WARRANT AGREEMENT
AGREEMENT, dated as of this day of
1998, by and between BALANCED LIVING, INC., a Colorado corporation
("Company"), and Interwest Transfer Company, Inc. as Warrant Agent
(the "Warrant Agent").
WITNESSETH
WHEREAS, in connection with a public offering of up to 250,000
units ("Units"), each unit consisting of one (1) share of the
Company's Common Stock, $.001 par value ("Common Stock"), one (1)
Class A Redeemable Common Stock Purchase Warrant (the "Class A
Warrants"), one (1) Class B Redeemable Common Stock Purchase Warrant
(the "Class B Warrants") and one (1) Class C Redeemable Common Stock
Purchase Warrant (the "Class C Warrants");
WHEREAS, the Company desires the Warrant Agent to act on behalf
of the Company, and the Warrant Agent is willing to so act, in
connection with the issuance, registration, transfer, exchange and
redemption of the Warrants, the issuance of certificates
representing the Warrants, the exercise of the Warrants, and the
rights of the holders thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the
terms and provisions of the Warrants and the certificates
representing the Warrants and the respective rights and obligations
thereunder of the Company, the holders of certificates representing
the Warrants and the Warrant Agent, the parties hereto agree as
follows:
1. Definitions. As used herein, the following terms shall
have the following meanings, unless the context shall otherwise
require:
(a) "Common Stock" shall mean the common stock of the
Company of which at the date hereof consists of 50,000,000
authorized shares, $.001 par value, and shall also include any
capital stock of any class of the Company thereafter authorized
which shall not be limited to a fixed sum or percentage in
respect to the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary
liquidation, dissolution, or winding up of the Company;
provided, however, that the shares issuable upon exercise of
the Warrants shall include (1) only shares of such class
designated in the Company's Certificate of Incorporation as
Common Stock on the date of the original issue of the Warrants
or (ii), in the case of any reclassification, change,
consolidation, merger, sale, or conveyance of the character
referred to in Section 9(c) hereof, the stock, securities, or
property provided for in such section or (iii), in the case of
any reclassification or change in the outstanding shares of
Common Stock issuable upon exercise of the Warrants as a result
of a subdivision or combination or a change in par value, or
from par value to no par value, or from no par value to par
value, such shares of Common Stock as so reclassified or
changed.
(b) "Corporate Office" shall mean the office of the
Warrant Agent (or its successor) at which at any particular
time its principal business shall be administered, which office
is located at the date hereof at 0000 Xxxx 0000 Xxxxx, Xxxxx
000, Xxxx Xxxx Xxxx, Xxxx 00000, (000) 000-0000
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(c) "Exercise Date" shall mean, as to any Warrant, the
date on which the Warrant Agent shall have received both (a)
the Warrant Certificate representing such Warrant, with the
exercise form thereon duly executed by the Registered Holder
(as defined below) thereof or his attorney duly authorized in
writing, and (b) payment in cash, or by official bank or
certified check made payable to the Company, of an amount in
lawful money of the United States of America equal to the
applicable Purchase Price (as defined below).
(d) "Initial Warrant Exercise Date" shall mean
, 1998.
(e) "Purchase Price" shall mean the purchase price per
share to be paid upon exercise of each Warrant in accordance
with the terms hereof, which price shall be $ 3.00 per share
for the Class A Warrants, $ 5.00 per share for the Class B
Warrants and $ 10.00 per share for the Class C Warrants subject
to adjustment from time to time pursuant to the provisions of
Section 9 hereof, and subject to the Company's right, in its
sole discretion, upon thirty (30) days written notice, to
reduce the Purchase Price upon notice to all warrant holders.
(f) "Redemption Price" shall mean the price at which the
Company may, at its option, redeem the Warrants, in accordance
with the terms hereof, which price shall be $0.01 per Warrant.
(g) "Registered Holder" shall mean as to any Warrant and
as of any particular date, the person in whose name the
certificate representing the Warrant shall be registered on
that date on the books maintained by the Warrant Agent pursuant
to Section 6.
(h) "Transfer Agent" shall mean Interwest Transfer
Company, Inc., as the Company's transfer agent, or its
authorized successor, as such.
(i) "Warrant Expiration Date" shall mean 5:00 P.M.
(Mountain time) on , 2003 or the Redemption
Date as defined in Section 8, whichever is earlier; provided
that if such date shall in the State of Colorado be a holiday
or a day on which banks are authorized or required to close,
then 5:00 P.M. (Mountain time) on the next following day which
in the State of Colorado is not a holiday or a day on which
banks are authorized or required to close. Upon notice to all
warrant holders, the Company shall have the right to extend the
warrant expiration date.
2. Warrants and Issuance of Warrant Certificates.
(a) A Warrant initially shall entitle the Registered
Holder of the Warrant representing such Warrant to purchase one
share of Common Stock upon the exercise thereof, in accordance
with the terms hereof, subject to modification and adjustment
as provided in Section 9.
(b) Upon execution of this Agreement, Warrant
Certificates representing the number of Warrants sold pursuant
to the Underwriting Agreement shall be executed by the Company
and delivered to the Warrant Agent. Upon written order of the
Company signed by its President or a Vice President and by its
Secretary or an Assistant Secretary, the Warrant Certificates
shall be countersigned, issued, and delivered by the Warrant
Agent.
(c) From time to time, up to the Warrant Expiration
Date, the Transfer Agent shall countersign and deliver stock
certificates in required whole number denominations
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representing up to an aggregate of 750,000 shares of Common
Stock, subject to adjustment as described herein, upon the
exercise of Warrants in accordance with this Agreement.
(d) From time to time, up to the Warrant Expiration
Date, the Warrant Agent shall countersign and deliver Warrant
Certificates in required whole number denominations to the
persons entitled thereto in connection with any transfer or
exchange permitted under this Agreement; provided that no
Warrant Certificates shall be issued except (i) those initially
issued hereunder, (ii) those issued on or after the Initial
Warrant Exercise Date, upon the exercise of fewer than all
Warrants represented by any Warrant Certificate, to evidence
any unexercised warrants held by the exercising Registered
Holder, (iii) those issued upon any transfer or exchange
pursuant to Section 6; (iv) those issued in replacement of
lost, stolen, destroyed, or mutilated Warrant Certificates
pursuant to Section 7; and (v) those issued at the option of
the Company, in such form as may be approved by the its Board
of Directors, to reflect any adjustment or change in the
Purchase Price, the number of shares of Common Stock
purchasable upon exercise of the Warrants or the Redemption
Price therefor made pursuant to Section 9 hereof.
3. Form and Execution of Warrant Certificates.
(a) The Class A Warrant Certificate, Class B Warrant
Certificate and Class C Warrant Certificate shall be
substantially in the forms annexed hereto as Exhibits A, B and
C respectfully (the provisions of which are hereby incorporated
herein) and may have such letters, numbers, or other marks of
identification or designation and such legends, summaries, or
endorsements printed, lithographed, or engraved thereon as the
Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Warrants may be listed, or to conform to
usage or to the requirements of Section 2(b). The Warrant
Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, exchange, or in lieu
of mutilated, lost, stolen, or destroyed Warrant Certificates)
and issued in registered form. Class A Warrant Certificates
shall be numbered serially with the letter WA, Class B Warrant
Certificates shall be numbered serially with the letter WB and
Class C Warrant Certificates shall be numbered serially with
the letter WC.
(b) Warrant Certificates shall be executed on behalf of
the Company by its President, or any Vice President and by its
Secretary or an Assistant Secretary, by manual signatures or by
facsimile signatures printed thereon, and shall have imprinted
thereon a facsimile of the Company's seal. Warrant
Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall
have signed any of the Warrant Certificates shall cease to be
an officer of the Company or to hold the particular office
referenced in the Warrant Certificate before the date of
issuance of the Warrant Certificates or before counter
signature by the Warrant Agent and issue and delivery thereof,
such Warrant Certificates may nevertheless be countersigned by
the Warrant Agent, issued and delivered with the same force and
effect as though the person who signed such Warrant
Certificates had not ceased to be an officer of the Company or
to hold such office. After countersignature by the Warrant
Agent, Warrant Certificates shall be delivered by the Warrant
Agent to the Registered Holder without further action by the
Company, except as otherwise provided by Section 4 hereof.
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4. Exercise. Each Warrant may be exercised by the Registered
Holder thereof at any time on or after the Initial Warrant Exercise
Date, but not after the Warrant Expiration Date, upon the terms and
subject to the conditions set forth herein and in the applicable
Warrant Certificate. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the Exercise
Date and the person entitled to receive the securities deliverable
upon such exercise shall be treated for all purposes as the holder
of those securities upon the exercise of the Warrant as of the close
of business on the Exercise Date. As soon as practicable on or
after the Exercise Date, the Warrant Agent shall deposit the
proceeds received from the exercise of a Warrant shall notify the
Company in writing of the exercise of the Warrants. Promptly
following, and in any event within five (5) business days after the
date of such notice from the Warrant Agent, the Warrant Agent, on
behalf of the Company, shall cause to be issued and delivered by the
Transfer Agent, to the person or persons entitled to receive the
same, a certificate or certificates for the securities deliverable
upon such exercise (plus a certificate for any remaining unexercised
Warrants of the Registered Holder), unless prior to the date of
issuance of such certificates the Company shall instruct the Warrant
Agent to refrain from causing such issuance of certificates pending
clearance of checks received in payment of the Purchase Price
pursuant to such Warrants. Upon the exercise of any Warrant and
clearance of the funds received, the Warrant Agent shall promptly
remit the payment received for the Warrant (the"Warrant Proceeds")
to the Company or as the Company may direct in writing.
5. Reservation of Shares; Listing; Payment of Taxes, etc.
(a) The Company covenants that it will at all times
reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon exercise of Warrants, such
number of shares of Common Stock as shall then be issuable upon
the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be
issuable upon exercise of the Warrants shall, at the time of
delivery, be duly and validly issued, fully paid,
nonassessable, and free from all taxes, liens, and charges with
respect to the issue thereof, (other than those which the
Company shall promptly pay or discharge) and that upon issuance
such shares shall be listed on each national securities
exchange or eligible for inclusion in each automated quotation
system, if any, on which the other shares of outstanding Common
Stock of the Company are then listed or eligible for inclusion.
(b) The Company covenants that if any securities to be
reserved for the purpose of exercise of Warrants hereunder
require registration with, or approval of, any governmental
authority under any federal securities law before such
securities may be validly issued or delivered upon such
exercise, then the Company will, to the extent the Purchase
Price is less than the Market Price (as hereinafter defined),
in good faith and as expeditiously as reasonably possible,
endeavor to secure such registration or approval and will use
its reasonable efforts to obtain appropriate approvals or
registrations under state "blue sky" securities laws. With
respect to any such securities, however, Warrants may not be
exercised by, or shares of Common Stock issued to, any
Registered Holder in any state in which such exercise would be
unlawful.
(c) The Company shall pay all documentary, stamp, or
similar taxes and other governmental charges that may be
imposed with respect to the issuance of Warrants, or the
issuance, or delivery of any shares upon exercise of the
Warrants; provided, however, that if the shares of Common Stock
are to be delivered in a name other than the name of the
Registered Holder of the Warrant Certificate representing any
Warrant being exercised, then no such delivery shall be made
unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto,
if any.
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(d) The Warrant Agent is hereby irrevocably authorized
for such time as it is acting as such to requisition the
Company's Transfer Agent from time to time for certificates
representing shares of Common Stock issuable upon exercise of
the Warrants, and the Company will authorize the Transfer Agent
to comply with all such proper requisitions. The Company will
file with the Warrant Agent a statement setting forth the name
and address of the Transfer Agent of the Company for shares of
Common Stock issuable upon exercise of the Warrants.
6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other
Warrant Certificates representing an equal aggregate number of
Warrants of the same class or may be transferred in whole or in
part. Warrant Certificates to be exchanged shall be
surrendered to the Warrant Agent at its Corporate Office, and
upon satisfaction of the terms and provisions hereof, the
Company shall execute and the Warrant Agent shall countersign,
issue, and deliver in exchange therefor the Warrant Certificate
or Certificates which the Registered Holder making the exchange
shall be entitled to receive.
(b) The Warrant Agent shall keep at its office books in
which, subject to such reasonable regulations as it may
prescribe, it shall register Warrant Certificates and the
transfer thereof in accordance with its regular practice. Upon
due presentment for registration of transfer of any Warrant
Certificate at such office, the Company shall execute and the
Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented
for registration or transfer, or for exchange or exercise, the
subscription form on the reverse thereof shall be duly
endorsed, or be accompanied by a written instrument or
instruments of transfer and subscription, in form satisfactory
to the Company and the Warrant Agent, duly executed by the
Registered Holder or his attorney-in-fact duly authorized in
writing.
(d) A service charge may be imposed by the Warrant Agent
for any exchange or registration of transfer of Warrant
Certificates. In addition, the Company may require payment by
such holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection
therewith.
(e) All Warrant Certificates surrendered for exercise or
for exchange in case of mutilated Warrant Certificates shall be
promptly canceled by the Warrant Agent and thereafter retained
by the Warrant Agent until termination of this Agreement or
resignation as Warrant Agent, or disposed of or destroyed, at
the direction of the Company.
(f) Prior to due presentment for registration of
transfer thereof, the Company and the Warrant Agent may deem
and treat the Registered Holder of any Warrant Certificate as
the absolute owner thereof and of each Warrant represented
thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than a duly authorized officer of
the Company or the Warrant Agent) for all purposes and shall
not be affected by any notice to the contrary. The Warrants
which are being publicly offered in Units with shares of Common
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Stock pursuant to the Underwriting Agreement will be
immediately detachable from the Common Stock and transferable
separately therefrom.
7. Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of
and loss, theft, destruction, or mutilation of any Warrant
Certificate and (in case of loss, theft, or destruction) of
indemnity satisfactory to them, and (in the case of mutilation) upon
surrender and cancellation thereof, the Company shall execute and
the Warrant Agent shall (in the absence of notice to the Company
and/or Warrant Agent that the Warrant Certificate has been acquired
by a bonafide purchaser) countersign and deliver to the Registered
Holder in lieu thereof a new Warrant Certificate of like tenor
representing an equal aggregate number of Warrants. Applicants for
a substitute Warrant Certificate shall comply with such other
reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
8. Redemption.
(a) Subject to the provisions of paragraph 2(e) hereof,
on not less than thirty (30) days notice given at any time
after the Initial Warrant Exercise Date, the Warrants may be
redeemed, at the option of the Company, at a redemption price
of $0.01 per Warrant, provided, in the case of the redemption
of its Class A Warrants, the Market Price of the Common Stock
receivable upon exercise of the Class A Warrant shall equal or
exceed $3.00 (the "Target Price"), in the case of the
redemption of its Class B Warrants, the Market Price of the
Common Stock receivable upon exercise of the Class B Warrant
shall equal or exceed $5.00 (the "Target Price") and in the
case of the redemption of its Class C Warrants, the Market
Price of the Common Stock receivable upon exercise of the Class
C Warrant shall equal or exceed $10.00 (the "Target Price")
subject to adjustment as set forth in Section 8(f) below.
Market Price for the purpose of this Section 8 shall mean (i)
the average closing bid price for any twenty (20) consecutive
trading days within a period of thirty (30) consecutive trading
days ending within five (5) days prior to the date of the
notice of redemption, which notice shall be mailed no later
than five (5) days there after, of the Common Stock as reported
by the National Association of Securities Dealers, Inc.
Automatic Quotation System or (ii) the last reported sale
price, for twenty (20) consecutive trading days within a period
of thirty (30)consecutive trading days ending within five (5)
days of the date of the notice of redemption, which notice
shall be mailed no later than five (5) days thereafter, on the
primary exchange on which the Common Stock is traded, if the
Common Stock is traded on a national securities exchange.
(b) If the conditions set forth in Section 8(a) are met,
and the Company desires to exercise its right to redeem the
Warrants, it shall mail a notice of redemption to each of the
Registered Holders of the Warrants to be redeemed, first class,
postage prepaid, not later than the thirtieth day before the
date fixed for redemption, at their last address as shall
appear on the records maintained pursuant to Section 6(b). Any
notice mailed in the manner provided herein shall be
conclusively presumed to have been duly given whether or not
the Registered Holder receives such notice.
(c) The notice of redemption shall specify (i) the
redemption price,(ii) the date fixed for redemption, (iii) the
place where the Warrant Certificates shall be delivered and the
redemption price paid, and (iv) that the right to exercise the
Warrant shall terminate at 5:00 P.M. (Mountain time) on the
business day immediately preceding the date fixed for
redemption. The date fixed for the redemption of the Warrant
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shall be the Redemption Date. No failure to mail such notice
nor any defect therein or in the mailing thereof shall affect
the validity of the proceedings for such redemption except as
to a Registered Holder (a) to whom notice was not mailed or (b)
whose notice was defective and then only to the extent that the
Registered Holder is prejudiced thereby. An affidavit of the
Warrant Agent or of the Secretary or an Assistant Secretary of
the Company that notice of redemption has been mailed shall, in
the absence of fraud, be prima facie evidence of the facts
stated therein.
(d) Any right to exercise a Warrant shall terminate at
5:00 P.M. (Mountain time) on the business day immediately
preceding the Redemption Date. On and after the Redemption
Date, Holders of the Warrants shall have no further rights
except to receive, upon surrender of the Warrant, the
Redemption Price.
(e) From and after the Redemption Date specified for,
the Company shall, at the place specified in the notice of
redemption, upon presentation and surrender to the Company by
or on behalf of the Registered Holder thereof of one or more
Warrant Certificates evidencing Warrants to be redeemed,
deliver or cause to be delivered to or upon the written order
of such Holder a sum in cash equal to the redemption price of
each such Warrant. From and after the Redemption Date and upon
the deposit or setting aside by the Company of a sum sufficient
to redeem all the Warrants called for redemption, such Warrants
shall expire and become void and all rights hereunder and under
the Warrant Certificates, except the right to receive payment
of the redemption price, shall cease.
(f) If the shares of the Company's Common Stock are
subdivided or combined into a greater or smaller number of
shares of Common Stock, the Target Price shall be
proportionally adjusted by the ratio which the total number of
shares of Common Stock outstanding immediately prior to such
event bears to the total number of shares of Common Stock to be
outstanding immediately after such event.
9. Adjustment of Exercise Price and Number of Shares of
Common Stock or Warrants.
(a) Subject to the exceptions referred to in Section
9(g) below, in the event the Company shall, at any time or from
time to time after the date hereof, sell any shares of Common
Stock for a consideration per share less than the Market Price
of the Common Stock (as defined in Section 8) on the date of
the sale or issue any shares of Common Stock as a stock
dividend to the holders of Common Stock, or subdivide or
combine the outstanding shares of Common Stock into a greater
or lesser number of shares (any such sale, issuance, sub
division, or combination being herein called a "Change of
Shares"), then, and thereafter upon each further Change of
Shares, the Purchase Price in effect immediately prior to such
Change of Shares shall be changed to a price (including any
applicable fraction of a cent) determined by multiplying the
Purchase Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the number
of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares and the number of shares of
Common Stock which the aggregate consideration received
(determined as provided in subsection 9(f) below) for the
issuance of such additional shares would purchase at such
current market price per share of Common Stock, and the
denominator of which shall be the sum of the number of shares
of Common Stock outstanding immediately after the issuance of
such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
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Upon each adjustment of the Purchase Price pursuant to this
Section 9, the total number of shares of Common Stock
purchasable upon the exercise of each Warrant shall (subject to
the provisions contained in Section 9(b) hereof) be such number
of shares (calculated to the nearest tenth)purchasable at the
Purchase Price in effect immediately prior to such adjustment
multiplied by a fraction, the numerator of which shall be the
Purchase Price in effect immediately prior to such adjustment
and the denominator of which shall be the Purchase Price in
effect immediately after such adjustment.
(b) The Company may elect, upon any adjustment of the
Purchase Price hereunder, to adjust the number of Warrants
outstanding, in lieu of the adjustment in the number of shares
of Common Stock purchasable upon the exercise of each Warrant
as herein above provided, so that each Warrant outstanding
after such adjustment shall represent the right to purchase one
share of Common Stock. Each Warrant held of record prior to
such adjustment of the number of Warrants shall become that
number of Warrants (calculated to the nearest tenth) determined
by multiplying the number one by a fraction, the numerator of
which shall be the Purchase Price in effect immediately prior
to such adjustment and the denominator of which shall be the
Purchase Price in effect immediately after such adjustment.
Upon each adjustment of the number of Warrants pursuant to this
Section 9, the Company shall, as promptly as practicable, cause
to be distributed to each Registered Holder of Warrant
Certificates on the date of such adjustment Warrant
Certificates evidencing, subject to Section 10 hereof, the
number of additional Warrants to which such Holder shall be
entitled as a result of such adjustment or, at the option of
the Company, cause to be distributed to such Holder in
substitution and replacement for the Warrant Certificates held
by him prior to the date of adjustment (and upon surrender
thereof, if required by the Company) new Warrant Certificates
evidencing the number of Warrants to which such Holder shall be
entitled after such adjustment
(c) In case of any reclassification, capital
reorganization, or other change of outstanding shares of Common
Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and
which does not result in any reclassification, capital
reorganization, or other change of outstanding shares of Common
Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as, or substantially
as, an entirety (other than a sale/leaseback, mortgage, or
other financing transaction), the Company shall cause effective
provision to be made so that each holder of a warrant then
outstanding shall have the right thereafter, by exercising such
Warrant, to purchase the kind and number of shares of stock or
other securities or property (including cash) receivable upon
such reclassification, capital reorganization, or other change,
consolidation, merger, sale, or conveyance by a holder of the
number of shares of Common Stock that might have been purchased
upon exercise of such Warrant immediately prior to such
reclassification, capital reorganization, or other change,
consolidation, merger, sale, or conveyance. Any such provision
shall include provision for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided
for in this Section 9. The Company shall not effect any such
consolidation, merger, or sale unless prior to or
simultaneously with the consummation thereof the successor (if
other than the Company) resulting from such consolidation or
merger or the corporation purchasing assets or other
appropriate corporation or entity shall assume, by written
instrument executed and delivered to the Warrant Agent, the
obligation to deliver to the holder of each Warrant such shares
of stock, securities, or assets as, in accordance with the
foregoing provisions, such holders may be entitled to purchase
and the other obligations under this Agreement. The foregoing
provisions shall similarly apply to successive
reclassification, capital reorganizations, and other changes of
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outstanding shares of Common Stock and to successive
consolidations, mergers, sales, or conveyances.
(d) Irrespective of any adjustments or changes in the
Purchase Price or the number of shares of Common Stock
purchasable upon exercise of the Warrants, the Warrant
Certificates theretofore and thereafter issued shall, unless
the Company shall exercise its option to issue new Warrant
Certificates pursuant to Section 2(d) hereof, continue to
express the Purchase Price per share, the number of shares
purchasable thereunder, and the Redemption Price therefor as
the Purchase Price per share, and the number of shares
purchasable and the Redemption Price therefore were expressed
in the Warrant Certificates when the same were originally
issued.
(e) After each adjustment of the Purchase Price pursuant
to this Section 9, the Company will promptly prepare a
certificate signed by the President or a Vice President, and by
the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of
Common Stock purchasable upon exercise of each Warrant after
such adjustment, and, if the Company shall have elected to
adjust the number of Warrants, the number of Warrants to which
the registered holder of each Warrant shall then be entitled,
and the adjustment in Redemption Price resulting therefrom, and
(iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate
with the Warrant Agent and cause a brief summary thereof to be
sent by ordinary first class mail to each registered holder of
Warrants at his last address as it shall appear on the registry
books of the Warrant Agent. No failure to mail such notice nor
any defect therein or in the mailing thereof shall affect the
validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose
notice was defective. The affidavit of an officer of the
Warrant Agent or the Secretary or an Assistant Secretary of the
Company that such notice has been mailed shall, in the absence
of fraud, be prima facie evidence of the facts stated therein.
(f) For purposes of Section 9(a) and 9(b) hereof, the
following provisions (i) to (vii) shall also be applicable:
(i) The number of shares of Common Stock
outstanding at any given time shall include shares of
Common Stock owned or held by or for the account of the
Company and the sale or issuance of such treasury shares
or the distribution of any such treasury shares shall not
be considered a Change of Shares for purposes of said
sections.
(ii) No adjustment of the Purchase Price shall be
made unless such adjustment would require an increase or
decrease of at least $.10 in such price; provided that
any adjustments which by reason of this subsection (ii)
are not required to be made shall be carried forward and
shall be made at the time of and together with the next
subsequent adjustment which, together with any
adjustment(s) so carried forward, shall require an
increase or decrease of at least $.10 in the Purchase
Price then in effect hereunder.
(iii) In case of (1) the sale by the Company for
cash of any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common
Stock or any securities convertible into or exchangeable
for Common Stock without the payment of any further
consideration other than cash, if any(such convertible or
exchangeable securities being herein called "Convertible
Securities"), or (2) the issuance by the Company, without
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the receipt by the Company of any consideration therefor,
of any rights or warrants to subscribe for or purchase,
or any options for the purchase of, Common Stock or
Convertible Securities, in each case, if (and only if)
the consideration payable to the Company upon the
exercise of such rights, warrants, or options shall
consist of cash, whether or not such rights, warrants, or
options, or the right to convert or exchange such
Convertible Securities, are immediately exercisable, and
the price per share for which Common Stock is issuable
upon the exercise of such rights, warrants, or options or
upon the conversion or exchange of such Convertible
Securities (determined by dividing(x) the minimum
aggregate consideration payable to the Company upon the
exercise of such rights, warrants, or options, plus the
consideration received by the Company for the issuance or
sale of such rights, warrants, or options, plus, in the
case of such Convertible Securities, the minimum
aggregate amount of additional consideration, if any,
other than such Convertible Securities, payable upon the
conversion or exchange thereof, by the total maximum
number of shares of Common Stock issuable upon the
exercise of such rights, warrants, or options or upon the
conversion or exchange of such Convertible Securities
issuable upon (y) the exercise of such rights, warrants,
or options) is less than the fair market value of the
Common Stock on the date of the issuance or sale of such
rights, warrants, or options, then the total maximum
number of shares of Common Stock issuable upon the
exercise of such rights, warrants, or options or upon the
conversion or exchange of such Convertible Securities (as
of the date of the issuance or sale of such rights,
warrants, or options) shall be deemed to be outstanding
shares of Common Stock for purposes of Sections 9(a) and
9(b) hereof and shall be deemed to have been sold for
cash in an amount equal to such price per share.
(g) No adjustment to the Purchase Price of the Warrants or to the
number of shares of Common Stock purchasable upon the exercise of
each Warrant will be made, however,
(i) upon the sale or exercise of the Warrants; or
(ii) upon the sale of any shares of Common Stock in
the Company's initial public offering, including, without
limitation, shares sold upon the exercise of any
over-allotment option granted to the Underwriters in
connection with such offering; or
(iii) upon the issuance or sale of Common Stock or
Convertible Securities upon the exercise of any rights or
warrants to subscribe for or purchase, or any options for
the purchase of, Common Stock or Convertible Securities,
whether or not such rights, warrants, or options were
outstanding on the date of the original sale of the
Warrants or were thereafter issued or sold; or
(iv) upon the issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities,
whether or not any adjustment in the Purchase Price was
made or required to be made upon the issuance or sale of
such Convertible Securities and whether or not such
Convertible Securities were outstanding on the date of
the original sale of the Warrants or were thereafter
issued or sold; or
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(v) upon the issuance or sale of Common Stock or
Convertible Securities in an exempt transaction unless
the issuance or sale price is less than 85% of the fair
market value of the Common Stock on the date of issuance,
in which case the adjustment shall only be for the
difference between 85% of the fair market value and the
issue or sale price;
(vi) upon the issuance or sale of Common Stock or
Convertible Securities to shareholders of any corporation
which merges and/or consolidates into or is acquired by
the Company or from which the Company acquires assets and
some or all of the consideration consists of equity
securities of the Company, in proportion to their stock
holdings of such corporation immediately prior to the
acquisition but only if no adjustment is required
pursuant to any other provision of this Section 9;
(vii) upon the issuance or exercise of options or
upon the issuance or grant of stock awards granted to the
Company's directors, employees or consultants under a
plan or plans adopted by the Company's Board of Directors
and approved by its stockholders (but only to the extent
that the aggregate number of shares excluded hereby and
issued after the date hereof shall not exceed ten percent
(10%) of the Company's Common Stock at the time of
issuance). For the purposes of determining whether the
consideration received by the Company is less than the
Market Price in connection with any issuance of stock to
the Company's directors, employees or consultants under
plans adopted by the Company's Board of Directors and
approved by its stockholders, the consideration received
shall be deemed to be the amount of compensation to the
director, employee or consultant reported by the Company
in connection with such issuance;
(viii) upon the issuance of Common Stock to the
Company's directors, employees or consultants under a
plan or plans which are qualified under the Internal
Revenue Code; or
(ix) upon the issuance of Common Stock in a bona
fide public offering pursuant to a firm commitment
underwriting.
(h) As used in this Section 9, the term "Common Stock"
shall mean and include the Company's Common Stock authorized on
the date of the original issue of the Units and shall also
include any capital stock of any class of the Company
thereafter authorized which shall not be limited to a fixed sum
or percentage in respect of the rights of the holders thereof
to participate in dividends and in the distribution of assets
upon the voluntary liquidation, dissolution, or winding up of
the Company; provided, however, that the shares issuable upon
exercise of the Warrants shall include only shares of such
class designated in the Company's Certificate of Incorporation
as Common Stock on the date of the original issue of the Units
or (i), in the case of any reclassification, change,
consolidation, merger, sale, or conveyance of the character
referred to in Section 9(c) hereof, the stock, securities, or
property provided for in such section or (ii), in the case of
any reclassification or change in the outstanding shares of
Common Stock issuable upon exercise of the Warrants as a result
of a subdivision or combination or a change in par value, or
from par value to no par value, or from no par value to par
value, such shares of Common Stock as so reclassified or
changed.
(i) Any determination as to whether an
adjustment in the Purchase Price in effect
hereunder is required pursuant to Section 9, or as
to the amount of any such adjustment, if required,
-11-
shall be binding upon the holders of the Warrants
and the Company if made in good faith by the Board
of Directors of the Company.
(ii) If and whenever the Company shall grant
to the holders of Common Stock, as such, rights or
warrants to subscribe for or to purchase, or any
options for the purchase of, Common Stock or
securities convertible into or exchangeable for or
carrying a right, warrant, or option to purchase
Common Stock, the Company shall concurrently
therewith grant to each Registered Holder as of the
record date for such transaction of the Warrants
then outstanding, the rights, warrants, or options
to which each Registered Holder would have been
entitled if, on the record date used to determine
the stockholders entitled to the rights, warrants,
or options being granted by the Company, the
Registered Holder were the holder of record of the
number of whole shares of Common Stock then
issuable upon exercise (assuming, for purposes of
this section 9(j), that exercise of warrants is
permissible during periods prior to the Initial
Warrant Exercise Date) of his Warrants. Such grant
by the Company to the holders of the Warrants shall
be in lieu of any adjustment which otherwise might
be called for pursuant to this Section 9.
10. Fractional Warrants and Fractional Shares.
(a) If the number of shares of Common Stock purchasable
upon the exercise of each Warrant is adjusted pursuant to
Section 9 hereof, the Company nevertheless shall not be
required to issue fractions of shares, upon exercise of the
Warrants or otherwise, or to distribute certificates that
evidence fractional shares. In such event, the Company may at
its option elect to round up the number of shares to which the
Holder is entitled to the nearest whole share or to pay cash in
respect of fractional shares in accordance with the following:
With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Holder an amount
in cash equal to such fraction multiplied by the current market
value of such fractional share, determined as follows:
(i) If the Common Stock is listed on a National
Securities Exchange or admitted to unlisted trading
privileges on such exchange or listed for trading on the
NASDAQ Quotation System, the current value shall be the
last reported sale price of the Common Stock on such
exchange on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on
such day, the average of the closing bid and asked prices
for such day on such exchange; or
(ii) If the Common Stock is not listed or admitted
to unlisted trading privileges, the current value shall be
the mean of the last reported bid and asked prices
reported by the National Quotation Bureau, Inc. on the
last business day prior to the date of the exercise of
this Warrant; or
(iii) If the Common Stock is not so listed or
admitted to unlisted trading privileges and bid and asked
prices are not so reported, the current value shall be an
amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
11. Warrant Holders Not Deemed Stockholders. No holder of
Warrants shall, as such, be entitled to vote or to receive dividends
or be deemed the holder of Common Stock that may at any time be
issuable upon exercise of such Warrants for any purpose whatsoever,
nor shall anything contained herein be construed to confer upon the
-12-
holder of Warrants, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action (whether upon
any recapitalization, issue or reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger,
or conveyance or otherwise), or to receive notice of meetings, or to
receive dividends or subscription rights, until such Holder shall
have exercised such Warrants and been issued shares of Common Stock
in accordance with the provisions hereof.
12. Rights of Action. All rights of action with respect to
this Agreement are vested in the respective Registered Holders of
the Warrants, and any Registered Holder of a Warrant, without
consent of the Warrant Agent or of the holder of any other Warrant,
may, in his own behalf and for his own benefit, enforce against the
Company his right to exercise his Warrants for the purchase of
shares of Common Stock in the manner provided in the Warrant
Certificate and this Agreement.
13. Agreement of Warrant Holders. Every holder of a Warrant,
by his acceptance thereof, consents and agrees with the Company, the
Warrant Agent and every other holder of a warrant that:
(a) The warrants are transferable only on the registry
books of the Warrant Agent by the Registered Holder thereof in
person or by his attorney duly authorized in writing and only
if the Warrant Certificates representing such Warrants are
surrendered at the office of the Warrant Agent, duly endorsed
or accompanied by a proper instrument of transfer satisfactory
to the Warrant Agent and the Company in their mutual
discretion, together with payment of any applicable transfer
taxes; and
(b) The Company and the Warrant Agent may deem and treat
the person in whose name the Warrant Certificate is registered
as the holder and as the absolute, true, and lawful owner of
the Warrants represented thereby for all purposes, and neither
the Company nor the Warrant Agent shall be affected by any
notice or knowledge to the contrary, except as otherwise
expressly provided in Section 7 hereof.
14. Cancellation of Warrant Certificates. If the Company
shall purchase or acquire any Warrant or Warrants, the Warrant
Certificate or Warrant Certificates evidencing the same shall
thereupon be delivered to the Warrant Agent and canceled by it and
retired. The Warrant Agent shall also cancel Common Stock following
exercise of any or all of the Warrants represented thereby or
delivered to it for transfer, split up, combination, or exchange.
15. Concerning the Warrant Agent. The Warrant Agent acts
hereunder as agent and in a ministerial capacity for the Company,
and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not, by issuing and delivering Warrant
Certificates or by any other act hereunder be deemed to make any
representations as to the validity, value, or authorization of the
Warrant Certificates or the Warrants represented thereby or of any
securities or other property delivered upon exercise of any Warrant
or whether any stock issued upon exercise of any Warrant is fully
paid and nonassessable.
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or
cause to be made any adjustment of the Purchase Price or the
Redemption Price provided in this Agreement, or to determine whether
any fact exists which may require any such adjustments, or with
respect to the nature or extent of any such adjustment, when made,
or with respect to the method employed in making the same. It shall
not (i) be liable for any recital or statement of facts contained
-13-
herein or for any action taken, suffered, or omitted by it in
reliance on any warrant Certificate or other document or instrument
believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties,(ii) be responsible for
any failure on the part of the Company to comply with any of its
covenants and obligations contained in this Agreement or in any
Warrant Certificate, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or
wilful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory
to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or
omitted by it in good faith in accordance with the opinion or advice
of such counsel.
Any notice, statement, instruction, request, direction, order,
or demand of the Company shall be sufficiently evidenced by an
instrument signed by the President, any Vice President, its
Secretary, or Assistant Secretary,(unless other evidence in respect
thereof is herein specifically prescribed). The Warrant Agent shall
not be liable for any action taken, suffered or omitted by it in
accordance with such notice, statement, instruction, request,
direction, order, or demand reasonably believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its
reasonable expenses hereunder; it further agrees to indemnify the
Warrant Agent and save it harmless against any and all losses,
expenses, and liabilities, including judgments, costs, and counsel
fees, for anything done or omitted by the Warrant Agent in the
execution of its duties and powers hereunder except losses,
expenses, and liabilities arising as a result of the Warrant Agent's
negligence or wilful misconduct.
The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder (except liabilities
arising as a result of the Warrant Agent's own negligence or wilful
misconduct), after giving thirty (30) days prior written notice to
the Company. At least fifteen (15) days prior to the date such
resignation is to become effective, the Warrant Agent shall cause a
copy of such notice of resignation to be mailed to the Registered
Holder of each Warrant Certificate at the Company's expense. Upon
such resignation, or any inability of the Warrant Agent to act as
such hereunder, the Company shall appoint a new warrant agent in
writing. If the Company shall fail to make such appointment within
a period of fifteen (15) days after it has been notified in writing
of such resignation by the resigning Warrant Agent, then the
Registered Holder of any Warrant Certificate may apply to any court
of competent jurisdiction in the State of Colorado for the
appointment of a new warrant agent. Any new warrant agent, whether
appointed by the Company or by such a court, shall be a bank or
trust company having a capital and surplus, as shown by its last
published report to its stockholders, of not less than $10,000,000
or a stock transfer company. After acceptance in writing of such
appointment by the new warrant agent is received by the Company,
such new warrant agent shall be vested with the same powers, rights,
duties, and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance,
conveyance, act, or deed; but if for any reason it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act, or deed, the same shall be done at the expense of
the Company and shall be legally and validly and delivered by the
resigning Warrant Agent. Not later than the effective date of any
such appointment the Company shall file notice thereof with the
resigning Warrant Agent and shall forthwith cause a copy of such
notice to be mailed to the Registered Holder of each Warrant
Certificate.
Any corporation into which the Warrant Agent or any new warrant
agent may be converted or merged or any corporation resulting from
any consolidation to which the Warrant Agent or any new warrant
agent shall be a party or any corporation succeeding to the trust
business of the Warrant Agent shall be a successor warrant agent
-14-
under this Agreement without any further act, provided that such
corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such
successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed to the Company and to the
Registered Holder of each Warrant Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell
Warrants or other securities of the Company and otherwise deal with
the Company in the same manner and to the same extent and with like
effects as though it were not the Warrant Agent. Nothing herein
shall preclude the Warrant Agent from acting in any other capacity
for the Company if so authorized by the Company or for any other
legal entity.
16. Modification of Agreement. The Warrant Agent and the
Company may by supplemental agreement make any changes or
corrections in this Agreement (i) that they shall deem appropriate
to cure any ambiguity or to correct any defective or inconsistent
provision or manifest mistake or error herein contained; or (ii)
that they may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Warrant
Certificates; provided, however, that this Agreement shall not
otherwise be modified, supplemented, or altered in any respect
except with the consent in writing of the Registered Holders of
Warrant Certificates representing not less than fifty percent
(50%)of the Warrants then outstanding; and provided, further, that
no change in the number or nature of the securities purchasable upon
the exercise of any Warrant, or the Purchase Price therefor, or the
acceleration of the Warrant Expiration Date, shall be made without
the consent in writing of the Registered Holder of the Warrant
Certificate representing such Warrant, other than such changes as
are specifically prescribed by this Agreement as originally executed
or are made in compliance with applicable law.
17. Notices. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed to
have been made when delivered or mailed first class registered or
certified mail, postage prepaid as follows: if to the Registered
Holder of a Warrant Certificate, at the address of such holder as
shown on the registry books maintained by the Warrant Agent; if to
the Company, 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx X, Xxxx Xxxx Xxxx,
Xxxx 00000, Attention: President, or at such other address as may
have been furnished to the Warrant Agent in writing by the Company;
and if to the Warrant Agent, at its corporate office.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado,
without reference to principles of conflict of laws.
19. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and the Warrant Agent, and their
respective successors and assigns, and the holders from time to time
of Warrant Certificates. Nothing in this Agreement is intended or
shall be construed to confer upon any other person any right,
remedy, or claim, in equity or at law, or to impose upon any other
person any duty, liability, or obligation.
20. Termination. This Agreement shall terminate at the close
of business on the Warrant Expiration Date of all the Warrants or
such earlier date upon which all Warrants have been exercised,
except that the Warrant Agent shall account to the Company for cash
held by it and the provisions of Section 15 hereof shall survive
such termination.
21. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single
document.
-15-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
BALANCED LIVING, INC.
By:
Its:
INTERWEST TRANSFER COMPANY, INC.
By:
Its Authorized Officer:
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