act"), for public resale and may not be
offered, transferred or sold except pursuant to (i) an
effective registration statement under the Securities Act and
any applicable state securities or blue sky laws, (ii) to the
extent
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applicable, Rule 144 under the securities act (or any similar
rule under the securities act relating to the disposition of
securities) together with an opinion of counsel reasonably
satisfactory to issuer's counsel that such transfer is
permitted or (iii) an opinion of counsel reasonably
satisfactory to issuer's counsel that an exemption from
registration under the securities act and any applicable state
securities or blue sky laws is available.
8. Adjustments to Exercise and Number of Securities.
8.1 Recapitalization and Reclassifications. If upon a
recapitalization or reclassification the shares of Common Stock are changed into
or become exchangeable for a larger or smaller number of shares, then upon the
effective date thereof the number of shares of Common Stock that Holder shall be
entitled to purchase upon exercise of the Warrants shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization or
reclassification, and the Exercise Price shall be, in the case of an increase in
the number of shares, proportionately decreased and, in the case of a decrease
in the number of shares, proportionately increased.
8.2 Sale; Merger; Consolidation. Subject to the notice
provisions set forth in section 13, upon a transfer or sale of all or
substantially all the capital stock or assets of the Company or in the case of
any consolidation or merger of the Company with another entity (other than a
consolidation or merger that does not result in any reclassification or change
of the outstanding Common Stock), the transferee, purchaser or entity formed by
or surviving the consolidation or merger, as the case may be, shall execute and
deliver to Holder a supplemental warrant agreement giving Holder the right
during the Exercise Period to receive, upon exercise of the Warrants, the kind
and amount of shares of stock and/or other securities receivable upon such
transfer, sale, consolidation or merger, as the case may be, by a holder of the
number of shares of Common Stock
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for which such Warrants could have been exercised immediately prior to such
transfer, sale, consolidation or merger. If such transfer, sale, consolidation
or merger results in the shareholders of the Company receiving cash or publicly
traded securities having a value in excess of the Exercise Price, this Warrant
Agreement shall terminate if not exercised prior to the closing date of such
transaction. Such supplemental warrant agreement shall provide for adjustments
identical to the adjustments provided in this section 8.
8.3 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made if the amount of an adjustment is
less than $.02 per share of Common Stock provided that any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment that, together
with any such adjustment, amounts to at least $.02 per share of Common Stock.
8.4 Dividends and Other Distributions. If the Company declares
a dividend payable in shares of Common Stock, Holder shall be entitled to
receive upon exercise of the Warrant, in addition to the number of shares of
Common Stock as to which the Warrant is exercised, such additional shares of
Common Stock as Holder would have received had the Warrant been exercised
immediately prior to such record date for the dividend. If the Company declares
a dividend of securities other than a dividend of Common Stock, Holder shall
thereafter be entitled to receive upon the exercise of such Warrants in addition
to the shares of Common Stock receivable upon the exercise of such Warrants,
such non-Common Stock dividend as Holder would have received had the Warrant
been exercised immediately prior to such record date for the dividend. At the
time of any such dividend or distribution, the Company shall make appropriate
reserves to ensure
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the timely performance of this section 8. Holder shall not be entitled to
receive any cash dividend declared by the Company.
8.5 If the Company issues in a public offering any shares of
Common Stock for a consideration per share less than the prevailing Exercise
Price, then (a) the Exercise Price in effect immediately prior to each such
instance shall be adjusted to a price equal to the quotient obtained by dividing
(i) an amount equal to the sum of the total number of shares of Common Stock
outstanding on a fully diluted basis immediately prior to such issuance
multiplied by the Exercise Price in effect immediately prior to such issuance
(the "Old Common Stock Number"), plus the consideration received by the Company
upon such issuance, by (ii) the total number of shares of Common Stock
outstanding on a fully diluted basis immediately after such issuance (the "New
Common Stock Number"), and (b) the number of shares of Common Stock then
issuable upon the exercise of the Warrants outstanding immediately prior to each
such issuance shall forthwith be adjusted by multiplying such number so issuable
by the quotient obtained by dividing (i) the New Common Stock Number by (ii) the
Old Common Stock Number.
8.6 Except as provided in section 8.5, if the Company issues
shares of Common Stock, or convertible preferred stock, warrants, options,
rights, or other securities only to the extent the aforementioned securities are
convertible into or exchangeable or exercisable for shares of Common Stock, or
rights to subscribe for or to purchase Common Stock or any stock or securities
convertible into or exchangeable or exercisable for Common Stock, without
consideration or for a consideration per share less than the prevailing Exercise
Price then, the Exercise Price in effect immediately prior to each such issuance
shall be decreased and the number of shares of Common Stock issuable upon the
exercise of the Warrants shall be increased pursuant to the formula set forth
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in section 8.5 counting as consideration received by the Company the
consideration actually received plus that deemed to be received upon such
conversion or exchange as provided in section 8.7(c).
8.7 For the purposes of any adjustment of the Exercise Price
and the number of shares of Common Stock issuable upon exercise of the Warrants
pursuant to sections 8.5 and 8.6, the following provisions shall be applicable:
(a) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of
cash received by the Company therefor.
(b) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the "fair
value" of such consideration as determined in the good faith
judgment of the board of directors of the Company.
(c) In the case of the issuance of (x) options to
purchase or rights to subscribe for Common Stock, (y)
securities by their terms convertible into or exchangeable for
Common Stock or (z) options to purchase or rights to subscribe
for such convertible or exchangeable securities:
(i) the aggregate maximum number of shares
of Common Stock deliverable upon exercise of such
options to purchase or rights to subscribe for Common
Stock shall be deemed to have been issued at the time
such options or rights were issued and for a
consideration equal to the consideration (determined
in the manner provided in subsections (a) and (b)
above), if any, received by the Company upon the
issuance of such options
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or rights plus the minimum purchase price provided in
such options or rights for the Common Stock covered
thereby;
(ii) the aggregate maximum number of shares
of Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable
securities or upon the exercise of options to
purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion
or exchange thereof shall be deemed to have been
issued at the time such securities were issued or
such options or rights were issued and for a
consideration equal to the consideration received by
the Company for any such securities and related
options or rights (excluding any cash received on
account of accrued interest or accrued dividends),
plus the additional consideration, if any, to be
received by the Company upon the conversion or
exchange of such securities or the exercise of any
related options or rights (the consideration in each
case to be determined in the manner provided in
subsections (a) and (b) above);
(iii) on any change in the number of shares
or exercise price of Common Stock deliverable upon
exercise of any such options or rights or conversions
of or exchange for such convertible or exchangeable
securities, other than a change resulting from the
antidilution provisions thereof, the Exercise Price
and the number of shares of Common Stock issuable
upon exercise of the Warrants shall forthwith be
readjusted to such Exercise Price and to such number
of shares as would have obtained had the adjustment
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made at the time of the issuance of such options,
rights or securities not converted prior to such
change been made upon the basis of such change; and
(iv) on the expiration of any such option or
rights, the termination of any such rights to convert
or exchange or the expiration of any options or
rights related to such convertible or exchangeable
securities, the Exercise Price and the number of
shares of Common Stock issuable upon exercise of the
Warrants shall forthwith be readjusted to such
Exercise Price and to such number of shares as would
have obtained had such options, rights, securities or
options or rights related to such securities not been
issued.
8.8 Definition of Common Stock. The term "Common Stock"
shall mean:
(a) the class of stock designated as Common Stock in
the Company's Articles of Incorporation, as may be amended, or any
other class of stock resulting from successive changes or
reclassifications of such Common Stock; and
(b) if, as a result of an adjustment made pursuant to
this section 8, Holder shall upon exercise of the Warrants become
entitled to receive securities or assets other than Common Stock then,
wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such other securities or assets
and thereafter the number of such other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as
nearly equivalent as practicable to the provisions of this section.
9. Issuance of New Warrant Certificate. Upon receipt by the Company of
evidence reasonably satisfactory to it of a loss, theft, destruction or
mutilation of a Warrant Certificate, reimbursement by Holder to the Company of
all incidental expenses and, in the case of loss, theft
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or destruction, receipt of indemnity or security from Holder reasonably
satisfactory to it or, in the case of a mutilated Warrant Certificate, upon
surrender and cancellation thereof, the Company shall make and deliver a new
Warrant Certificate to Holder.
10. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants. The Company shall have the option to make
payment in cash in respect of any fractional shares or to round any fraction up
to the nearest whole number of shares of Common Stock.
11. Reservation and Listing of Securities. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Common Stock as shall be issuable upon the exercise thereof.
The Company covenant and agrees that, upon exercise of the Warrants and payment
of the Exercise Price by Holder, all shares of Common Stock issuable upon such
exercise shall be duly and validly issued, fully paid and non-assessable.
12. Representations and Warranties.
12.1 Holder represents and warrants to the Company that the
Warrants are being acquired solely for Holder's own account, for investment, not
for the interest of any other and are not being acquired with a view to or for
resale, distribution, assignment, subdivision or fractionalization thereof, and
Holder has no present plan to enter into any contract, undertaking, agreement or
arrangement for such purpose.
12.2 Holder represents and warrants to the Company that it is
an "Accredited investor" and a "sophisticated investor," each as defined in the
Regulation D promulgated under the Securities Act.
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13. Advance Notice to Warrant Holder re: Dividend, Exchange, Merger,
etc. Nothing contained in this Warrant Agreement shall be construed as
conferring upon Holder the right to vote, consent or receive notice as a
stockholder in respect of any meeting of stockholders for the election of
directors or any other matter, or as having any right as a stockholder of the
Company. If, however, at any time prior to the expiration of the Warrants and
their exercise, any of the following events shall occur:
(a) the Company takes a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable other than in cash, or a cash dividend
or distribution payable otherwise than out of current or retained
earnings, as indicated by the accounting treatment (which treatment
shall be in accordance with generally accepted accounting principles)
of such dividend or distribution on the books of the Company; or
(b) the Company offers to all the holders of its
Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchange for shares of capital stock of
the Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation, winding up, transfer,
consolidation, merger or a sale of all or substantially all its
property, assets and business as an entirety is proposed;
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the Company shall give notice of such event at least 15 days prior to
the date fixed as a record date or the date of the closing the transfer
books for the determination of the stockholders entitled to such
dividend, distribution, convertible or exchangeable securities or
subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record
date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the
validity of any action taken in connection with the declaration or
payment of any such dividend, or the issuance of any convertible or
exchangeable securities, or subscription rights, options or warrants,
or any proposed dissolution, liquidation, winding up or sale.
14. Notices. Any notice or demand pursuant to this Warrant Agreement
shall be in writing and shall be deemed sufficiently given or made (a) upon
personal delivery (b) the next business day following delivery to a reputable
overnight courier or (c) three days following mailing by certified or registered
mail, return receipt requested, postage prepaid, and addressed, until the other
party is notified of another address, as follows:
If to the Company:
Bionutrics, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx, Chief Executive Officer
with a copy to:
Xxxxxxxx Siegelbaum LLP
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: J. Xxxxxx Xxxxxx, Esq.
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If to Holder:
AC Humko Corp.
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
with a copy to:
Xxxxxx & Xxxxxx LLP
0000 Xxxxxx Xxxxxx (Xxxxx 0000)
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx, Esq.
15. Successors. All the covenants and provisions of this Warrant
Agreement shall be binding upon and inure to the benefit of the Company, Holder
and their respective successors and permitted assigns hereunder.
16. Governing Law; Submission to Jurisdiction. (a) This Warrant
Agreement and each Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of New York and for all the purposes
shall be construed in accordance with the laws of said State without giving
effect to the rules thereof governing conflicts of laws.
(b) Any action, proceeding or claim against either party hereto arising
out of, or relating in any way to, this Warrant Agreement shall be brought and
enforced in the courts of the State of New York or of the United States of
America for the Southern District of New York, and the parties hereto
irrevocably submit to such jurisdiction, which jurisdiction shall be exclusive.
The parties irrevocably waive any objection to such exclusive jurisdiction
including on the ground of inconvenient forum. Any such process or summons to be
served upon either party hereto may (at the option of any party bringing such
action, proceeding or claim) be served in accordance with section 14. The
prevailing party in any such action or proceeding shall be entitled to recover
from
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the other party its reasonable legal costs and expense incurred in connection
with such action or proceeding.
17. Entire Agreement; Modification. This Warrant Agreement contains the
entire understanding between the parties with respect to the subject matter
hereof and may not be modified or amended except in writing by both parties.
18. Severability. If any provision of this Warrant Agreement shall be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereof.
19. Captions. The caption headings of the sections of this Warrant
Agreement are for convenience of reference only and are not intended, nor should
they be construed as, a part of this Warrant Agreement and shall be given no
substantive effect.
20. Benefits of this Warrant Agreement. Nothing in this Warrant
Agreement shall be construed to give to any person or entity other than the
Company and Holder any legal or equitable right, remedy or claim hereunder and
this Warrant Agreement shall be for the sole and exclusive benefit of the
Company and Holder.
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22. Counterparts. This Warrant Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and such counterparts shall together constitute but one and
the same instrument.
In Witness Whereof the parties hereto have caused this Warrant
Agreement to be duly executed, as of the day date in the preamble hereof.
Bionutrics, Inc.
by: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx, Chief Executive Officer
AC Humko Corp.
by: /s/ Xxxxx Xxxxxxxxxxxxx
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Xxxxx Xxxxxxxxxxxxx, Vice President
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Exhibit A-1
Form of Warrant Certificate
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), FOR PUBLIC RESALE AND MAY NOT BE OFFERED,
TRANSFERRED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS,
(ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE SECURITIES ACT (OR ANY SIMILAR
RULE UNDER THE SECURITIES ACT RELATING TO THE DISPOSITION OF SECURITIES)
TOGETHER WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ISSUER'S COUNSEL
THAT SUCH TRANSFER IS PERMITTED OR (iii) AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ISSUER'S COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS IS
AVAILABLE.
THE EXERCISE, TRANSFER AND EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE WARRANT AGREEMENT BETWEEN BIONUTRICS, INC. AND AC
HUMKO CORP.
2,000,000 Warrants
Warrant Certificate
This Warrant Certificate certifies that AC Humko Corp., a Delaware
corporation, is the registered holder of 2,000,000 warrants to purchase, at any
time from August 14, 1998, until 5:30 p.m. Eastern Standard Time on August 14,
2000 ("Expiration Date"), up to 2,000,000 fully-paid and non-assessable shares
of common stock, par value $.001 per share ("Common Stock"), of Bionutrics, Inc.
(the "Company") at an exercise price determined pursuant to section 2 of the
Warrant Agreement dated August 14, 1998 between the Company and AC Humko Corp.
(the "Warrant Agreement"), upon surrender of this Warrant Certificate and
payment of such exercise price to the Company and subject to the Warrant
Agreement.
At 5:31 p.m. Eastern Standard Time on the Expiration Date all Warrants
evidenced hereby, unless exercised prior thereto, shall be void.
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A-1
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The Warrant Agreement is hereby incorporated by reference and made a
part of this Warrant Certificate and is hereby referred to for a description of
the rights, obligations, duties and restrictions of the Company and holder of
the Warrants.
In Witness Whereof, the Company has caused this Warrant Certificate to
be duly executed on this 14 day of August 1998.
Bionutrics, Inc.
by: /s/ Xxxxxx X. Xxxx
------------------------------------------
Xxxxxx X. Xxxx, Chief Executive Officer
A-2
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Exhibit B
Form of Election to Purchase
The undersigned hereby irrevocably elects to exercise the right
represented by the attached Warrant Certificate to purchase ______ shares of
common stock, par value $.001, of Bionutrics, Inc. at an exercise price of $____
per share and herewith tenders in payment for such stock a certified or official
bank check payable in New York Clearing House Funds to the order of Bionutrics,
Inc. or if so indicated below had arranged for wire transfer to Bionutrics's
account as set forth on the attached wire transfer information in the amount of
$____________.
AC Humko Corp.
by:
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Xxxxxx X. Xxxxxxxxx, Chief Executive Officer
B-1
