EXHIBIT 10.15
WARRANT AGREEMENT BETWEEN
INSTITUTE FOR MEDICAL STUDIES, INC. AND XXXXXXXXXXXXXXXX.XXX
DATED SEPTEMBER 29, 1999
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION, OR APPLICABLE EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS UNDER SUCH LAWS, AND COMPLIANCE WITH THE REQUIREMENTS
OF SECTION 8 OF THIS WARRANT.
WARRANT AGREEMENT
This Warrant Agreement (this "WARRANT" or this "AGREEMENT") is entered
into as of September 29, 1999 between INSTITUTE FOR MEDICAL STUDIES, INC., a
California corporation ("HOLDER"), and XXXXXXXXXXXXXXXX.XXX, a Delaware
corporation (the "COMPANY"). This Warrant is issued in consideration of Holder's
services under the Website Services and Revenue Sharing and Services Agreement
(the "SERVICES AGREEMENT") between Holder and the Company dated as of September
29, 1999. The Company hereby grants to Holder a warrant to purchase, subject to
the provisions of this Agreement, up to one million five hundred thousand
(1,200,000) shares of the Company's Common Stock (the "COMMON STOCK"). The price
to be paid for each such share purchased upon an exercise of this Warrant shall
be Ten Cents ($0.10). The number of shares of Common Stock to be received upon
the exercise of this Warrant and the price to be paid for a share of Common
Stock may be adjusted from time to time as set forth below. The shares of Common
Stock deliverable upon such exercise, and as adjusted from time to time, are
referred to below as "WARRANT SHARES" and the exercise price of a share of
Common Stock in effect at any time and as adjusted from time to time is referred
to below as the "EXERCISE PRICE."
1. EXERCISE OF WARRANT. As used in this Warrant, the "EXERCISE PERIOD"
shall mean the period between July 1, 2000 and September ___, 2002. Subject to
Section 8 hereof, this Warrant may be exercised in whole or in part at any time
or from time to time during the Exercise Period by presentation and surrender of
this Warrant to the Company at its principal office, accompanied by a statement
of the number of shares being purchased and payment of the Exercise Price for
the purchased shares in accordance with Section 2 . If this Warrant should be
exercised in part only, the Company shall, upon surrender of this Warrant for
exercise and cancellation, execute and deliver a new Warrant evidencing the
rights of Holder thereof to purchase the balance of the shares purchasable
hereunder. Upon receipt by the Company of this Warrant and the purchase price
for the shares being purchased upon such an exercise, Holder shall be deemed to
be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of the Company shall
then be closed or that certificates representing such shares of Common Stock
shall not then be actually delivered to Holder. Following proper exercise of
this Warrant, a certificate for the shares purchased, registered in the name of
the person entitled to receive such shares, shall be promptly delivered to such
person. No fractional shares shall be issued upon the exercise of this Warrant.
Any fraction of a share called for upon any exercise hereof shall be canceled.
If there is (a) any merger of the Company with or into another entity (other
than a merger of either such corporation with the other or in which it is the
continuing entity and which does not result in any reclassification, capital
reorganization or other change of outstanding shares issuable upon exercise of
this Warrant), or (b) any sale or other conveyance (or series of related sales
or conveyances) of all or substantially all of the property or business of the
Company, or (c) or any sale by the Company of shares constituting after such
sale a majority of the outstanding shares of such corporation, or (d) the
liquidation and winding up of the Company, Holder shall be given prior written
notice of the transaction under Section 7 and this Warrant shall become
immediately and fully exercisable upon the later of Holder's receipt of such
notice or six (6) months after the date of this Warrant Agreement. If the
Company shall file a registration statement under the Securities Act of 1933, as
amended, to register any of its securities, either for its own account or the
account of a security holder or holders, other than a registration statement
relating solely to employee benefit plans or a registration statement relating
solely to a Securities and Exchange Commission Rule 145 transaction, Holder
shall have the related registration rights described in EXHIBIT A to this
Warrant and this Warrant shall become fully exercisable upon the effectiveness
of such registration statement.
2. PAYMENT OF THE EXERCISE PRICE. Payment of the Exercise Price for any
Warrant Shares on any exercise of this Warrant shall be made, at Holder's
option: (a) in cash; and/or (b) by forgiveness of indebtedness owed to Holder by
the Company; and/or (c) by transfer or surrender to the Company and delivery of
the certificates representing such shares, concurrently with such exercise, of
shares of Common Stock of the Company (which shares shall have been owned by
Holder for at least six months) valued on the basis of the Fair Market Value of
the Common Stock on the next business day before the date of such exercise. For
this purpose, the "FAIR MARKET VALUE"
of the Common Stock shall mean: (i) if the Common Stock is listed or admitted
to trade on a securities exchange, the closing sale price of a share of the
Common Stock on the composite tape of the principal securities exchange on
which the Common Stock is so listed or admitted to trade; or, (ii) if the
Common Stock is not listed or admitted to trade on a securities exchange, the
reported closing sale price or, if such prices are not reported, the mean
between the last reported bid and asked prices, for a share of the Stock as
furnished by the National Association of Securities Dealers, Inc. through
NASDAQ or a similar organization if NASDAQ is no longer reporting such
information; or (iii) if the Common Stock is not listed or admitted to trade
on a securities exchange and if prices for the Common Stock are not so
furnished through NASDAQ or a similar organization, the last reported sale
price or, if such prices are not reported, the mean between the last reported
bid and asked prices, for a share of the Stock in the Over-the-Counter market
as reported through the Bulletin Board, the "pink sheets" or otherwise; or
(v), if (i)-(iv) are not applicable, the fair market value of a share of the
Common Stock as reasonably determined in good faith by the Company's Board of
Directors. The Fair Market Value as of any date under (i)-(iv) shall be
determined by the trading price on that date, or if there was no trading
price on that date, on the next preceding date on which the Common Stock was
traded.
3. WARRANTIES OF THE COMPANY. The Company hereby warrants and represents
to Holder the following:
(a) All Warrant Shares shall, upon their issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer under applicable securities
laws and under existing agreements between Holder and the Company.
(b) This Warrant Agreement and the Services Agreement have been
duly authorized and executed by the Company and are valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency or other laws of
general application affecting the enforcement of creditors' rights.
(c) The Company is not a party to, bound by or subject to any
agreement or instrument, or any judgment, order or decree of any court or
governmental agency or authority, or any law or regulation, which would be
violated by its entering into or carrying out this Warrant Agreement or the
Services Agreement.
(d) The execution and delivery of this Warrant Agreement and the
Services Agreement by the Company, and the issuance of the Warrant Shares by the
Company pursuant to this Warrant Agreement, will not conflict with or breach any
provision of the Company's Certificate of Incorporation or Bylaws or any
agreement to which the Company is a party.
(e) On a fully diluted basis, assuming the complete exercise and
conversion of all outstanding rights and options to acquire, directly or
indirectly, shares of the Company's capital stock (whether or not presently
exercisable), including (without limitation) exchange rights of the holders of
shares of common stock of Biologix International Ltd., but excluding this
Warrant, the total number of shares of the Company's common stock would not
exceed 106,819,558 shares.
4. EXCHANGE, TRANSFER OR LOSS OF WARRANT. This Warrant is exchangeable,
without expense, at the option of Holder, upon presentation and surrender hereof
to the Company for other Warrants in this form of different denominations
entitling the holder thereof to purchase in the aggregate the same number of
shares of Common Stock purchasable hereunder. Subject to Section 8, upon
surrender of this Warrant to the Company accompanied by an assignment duly
executed by Holder and the assignee, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee named in such instrument
of assignment, this Warrant shall promptly be canceled and such assignee shall
be deemed to be the Holder of this Warrant. This Warrant may be divided or
combined with any other Warrants which carry the same rights upon presentation
thereof at the office of the Company, together with a written notice specifying
the names and denominations in which new Warrants are to be issued and signed by
the Holder hereof. The term "WARRANT" as used herein includes any Warrants into
or for which this Warrant may be divided or exchanged. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date.
5. RIGHTS OF HOLDER. Holder shall not, by virtue hereof, be entitled to
any rights of a shareholder in the Company, either at law or equity, and the
rights of Holder are limited to those expressed in this Warrant and are not
enforceable against the Company except to the extent set forth herein.
Notwithstanding the foregoing, (a) with respect to any transaction involving
self-dealing or conflict of interest on the part of the Company's directors or
controlling shareholders, Holder shall be a beneficiary of and entitled to the
same fiduciary duties that may be owed, from time to time, by the Company's
board of directors and controlling shareholders to the holders of shares of its
Common Stock, and (b) the Company will transmit to Holder such information,
documents and reports as are generally distributed to the holders of any class
or series of the securities of the Company concurrently with the distribution
thereof to the shareholders.
6. ANTI-DILUTION PROVISIONS. The Exercise Price and the number and kind of
securities purchasable upon the exercise of this Warrant shall be subject to
adjustment from time to time upon the happening of certain events as hereinafter
provided. The Exercise Price in effect at any time and the number and kind of
securities purchasable upon exercise of each Warrant shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend or make a
distribution on its shares of Common Stock in shares of Common Stock, (ii)
subdivide or reclassify its outstanding Common Stock into a greater number of
shares, or (iii) combine or reclassify its outstanding Common Stock into a
smaller number of shares, the Exercise Price and the number of shares
purchasable upon further exercise of this Warrant in effect at the time of the
record date for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that, by exercising the Warrant after such date Holder shall be entitled to
receive the same number of shares which, if such Warrant had been exercised
immediately prior to such date, it would have received upon such exercise
immediately followed by such event. For example, if there should be a 2-for-1
stock split of the Common Stock, the Exercise Price shall be divided by two and
the number of shares purchasable upon further exercise of this Warrant shall be
doubled. Such an adjustment shall be made successively whenever any event listed
above shall occur. Notwithstanding the foregoing, if there is a reverse split of
the outstanding Common Stock into a smaller number of shares during the first
twelve (12) months after the date of this Agreement, the number of shares which
may be purchased on exercise of this Warrant shall be reduced as provided in
this paragraph, but the exercise price, only with respect to the first such
reverse split, shall only be increased by 50% of the proportionate adjustment.
(b) Excluding any transaction covered by Section 6(a), (i) in case
of any reclassification, capital reorganization or other change of outstanding
shares of Common Stock of the Company, or in case of any consolidation or merger
of the Company with or into another entity (other than a merger in which the
Company is the continuing entity and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
issuable upon exercise of this Warrant), or (ii) in case of any sale or other
conveyance (or series of related sales or conveyances) of all or substantially
all of the property of the Company to another party or other parties, the
Company shall, as a condition precedent to such transaction, cause effective
provisions to be made so that Holder shall have the right thereafter by
exercising this Warrant to purchase the kind and amount of shares of stock and
other securities and property receivable upon such reclassification, capital
reorganization and other change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which might have been received
upon exercise of this Warrant followed immediately by such reclassification,
change, consolidation, merger, sale or conveyance. Any such provision shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Warrant. The foregoing
provisions of this Section (c) shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Common Stock
and to successive consolidations, mergers, sales or conveyances.
(c) Whenever the Exercise Price or number or type of shares
purchasable upon exercise of this Warrant is adjusted, as herein provided, the
Company shall promptly cause a notice setting forth the adjusted Exercise Price
and adjusted number of shares issuable upon exercise of this Warrant to be
mailed to Holder, at its last address appearing in the records of the Company.
(d) In the event that at any time, as a result of an adjustment
made pursuant to the provisions herein, Holder of this Warrant thereafter shall
become entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
this Section 6.
(e) Irrespective of any adjustments in the Exercise Price or the
number or kind of shares purchasable upon exercise of this Warrant, the Warrant
certificate theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in the Warrant certificate
previously issued pursuant to this Agreement.
7. NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, if (i) the Company shall pay any dividend or make any distribution
upon the Common Stock, or (ii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, or if (iii) there is any sale by the Company
of shares constituting after such sale a majority of its outstanding shares,
then in any such case the Company shall give to Holder, at least thirty (30)
days prior to the earliest date specified in (a) or (b) below, as the case may
be, a written notice containing a brief description of the proposed transaction
and stating (a) the date on which a record date is to be taken for the purpose
of such dividend or distribution, or (b) the date on which such
reclassification, reorganization, consolidation, merger, sale, lease, transfer,
dissolution, liquidation or winding up is to take place and the date, if any, to
be fixed as of which the holders of Common Stock or other securities shall
receive cash or other property deliverable upon such transaction.
8. RESTRICTIONS ON TRANSFERS AND COMPLIANCE WITH SECURITIES LAWS
(a) This Warrant and the Warrant Shares have not been registered
under the Securities Act of 1933, as amended (the "FEDERAL ACT"), and have not
been qualified under the California Corporate Securities Law of 1968, as amended
(the "CALIFORNIA LAW"). In not so registering or qualifying this Warrant, the
Company is relying on the exemption from the registration requirements under the
Federal Act provided by 506 of Regulation D under that Act, and on the exemption
from the qualification requirements under the California Law provided by Section
18(b)(4)(D) of the Federal Act, and on Holder's representations set forth below
in this Section 8.
(b) Holder agrees that it will not sell, pledge or otherwise
transfer any or all of this Warrant if such transaction would be in violation,
or would cause the Company to violate, the Federal Act or the California Law. As
a condition to any such sale, pledge or transfer of this Warrant, Holder will
give the Company written notice of such transaction and a written agreement by
the proposed purchaser, pledgee or transferee to be bound by the restrictions
set forth in this Section 8 and the other terms of this Warrant.
(c) The Company will endeavor to comply with all such applicable
security law requirements in connection with the exercise of this Warrant, but,
except as provided in EXHIBIT A, shall not be required to register or qualify
this Warrant or the Warrant Shares under the Federal Act, the California Law or
any other state securities law. Subject to EXHIBIT A, the Company shall be
entitled to utilize applicable exemptions from the registration requirements
under state and federal securities laws, even though such exemptions entail
restrictions on the transferability of Warrant Shares. A legend comparable to
the legend at the beginning of this Warrant shall be placed on all certificates
representing Warrant Shares unless or until there is provided to the Company an
opinion of counsel or other reasonable evidence that such legend is not or is no
longer required.
(d) Holder represents and warrants that this Warrant has been
acquired for its own account and not with a view to the sale or other
disposition of this Warrant or any shares issuable upon exercise of this Warrant
in connection with any distribution thereof, subject to Holder's rights
immediately to sell or dispose of any Warrant Shares registered under the
Federal Act pursuant to EXHIBIT A.
(e) In addition to the foregoing restrictions, this Warrant, or
any portion of this Warrant, shall not be transferable to or exercisable by any
person or entity other than Holder, the present sole shareholders of Holder, an
estate planning grantor trust for the benefit of such shareholders' children of
which such shareholders are the sole trustees and, following either such
shareholder's death, his or her estate or legal successors in interest.
9. RESERVATION OF SHARES. The Company hereby agrees that at all times
there shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of shares of its Common Stock as shall be required for
issuance and delivery upon exercise of this Warrant. All shares issued upon
proper exercise of this Warrant shall be validly issued, fully paid and
nonassessable.
10. WARRANTIES AND AGREEMENTS BY HOLDER
In connection with its purchase of this Warrant, Holder warrants and
represents to the Company and agrees as follows:
(a) In making this investment, Holder is relying upon its own
investigation and analysis and has determined that the Warrant is a suitable
investment for it. The Company has made available to Holder the opportunity to
question its officers concerning the terms of this offering and the proposed
activities of the Company and Holder has been furnished with all such
information which it has requested. Holder is aware that the purchase of this
Warrant is an illiquid investment. It has never been guaranteed or warranted by
the Company's management, or any person connected with or acting on the
Company's behalf, that Holder will be able to sell or liquidate this Warrant or
the Warrant Shares in any specified period of time or that there will be any
profit to be realized as a result of this investment. Holder has adequate means
to provide for its current and expected financial needs and reasonable
contingencies, and can bear the economic risks associated with this investment.
(b) Holder represents that it has a substantial preexisting
personal or business relationship with the Company's officers or directors, and
is, by reason of its owners' business or financial experience, capable of
evaluating the merits and risks of its purchase of this Warrant and has the
capacity to protect its interests in connection with this investment. In
addition, with respect to Holder's sole shareholders, Xxxxxx and Xxxxx Xxxxxxxx:
(i) their joint net worth, including the estimated net
fair market value of their principal residence, presently exceeds $1,000,000;
and/or
(ii) they had income in excess of $300,000 in each of the
two most recent years and reasonably expect to have income in excess of $300,000
in the current year.
(c) This Warrant Agreement and the Services Agreement have been
duly authorized and executed by Holder and are valid and binding obligations of
Holder, enforceable against Holder in accordance with their terms, subject to
applicable bankruptcy, insolvency or other laws of general application affecting
the enforcement of creditors' rights.
(d) Holder is not a party to, bound by or subject to any agreement
or instrument, or any judgment, order or decree of any court or governmental
agency or authority, or any law or regulation, which would be violated by its
entering into or carrying out this Warrant Agreement or the Services Agreement.
(e) The execution and delivery of this Warrant Agreement and the
Services Agreement by Holder will not conflict with or breach any provision of
Holder's Articles of Incorporation or Bylaws or any agreement to which Holder is
a party.
11. MISCELLANEOUS
(a) NOTICES. Any notice or other communication which is given to a
party under this Warrant shall be in writing and shall be deemed given when
personally delivered to that party, or when delivered, addressed to that party,
at the following address:
If to the Company: xxxxxxxxxxxxxxxx.xxx, Inc.
0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
If to Holder: Institute for Medical Studies, Inc.
00000 Xxxx Xxxxxx Xxxxx
Xxxxx 0-XXX #000
Xxxxxx Xxxxxx, XX 00000-0000
Either party may, by giving notice to the other party as provided in this
paragraph, change the address to which or the person to whose attention notices
to that party shall be given.
(b) AMENDMENT. This Warrant may be modified, altered or amended
only by a writing signed by both Holder and the Company.
(c) SUCCESSORS AND ASSIGNS. Subject to the restrictions on
transfer set forth in Sections 8 and 9, this Agreement shall inure to the
benefit of and be binding upon the parties and their respective successors and
assigns.
(d) ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties, and supersedes all other agreements, representations and
understandings of the parties, relating to the subject matter of this Agreement.
(e) WAIVERS. No waiver of any of the provisions of this Agreement
will be deemed, or will constitute, a waiver of any other provision, whether or
not similar, nor will any waiver constitute a continuing waiver.
(f) ATTORNEYS' FEES. If any legal action or other proceeding is
brought in connection with any of the provisions of this Agreement, the
successful or prevailing party will be entitled to recover reasonable attorneys'
fees and other costs incurred in that action or proceeding, in addition to any
other relief to which that party may be entitled.
(g) GOVERNING LAW. All questions with respect to the construction
of this Warrant, and the rights and liabilities of the parties under or relating
to this Warrant, will be governed by the laws (excluding conflict of laws
provisions) of the State of California.
(h) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed a valid, original agreement, but all
of which together will constitute one and the same instrument.
(i) SEVERANCE. If any provision of this Warrant or its application
to any person or circumstances is held to be unenforceable or invalid by any
court of competent jurisdiction, its other applications and the remaining
provisions of this Warrant will be interpreted so as best reasonably to effect
the intent of the parties.
(j) DRAFTING. This Warrant has been negotiated at arm's length and
between persons sophisticated and knowledgeable in the matters dealt with and
represented by their own counsel. Accordingly, any rule of law (including
California Code of Civil Procedure Section 1654) or legal decision that would
require interpretation against the drafter of this Agreement is not applicable
and is waived.
(k) FURTHER ACTIONS. Each party agrees that after the delivery of
this Warrant it will execute and deliver such other documents and do such
further acts and things as the other party may reasonably request in order to
carry out the terms of this Agreement.
This Warrant Agreement has been executed as of the date first set forth
above.
XXXXXXXXXXXXXXXX.XXX,
a Delaware corporation
By: /s/ XXXXXX XXXXXXXX
----------------------------
Xxxxxx Xxxxxxxx,
Chief Financial Officer
INSTITUTE FOR MEDICAL STUDIES, INC.
a California corporation
By: /s/ XXXXXX XXXXXXXX
----------------------------
Xxxxxx Xxxxxxxx,
President
EXHIBIT A
PIGGY BACK REGISTRATION
RIGHTS OF HOLDER
1. DEFINITIONS
In addition to the definitions contained in the Warrant Agreement, as
used in this EXHIBIT A the following terms shall have the following respective
meanings:
(a) "Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
(b) "Company" shall mean xxxxxxxxxxxxxxxx.xxx, Inc., a Delaware
corporation.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(d) "Holder" shall mean Institute for Medical Studies, Inc. and
any person to whom all or a portion of this Warrant is transferred under Section
8 of the Warrant Agreement.
(e) "Recapitalizations" shall mean stock splits, stock dividends,
exchanges of shares of the Company for other shares of the Company and the like
affecting outstanding shares of the Company.
(f) "Registrable Securities" means (i) the Shares; and (ii) any
Common Stock of the Company issued or issuable in respect of the Shares or other
securities issued or issuable pursuant to the exercise of this Warrant upon any
Recapitalization, or any Common Stock otherwise issued or issuable with respect
to this Warrant; PROVIDED, HOWEVER, that shares of Common Stock or other
securities shall only be treated as Registrable Securities if and so long as
they (A) have not been sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, or (B) have not been
sold or are available for sale in the opinion of counsel to the Company in a
single transaction exempt from the registration and prospectus delivery
requirements of the Securities Act so that all transfer restrictions and
restrictive legends with respect thereto are or may be removed upon the
consummation of such sale. The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing with the Commission a
registration statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration statement.
(g) "Registration Expenses" shall mean all expenses, except
Selling Expenses as defined below, incurred by the Company in complying with
Sections 2 and 3 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees and disbursements
of counsel for the Company, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company which shall be paid in any
event by the Company).
(h) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(i) "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and all fees and disbursements of counsel for any
Holder.
(j) "Shares" means the Common Stock issued or issuable pursuant to
exercises of this Warrant.
2. PIGGY-BACK REGISTRATION RIGHTS
(a) NOTICE OF REGISTRATION. If at any time or from time to time
the Company shall determine to register any of its securities, either for its
own account or the account of a security holder or holders, including (without
limitation) any registration of the Company's shares issued to shareholders of
Biologix International Ltd., but excluding any registration relating solely to
employee benefit plans or a registration relating solely to a Commission Rule
145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 20 days after receipt of such written notice from the
Company, by any Holder.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise each Holder as a part of the written notice given
pursuant to Section 2(a)(i). In such event the right of any Holder to
registration pursuant to this Section 2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and any other shareholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company. If any Holder disapproves of the terms of any such underwriting, he
or she may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 90 days after the effective date
of the registration statement relating thereto, or such other shorter period of
time as the underwriters may require. The Company may include shares of Common
Stock held by shareholders other than Holders in a registration statement
pursuant to this Section 2 to the extent that the amount of Registrable
Securities otherwise includible in such registration statement would not thereby
be diminished.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
3. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS
The Company shall not after the date of this Warrant enter into any
agreement granting any holder or prospective holder of any securities of the
Company registration rights that are in conflict with or limit the rights
granted under this EXHIBIT A.
4 EXPENSES OF REGISTRATION
All Registration Expenses incurred in connection with registrations
pursuant to Section 2 shall be borne by the Company. Unless otherwise stated,
all Selling Expenses relating to securities registered on behalf of the Holders
and all other Registration Expenses shall be borne by the Holders of such
securities pro rata on the basis of the number of shares so registered.
5. REGISTRATION PROCEDURES
In the case of each registration, qualification or compliance effected
by the Company pursuant to this EXHIBIT A, the Company will keep each Holder
advised in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least 120 days, and
prepare and file with the Commission such amendments to such registration
statement and supplements to the prospectus contained therein as may be
necessary to keep such registration statement effective for at least 120 days,
provided that no such registration shall constitute a shelf registration under
Rule 415 promulgated by the Commission under the Securities Act;
(b) Enter into a written underwriting agreement in customary form
and substance reasonably satisfactory to the Company, the Holders and the
managing underwriter or underwriters of the public offering of such securities,
if the offering is to be underwritten in whole or in part;
(c) Furnish to the Holders participating in such registration and
to the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(d) Use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as such participating Holders may reasonably request
within ten (10) days prior to the original filing of such registration
statement, except that the Company shall not for any purpose be required to
execute a general consent to service of process or to qualify to do business as
a foreign corporation in any jurisdiction where it is not so qualified;
(e) Notify the Holders (or if they have appointed an
attorney-in-fact, such attorney-in-fact) participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed;
(f) Notify such Holders or their attorney-in-fact promptly of any
request by the Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
(g) Prepare and file with the Commission promptly upon the request
of any such Holders any amendments or supplements to such registration statement
or prospectus which, in the reasonable opinion of counsel for such Holders, is
required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the Registrable Securities by such Holders;
(h) Prepare and promptly file with the Commission, and promptly
notify such Holders or their attorney-in-fact of the filing of, such amendment
or supplement to such registration statement or prospectus as may be necessary
to correct any statements or omissions if, at the time when a prospectus
relating to such securities is required to be delivered under the Securities
Act, any event has occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances in which they
were made;
(i) In case any of such Holders or any underwriter for any such
Holders is required to deliver a prospectus at a time when the prospectus then
in effect may no longer be used under the Securities Act, prepare promptly upon
request such amendment or amendments to such registration statement and such
prospectuses as may be necessary to permit compliance with the requirements of
the Securities Act;
(j) Advise such Holders or their attorney-in-fact, promptly after
it shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for that purpose
and promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued; and
(k) At the request of any such Holder, furnish on the effective
date of the registration statement and, if such registration includes an
underwritten public offering, at the closing provided for in the underwriting
agreement, (i) an opinion, dated each such date, of the counsel representing the
Company for the purposes of such registration, addressed to the underwriters, if
any, and to the Holder or Holders making such request, covering such matters
with respect to the registration statement, the prospectus and each amendment or
supplement thereto, proceedings under state and federal securities laws, other
matters relating to the Company, the securities being registered and the offer
and sale of such securities as are customarily the subject of opinions of
issuer's counsel provided to underwriters in underwritten public offerings, and
(ii) to the extent the Company's accounting firm is willing to do so, a letter
dated each such date, from the independent public accountants of the Company,
addressed to the underwriters, if any, and to the Holder or Holders making such
request, stating that they are independent public accountants within the meaning
of the Securities Act and that in the opinion of such accountants the financial
statements and other financial data of the Company included in the registration
statement or the prospectus or any amendment or supplement thereto comply in all
material respects with the applicable accounting requirements of the Securities
Act, and additionally covering such other financial matters, including
information as to the period ending not more than five (5) business days prior
to the date of such letter with respect to the registration statement and
prospectus, as the underwriters or such requesting Holder or Holders may
reasonably request.
6. INFORMATION BY HOLDER
The Holder or Holders of Registrable Securities included in any
registration shall furnish the Company such information regarding such Holder or
Holders, the Registrable Securities held by them and the distribution proposed
by such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this EXHIBIT A.
7. INDEMNIFICATION
(a) The Company will indemnify each Holder, each of its officers,
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
EXHIBIT A, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of
the Securities Act, against all expenses, claims, losses, damages or
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident
to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, or any violation
by the Company of the Securities Act or any rule or regulation promulgated
under the Securities Act applicable to the Company in connection with any
such registration, qualification or compliance, and the Company will
reimburse each such Holder, each of its officers and directors, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending
any such claim, loss, damage, liability or action, provided that the Company
will not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder, controlling person or
underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein. Notwithstanding the foregoing, the
liability of each Holder under this subsection (b) shall be limited to an amount
equal to the initial public offering price of the shares sold by such Holder,
unless such liability arises out of or is based on willful conduct by such
Holder.
(c) Each party entitled to indemnification under this Section 7
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this EXHIBIT A unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict
of interest or separate and different defenses. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
8. TRANSFER OF REGISTRATION RIGHTS
The rights to cause the Company to register securities granted
Institute for Medical Studies, Inc. under Section 2 may only be assigned to a
transferee or assignee in connection with any transfer or assignment of all or a
portion of this Warrant pursuant to Section 8 of the Warrant Agreement, provided
that: (i) such transfer may otherwise be effected in accordance with applicable
securities laws, and (ii) such assignee or transferee acquires ownership of or
the right to purchase at least 25% of the number of the Shares initially
purchasable upon exercises of this Warrant (appropriately adjusted for any
Recapitalizations).
9. AMENDMENT OF REGISTRATION RIGHTS.
Any provision of this EXHIBIT A may be amended and the observance
thereof may be waived (either generally or in a particular instance) with the
written consent of the Company and Holders who own or have the right to acquire
at least a majority of the Shares (or securities issued in exchange for the
Shares in any Recapitalization). Any amendment or waiver effected in accordance
with this Section 9 shall be binding on each Holder and the Company.
EXHIBIT B
OUTSTANDING SHARES AND RIGHTS TO ACQUIRE SHARES
EXHIBIT 27
FINANCIAL DATA SCHEDULE
