EXHIBIT 1.2
WARRANT NO. _____
WARRANT TO PURCHASE SHARES
OF
IMAGENETIX, INC.
Warrant to Purchase 33,333 Shares
(subject to adjustment as set forth herein)
Exercise Price $3.60 Per Share
(subject to adjustment as set forth herein)
VOID AFTER 3:00 P.M., DENVER, COLORADO, TIME, ___________________
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (the "Act") OR REGISTERED OR QUALIFIED UNDER ANY OTHER
APPLICABLE FEDERAL OR STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR QUALIFICATION FILED IN ACCORDANCE WITH
THE ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT.
Imagenetix, Inc., 00000 Xxxxxxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx,
Xxxxxxxxxx 00000 (the "Company"), hereby certifies that, for value received,
Xxxxxxx Xxxxxxx, Inc., 0000 Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (the
"Holder"), is entitled, subject to the terms and conditions set forth below,
to purchase from the Company at any time on or after _________________________,
but before 3:00 p.m., Denver time, on ____________________, up to 33,333 shares
of common stock of the Company ("Shares") at a purchase price of $3.60 per
Share.
The number and character of the securities purchasable upon exercise of
this Warrant and the Exercise Price are subject to adjustment as provided
below.
The term "Warrant" as used herein shall include this Warrant and any Warrants
issued in substitution for or replacement of this Warrant, or any Warrants
into which this Warrant may be divided or exchanged. The securities
purchasable upon the exercise of this Warrant are hereinafter referred to as
"Warrant Securities." Except as otherwise provided herein, the Warrant
Securities shall be as described in the Company's prospectus dated
____________________ ("Effective Date").
This Warrant may be assigned, transferred, sold, offered for sale, or
exercised by the Holder upon compliance with all the pertinent provisions
hereof.
1. Exercise of Warrant.
(a) Subject to the other terms and conditions of this Warrant, the
purchase rights evidenced by this Warrant may be exercised in whole or in
part at any time, and from time to time, on or after ____________________,
but before 3:00 p.m., Denver time, on ____________________, by the Holder's
presentation and surrender of this Warrant to the Company at its principal
office or at the office of the Company's stock transfer agent, if any,
accompanied by a duly executed Notice of Exercise, in the form attached to
and by this reference incorporated in this Warrant as Exhibit A, and by
payment of the aggregate Exercise Price, in certified funds or a bank
cashier's check, for the number of Shares specified in the Notice of
Exercise. In the event this Warrant is exercised in part only, as soon as is
practicable after the presentation and surrender of this Warrant to the
Company for exercise, the Company shall execute and deliver to the Holder a
new Warrant, containing the same terms and conditions as this Warrant,
evidencing the right of the Holder to purchase the number of Shares as to
which this Warrant has not been exercised.
(b) Upon receipt of this Warrant by the Company as described in
subsection (a) above, the Holder shall be deemed to be the holder of record
of the Warrant Securities issuable upon such exercise, notwithstanding that
the transfer books of the Company may then be closed or that certificates
representing such Warrant Securities may not have been prepared or actually
delivered to the Holder.
2. Payment of the Exercise Price. The Company hereby determines that
the Holder shall be permitted to pay the Exercise Price in the following
manner:
(a) In cash or by check.
(b) By delivery to the Company of common stock having a fair market
value on the date of exercise equal to the aggregate Exercise Price of the
Shares as to which the Warrant is being exercised.
(c) By exchanging all or part of this Warrant for the number of Shares
which have an aggregate fair market value on the date of exercise equal to
the difference between (x) the fair market value of the number of Shares
designated by the Holder on the date of exercise and (y) the aggregate
Exercise Price payable under the Warrant by the Holder for such designated
Shares (i.e., if market is $5.00 per share: $5.00 X 33,333 = $166,665 -
$3.60 X 33,333 = $119,999 = $46,666 DIVIDED BY $5.00 = 9,333 shares).
(d) any combination of the foregoing methods of payment.
3. Exchange, Assignment or Loss of Warrant.
(a) This Warrant may not be sold, transferred, assigned or hypothecated
until ____________________, except for (i) the sale, transfer, or assignment, in
whole or in part, to or among the officers of Xxxxxxx Xxxxxxx, Inc. and other
securities broker-dealers which are members of the National Association of
Securities Dealers, Inc. ("NASD") and which participated in the public offering
of the Company's Shares and the officers or partners of those NASD member firms,
(ii) the transfer by operation of law as a result of the death of any transferee
to whom all or a portion of this Warrant may be transferred, and (iii) the
transfer to any successor to the business of Xxxxxxx Xxxxxxx, Inc. All sales,
transfers, assignments or hypothecations of this Warrant must be in compliance
with Section 8 hereof. Any assignment or transfer of this Warrant shall be made
by the presentation and surrender of this Warrant to the Company at its
principal office or the office of its transfer agent, if any, accompanied by a
duly executed Assignment Form, in the form attached to and by this reference
incorporated in this Warrant as Exhibit B. Upon the presentation and surrender
of these items to the Company, the Company, at its sole expense, shall execute
and deliver to the new Holder or Holders a new Warrant or Warrants, containing
the same terms and conditions as this Warrant, in the name of the new Holder or
Holders as named in the Assignment Form, and this Warrant shall at that time be
canceled.
(b) This Warrant, alone or with other Warrants containing substantially
the same terms and conditions and owned by the same Holder, is exchangeable at
the option of the Holder but at the Company's sole expense, at any time prior to
its expiration either by its terms or by its exercise in full upon presentation
and surrender to the Company at its principal office or at the office of its
transfer agent, if any, for another Warrant or other Warrants, of different
denominations but containing the same terms and conditions as this Warrant,
entitling the Holder to purchase the same aggregate number of Warrant Securities
that were purchasable pursuant to the Warrant or Warrants presented and
surrendered. At the time of presentation and surrender by the Holder to the
Company, the Holder also shall deliver to the Company a written notice, signed
by the Holder, specifying the denominations in which new Warrants are to be
issued to the Holder.
(c) The Company will execute and deliver to the Holder a new Warrant
containing the same terms and conditions as this Warrant upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction, or mutilation of this Warrant, provided that (i) in the case of
loss, theft, or destruction, the Company receives from the Holder a reasonably
satisfactory indemnification, and (ii) in the case of mutilation, the Holder
presents and surrenders this Warrant to the Company for cancellation. Any new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Company regardless of whether the Warrant that was
lost, stolen, destroyed, or mutilated shall be enforceable by anyone at any
time.
4. Adjustments: Stock Dividends, Reclassification, Reorganization, Merger
and Anti-Dilution Provisions.
(a) If the Company increases or decreases the number of its issued and
outstanding shares of Common Stock, or changes in any way the rights and
privileges of such shares, by means of (i) the payment of a stock dividend or
the making of any other distribution on such shares payable in its Common Stock,
(ii) a forward or reverse stock split or other subdivision of
shares, (iii) a consolidation or combination involving its Common Stock, or
(iv) a reclassification or recapitalization involving its Common Stock, then
the Exercise Price in effect at the time of such action and the number of
Warrant Securities purchasable pursuant to this Warrant at that time shall be
proportionately adjusted so that the numbers, rights, and privileges relating
to the Warrant Securities then purchasable pursuant to this Warrant shall be
increased, decreased or changed in like manner, for the same aggregate
purchase price as set forth in this Warrant, as if the Warrant Securities
purchasable pursuant to this Warrant immediately prior to the event at issue
had been issued, outstanding, fully paid and nonassessable at the time of
that event. As an example, if the Company were to declare a two-for-one
forward stock split or a 100 percent stock dividend, then the unpurchased
number of Warrant Securities subject to this Warrant would be doubled and the
Exercise Price for all unpurchased Warrant Securities would be reduced by 50
percent. These adjustments would result in the Holder's rights under this
Warrant not being diluted by the stock split or stock dividend and the Holder
paying the same aggregate exercise price.
If the Company shall declare a dividend payable in money on its Common
Stock and at substantially the same time shall offer to its shareholders a
right to purchase new shares of Common Stock from the proceeds of such
dividend or for an amount substantially equal to the dividend, all shares of
Common Stock so issued shall, for purposes of this Warrant, be deemed to have
been issued as a stock dividend.
(b) If the Company pays or makes any dividend or other distribution
upon its Common Stock payable in securities or other property, excluding
money or the Company's Common Stock but including (without limitation) shares
of any other class of the Company's stock or stock or other securities
convertible into or exchangeable for shares of Common Stock or any other
class of the Company's stock or other interests in the Company or its assets
("Convertible Securities"), a proportionate part of those securities or that
other property shall be set aside by the Company and delivered to the Holder
in the event that the Holder exercises this Warrant. The securities and
other property then deliverable to the Holder upon the exercise of this
Warrant shall be in the same ratio to the total securities and property set
aside for the Holder as the number of Warrant Securities with respect to
which the Warrant is then exercised is to the total Warrant Securities
purchasable pursuant to this Warrant at the time the securities or property
were set aside for the Holder.
If the Company shall declare a dividend payable in money on its Common
Stock and at substantially the same time shall offer to its shareholders a
right to purchase new shares of a class of stock (other than Common Stock),
Convertible Securities, property or other interests from the proceeds of such
dividend or for an amount substantially equal to the dividend, all shares of
stock, Convertible Securities, property or other interests so issued or
transferred shall, for purposes of this Warrant, be deemed to have been
issued as a dividend or other distribution subject to this subsection (b).
(c) If at any time the Company grants to its shareholders rights to
subscribe pro rata for additional securities of the Company, whether Common
Stock, Convertible Securities, or other classifications, or for any other
securities, property or interests that the Holder would have
been entitled to subscribe for if, immediately prior to such grant, the
Holder had exercised this Warrant, then the Company shall also grant to the
Holder the same subscription rights that the Holder would be entitled to if
the Holder had exercised this Warrant in full immediately prior to such grant.
(d) The Company shall cause effective provision to be made so that the
Holder shall have the right thereafter, by the exercise of this Warrant, to
purchase for the aggregate Exercise Price described in this Warrant the kind
and amount of shares of stock and other securities, and property and
interests, as would be issued or payable with respect to or in exchange for
the number of Warrant Securities of the Company that are then purchasable
pursuant to this Warrant as if such Warrant Securities had been issued to the
Holder immediately before the occurrence of any of the following events: (i)
the reclassification, capital reorganization, or other similar change of
outstanding shares of Common Stock of the Company, other than as described
and provided for in subsection (a) above; (ii) the merger or consolidation of
the Company with one or more other corporations or other entities, other than
a merger with a subsidiary or affiliate pursuant to which the Company is the
continuing entity and the outstanding shares of Common Stock, including the
Warrant Securities purchasable pursuant to this Warrant, are not affected; or
(iii) the spin-off of assets to a subsidiary or an affiliated entity, or the
sale, lease, or exchange of a significant portion of the Company's assets, in
a transaction pursuant to which the Company's shareholders of record are to
receive securities or other interests in another entity. Any such provision
made by the Company for adjustments with respect to this Warrant shall be as
nearly equivalent to the adjustments otherwise provided for in this Warrant
as is reasonably practicable. The foregoing provisions of this subsection (d)
shall similarly apply to successive reclassifications, capital
reorganizations and similar changes of shares of Common Stock and to
successive consolidations, mergers, spin-offs, sales, leases or exchanges.
In the event that in any such reclassification, capital reorganization,
change, consolidation, merger, spin-off, sale, lease or exchange additional
shares of Common Stock are issued in exchange, conversion, substitution or
payment, in whole or in part, for securities of the Company other than Common
Stock, any such issue shall be treated as an issue of Common Stock covered by
the provisions of subsection (f) below, with the amount of the consideration
received upon the issue to be determined in accordance with subsection (g)
below.
(e) If any sale, lease or exchange of all, or substantially all, of the
Company's assets or business or any dissolution, liquidation or winding up of
the Company (a "Termination of Business") shall be proposed, the Company
shall deliver written notice to the Holder or Holders of this Warrant in
accordance with Section 5 below as a condition precedent to the consummation
of that Termination of Business. If the result of the Termination of
Business is that shareholders of the Company are to receive securities or
other interests of another entity, the provisions of subsection (d) above
shall apply. However, if the result of the Termination of Business is that
shareholders of the Company are to receive money or property other than
securities or other interests in another entity, the Holder or Holders of
this Warrant shall be entitled to exercise this Warrant prior to the
consummation of the event at issue and, with respect to any Warrant
Securities so purchased, shall be entitled to all of the rights of the other
shareholders of Common Stock with respect to any distribution by the Company
in connection with the Termination of Business. In the event no other entity
is involved and subsection (d) does not apply, all purchase
rights under this Warrant shall terminate at the close of business on the
date as of which shareholders of record of the Common Stock shall be entitled
to participate in a distribution of the assets of the Company in connection
with the Termination of Business; provided, that in no event shall that date
be less than 30 days after delivery to the Holder or Holders of this Warrant
of the written notice described above and in Section 5. If the termination
of purchase rights under this Warrant is to occur as a result of the event at
issue, a statement to that effect shall be included in that written notice.
Notwithstanding anything herein to the contrary, in the event that
Termination of Business is to occur prior to ________________, then
provisions shall be made by the Company, by setting aside money or other
assets to be distributed to shareholders in an amount sufficient for
distribution to Holder or Holders of this Warrant as if the Warrant had been
previously exercised, to ensure that the Holder or Holders of this Warrant
will have an opportunity to participate in such distribution by exercising
the Warrant within 90 days after its earliest exercise date. The Company
will take no steps to dissolve the Company prior to such date.
(f) If at any time or from time to time the Company should issue or
sell any shares of Common Stock, including shares held in the Company's
Treasury, without consideration or for a per share consideration less than
the Exercise Price in effect immediately prior to the issuance or sale, the
Exercise Price in effect immediately prior to each such issuance or sale
shall be adjusted downward to equal (i) the per share consideration received
by the Company upon the issuance or sale of its Common Stock, PLUS (ii)
one-third of one percent of that per share consideration for each month
remaining before this Warrant expires by its terms, including only complete
months for purposes of this adjustment. Upon adjustment of the Exercise
Price, the number of Warrant Securities purchasable pursuant to this Warrant
shall also be adjusted to equal a number computed by (i) dividing the
Exercise Price in effect immediately prior to such adjustment by the Exercise
Price as adjusted, and (ii) multiplying the resulting quotient by the number
of Warrant Securities purchasable pursuant to this Warrant immediately prior
to such adjustment. For purposes of any computation to be made in accordance
with the provisions of this subsection (f), the following provisions (A)
through (D) shall be applicable:
(A) In case the Company at any time shall issue options, rights or
warrants to purchase shares of Common Stock, including shares held in the
Company's Treasury, or shall issue any Convertible Securities, without
consideration or for a consideration per share less than the Exercise Price
in effect immediately prior to the issuance of such options, rights,
warrants or Convertible Securities, the Exercise Price and the number of
Warrant Securities purchasable pursuant to this Warrant shall be adjusted
in accordance with the provisions of this subsection (f). For purposes of
this provision (A), (i) the aggregate maximum number of shares of Common
Stock deliverable under such options, rights or warrants shall be
considered to have been issued at the time such options, rights or warrants
were issued, for a consideration equal to the minimum purchase price per
share of Common Stock provided for in the options, rights or warrants plus
the consideration, if any, paid to the Company for such options, rights or
warrants; and (ii) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or exchange for any Convertible Securities
shall be considered to have been issued at the
time such Convertible Securities were issued for a consideration equal
to the consideration paid to the Company upon the issuance of those
Convertible Securities.
(B) No adjustment of the Exercise Price or the Warrant Securities
purchasable pursuant to this Warrant shall be made in connection with the
issuance or sale of Common Stock upon the exercise of options, rights or
warrants, or upon the conversion of Convertible Securities.
(C) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which is in money, the amount of the money
consideration for those shares shall be deemed to be (i) the amount of
money received by the Company for such shares, or (ii) if shares of Common
Stock are offered by the Company for subscription, the subscription price,
or (iii) if shares of Common Stock are sold to underwriters or dealers for
a public offering without a subscription offering, the initial public
offering price without deduction for any compensation paid or discount
allowed in the sale, underwriting or purchase by underwriters or dealers or
others performing similar services or for any expenses incurred in
connection therewith.
(D) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which is property, securities or interests
other than money, the amount of consideration therefor other than money
shall be deemed to be the fair market value of such consideration as
determined in accordance with subsection (h) below.
(g) Except as otherwise provided in this Section 4, upon any adjustment of
the Exercise Price, the Holder shall be entitled to purchase, at the new
Exercise Price, the number of shares of Common Stock, calculated to the nearest
full share, obtained by multiplying the number of Warrant Securities purchasable
pursuant to this Warrant immediately prior to the adjustment of the Exercise
Price by the Exercise Price in effect immediately prior to its adjustment and
dividing the product so obtained by the new Exercise Price.
(h) If consideration other than money is received by the Company upon the
issuance or sale of Common Stock, Convertible Securities, or other securities or
interests, the fair market value of such consideration, as reasonably determined
by the Board of Directors of the Company, shall be used for purposes of any
adjustment required by this Section 4. The fair market value of such
consideration shall be determined as of the date of the adoption of the
resolution of the Board of Directors of the Company that authorizes the
transaction giving rise to the adjustment. In case of the issuance or sale of
Common Stock, Convertible Securities, or other securities or interests in
conjunction with the issuance or sale of other securities or property without a
separate allocation of the purchase price, the Board of Directors of the Company
shall reasonably determine an allocation of the consideration among the items
being issued or sold. The reclassification of securities other than Common
Stock into securities including Common Stock shall be deemed to involve the
issuance of that Common Stock for a consideration other than money immediately
prior to the close of business on the date fixed for the determination of
shareholders entitled to receive that Common Stock.
The Company shall promptly deliver written notice of all such
determinations by its Board of Directors to the Holder or Holders of this
Warrant, and those determinations shall be final and binding on the Holder or
Holders if, and only if, no Holder of this Warrant delivers written notice to
the Company of an objection to a determination within 30 days after written
notice of that determination is delivered to the Holder. If written notice
of an objection is delivered to the Company and the parties cannot reconcile
their dispute, the dispute shall be arbitrated pursuant to Section 16 below.
(i) The provisions of this Section 4 shall apply to successive events
that may occur from time to time but shall only apply to a particular event
if it occurs prior to the expiration of this Warrant either by its terms or
by its exercise in full.
(j) Unless the context requires otherwise, whenever reference is made
in this Section 4 to the issue or sale of shares of Common Stock, the term
"Common Stock" shall mean (i) the common stock of the Company, (ii) any other
class of stock ranking on a parity with, and having substantially similar
rights and privileges as the Company's common stock, and (iii) any
Convertible Security convertible into either (i) or (ii). However, subject
to the provisions of subsection (d) above, Warrant Securities issuable upon
exercise of this Warrant shall include only shares of the common stock
designated as common stock of the Company as of the date of this Warrant and
warrants to purchase such common stock.
(k) For purposes of subsections (a), (b) and (f) above, shares of
Common Stock owned or held at any relevant time by, or for the account of,
the Company, in its treasury or otherwise, shall not be deemed to be
outstanding for purposes of the calculations and adjustments described.
5. Notice to Holders. If, prior to the expiration of this Warrant
either by its terms or by its exercise in full, any of the following shall
occur:
(i) the Company shall declare a dividend or authorize any other
distribution on its Common Stock; or
(ii) the Company shall authorize the granting to the shareholders of its
Common Stock of rights to subscribe for or purchase any securities or
any other similar rights; or
(iii) any reclassification, reorganization or similar change of the Common
Stock, or any consolidation or merger to which the Company is a party,
or the sale, lease, or exchange of any significant portion of the
assets of the Company; or
(iv) the voluntary or involuntary dissolution, liquidation or winding up of
the Company; or
(v) any purchase, retirement or redemption by the Company of its Common
Stock;
then, and in any such case, the Company shall deliver to the Holder or Holders
written notice thereof at least 30 days prior to the earliest applicable date
specified below with respect to which
notice is to be given, which notice shall state the following:
(i) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights, or, if a record is not to be taken,
the date as of which the shareholders of Common Stock of record to be
entitled to such dividend, distribution or rights are to be
determined;
(ii) the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation,
winding up or purchase, retirement or redemption is expected to become
effective, and the date, if any, as of which the Company's
shareholders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property deliverable upon
such reclassification, reorganization, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up, purchase, retirement
or redemption; and
(iii) if any matters referred to in the foregoing clauses (i) and (ii) are
to be voted upon by shareholders of Common Stock, the date as of which
those shareholders to be entitled to vote are to be determined.
6. Officers' Certificate. Whenever the Exercise Price or the
aggregate number of Warrant Securities purchasable pursuant to this Warrant
shall be adjusted as required by the provisions of Section 4 above, the
Company shall promptly file with its Secretary or an Assistant Secretary at
its principal office, and with its transfer agent, if any, an officers'
certificate executed by the Company's President and Secretary or Assistant
Secretary, describing the adjustment and setting forth, in reasonable detail,
the facts requiring such adjustment and the basis for and calculation of such
adjustment in accordance with the provisions of this Warrant. Each such
officers' certificate shall be made available to the Holder or Holders of
this Warrant for inspection at all reasonable times, and the Company, after
each such adjustment, shall promptly deliver a copy of the officers'
certificate relating to that adjustment to the Holder or Holders of this
Warrant. The officers' certificate described in this Section 6 shall be
deemed to be conclusive as to the correctness of the adjustment reflected
therein if, and only if, no Holder of this Warrant delivers written notice to
the Company of an objection to the adjustment within 30 days after the
officers' certificate is delivered to the Holder or Holders of this Warrant.
The Company will make its books and records available for inspection and
copying during normal business hours by the Holder so as to permit a
determination as to the correctness of the adjustment. If written notice of
an objection is delivered by a Holder to the Company and the parties cannot
reconcile the dispute, the Holder and the Company shall submit the dispute to
arbitration pursuant to the provisions of Section 16 below. Failure to
prepare or provide the officers' certificate shall not modify the parties'
rights hereunder.
7. Reservation of Warrant Securities. The Company hereby agrees that
at all times prior to ____________________, it will have authorized and will
reserve and keep available for issuance and delivery to the Holder that
number of shares of its Common Stock that may be required from time to time
for issuance and delivery upon the exercise of the then unexercised portion
of this Warrant.
8. Limited Registration Rights Under the Securities Act of 1933.
(a) If at any time prior to ____________________, (five years from the
Effective Date), the Company files a registration statement with the United
States Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended (the "Act"), or pursuant to any other act passed after the
date of this Agreement, which filing provides for the sale of securities by
the Company to the public, or files a Regulation A Offering Statement under
the Act, the Company shall offer to the Holder or Holders of this Warrant and
the holders of any Warrant Securities the opportunity to register or qualify
the Warrant (if prior to its expiration), Warrant Securities and any Warrant
Securities underlying the unexercised portion of this Warrant, if any, at the
Company's sole expense, regardless of whether the Holder or Holders of this
Warrant or the holders of Warrant Securities or both may have previously
availed themselves of any of the registration rights described in this
Section 8; provided, however, that in the case of a Regulation A offering,
the opportunity to qualify shall be limited to the amount of the available
exemption after taking into account the securities that the Company wishes
to qualify. Notwithstanding anything to the contrary, this subsection (a)
shall not be applicable to a registration statement on Forms S-4, S-8 or
their successors or any other inappropriate forms filed by the Company with
the United States Securities and Exchange Commission.
The Company shall deliver written notice to the Holder or Holders of
this Warrant and to any holders of the Warrant Securities of its intention to
file a registration statement or Regulation A Offering Statement under the
Act at least 60 days prior to the filing of such registration statement or
offering statement, and the Holder or Holders and holders of Warrant
Securities shall have 30 days thereafter to request in writing that the
Company register or qualify the Warrant, Warrant Securities, or the Warrant
Securities underlying the unexercised portion of this Warrant in accordance
with this subsection (a). Upon the delivery of such a written request within
the specified time, the Company shall be obligated to include in its
contemplated registration statement or offering statement all information
necessary or advisable to register or qualify the Warrant, Warrant Securities
or Warrant Securities underlying the unexercised portion of this Warrant for
a public offering, if the Company does file the contemplated registration
statement or offering statement; provided, however, that neither the delivery
of the notice by the Company nor the delivery of a request by a Holder or by
a holder of Warrant Securities shall in any way obligate the Company to file
a registration statement or offering statement. Furthermore, notwithstanding
the filing of a registration statement or offering statement, the Company
may, at any time prior to the effective date thereof, determine not to offer
the securities to which the registration statement or offering statement
relates, other than the Warrant, Warrant Securities and Warrant Securities
underlying the unexercised portion of this Warrant.
The Company shall comply with the requirements of this subsection (a)
and the related requirements of subsection (e) at its own expense. That
expense shall include, but not be limited to, legal, accounting, consulting,
printing, federal and state filing fees, NASD fees, out-of-pocket expenses
incurred by counsel, accountants and consultants retained by the Company, and
miscellaneous expenses directly related to the registration statement or
offering statement and the offering. However, this expense shall not include
the portion of any underwriting commissions, transfer taxes and the
underwriter's accountable and nonaccountable expense allowances
attributable to the offer and sale of the Warrant, Warrant Securities and the
Warrant Securities underlying the unexercised portion of this Warrant, all of
which expenses shall be borne by the Holder or Holders of this Warrant and
the holders of the Warrant Securities registered or qualified.
(b) In the event that the Company registers or qualifies the Warrant,
Warrant Securities or the Warrant Securities underlying the unexercised
portion of this Warrant pursuant to subsections (a) or (b) above, the Company
shall include in the registration statement or qualification, and the
prospectus included therein, all information and materials necessary or
advisable to comply with the applicable statutes and regulations so as to
permit the public sale of the Warrant, Warrant Securities or the Warrant
Securities underlying the unexercised portion of this Warrant. As used in
subsections (a) and (b) of this Section 8, reference to the Company's
securities shall include, but not be limited to, any class or type of the
Company's securities or the securities of any of the Company's subsidiaries
or affiliates.
(c) As to each registration statement or offering statement, the
Company's obligations contained in this Section 8 shall be conditioned upon a
timely receipt by the Company in writing of the following:
(i) Information as to the terms of the contemplated public offering
furnished by and on behalf of each Holder or holder intending to make
a public distribution of the Warrant, Warrant Securities or Warrant
Securities underlying the unexercised portion of the Warrant; and
(ii) Such other information as the Company may reasonably require from such
Holders or holders, or any underwriter for any of them, for inclusion
in the registration statement or offering statement.
(d) In each instance in which the Company shall take any action to
register or qualify the Warrant, Warrant Securities or the Warrant Securities
underlying the unexercised portion of this Warrant, if any, pursuant to this
Section 8, the Company shall do the following:
(i) supply to Xxxxxxx Xxxxxxx, Inc., as the representative of the Holders
of the Warrant and the holders of Warrant Securities whose Warrant and
Warrant Securities are being registered or qualified, 2 manually
signed copies of each registration statement or offering statement,
and all amendments thereto, and a reasonable number of copies of the
preliminary, final or other prospectus or offering circular, all
prepared in conformity with the requirements of the Act and the rules
and regulations promulgated thereunder, and such other documents as
Xxxxxxx Xxxxxxx, Inc. shall reasonably request;
(ii) cooperate with respect to (A) all necessary or advisable actions
relating to the preparation and the filing of any registration
statements or offering statements, and all amendments thereto, arising
from the provisions of this Section 8, (B) all reasonable efforts to
establish an exemption from the provisions of the Act or any other
federal or state securities
statutes, (C) all necessary or advisable actions to register or
qualify the public offering at issue pursuant to federal securities
statutes and the state "blue sky" securities statutes of each
jurisdiction that the Holders of the Warrant or holders of Warrant
Securities shall reasonably request, and (D) all other necessary or
advisable actions to enable the Holders of the Warrant and holders
of the Warrant Securities to complete the contemplated disposition
of their securities in each reasonably requested jurisdiction;
(iii) keep all registration statements or offering statements to which this
Section 8 applies, and all amendments thereto, effective under the Act
for a period of at least 9 months after their initial effective date
and cooperate with respect to all necessary or advisable actions to
permit the completion of the public sale or other disposition of the
securities subject to a registration statement or offering statement;
and
(iv) indemnify and hold harmless each Holder of the Warrant, each holder of
Warrant Securities, and each underwriter within the meaning of the Act
for each such Holder or holder, from and against all losses, claims,
damages, and liabilities, including, but not limited to, any and all
expenses reasonably incurred in investigating, preparing, defending or
settling any claim, arising from or relating to (A) any untrue or
alleged untrue statement of a material fact contained in any
registration statement or offering statement to which this Section 8
applies, or (B) any omission or alleged omission to state a material
fact necessary to make the statements contained in a registration
statement or offering statement to which this Section 8 applies not
misleading; provided, however, that the indemnification contained in
this provision (iv) shall not apply if the untrue statement or
omission, or alleged untrue statement or omission, was the result of
information furnished in writing to the Company by the Holder, holder
or underwriter seeking indemnification expressly for use in the
registration statement or offering statement at issue. To the extent
that the indemnification contained in this provision applies, the
Company also shall indemnify and hold harmless each officer, director,
employee, controlling person or agent of an indemnified Holder, holder
or underwriter.
(e) In each instance in which pursuant to this Section 8 the Company shall
take any action to register or qualify the Warrant, Warrant Securities or the
Warrant Securities underlying the unexercised portion of this Warrant, prior to
the effective date of any registration statement or offering statement, the
Company and each Holder or holder of Warrants or Warrant Securities being
registered or qualified shall enter into reciprocal indemnification agreements,
in the form customarily used by reputable investment bankers with respect to
public offerings of securities, containing substantially the same terms as
described in subsection (d)(iv) above. These indemnification agreements also
shall contain an agreement by the Holder or shareholder at issue to indemnify
and hold harmless the Company, its officers, directors from and against any and
all losses, claims, damages and liabilities, including, but not limited to, all
expenses reasonably incurred in investigating, preparing, defending or settling
any claim, directly resulting from any untrue statements of material facts, or
omissions to state a material fact necessary to make a statement not misleading,
contained in a registration statement or offering statement to which this
Section 8 applies, if, and only if, the untrue statement or omission directly
resulted from information provided in writing to the Company by the indemnifying
Holder or shareholder
expressly for use in the registration statement or offering statement at
issue.
9. Transfer to Comply With the Securities Act of 1933.
(a) This Warrant, the Warrant Securities, and all other securities issued
or issuable upon exercise of this Warrant, may not be offered, sold or
transferred, in whole or in part, except in compliance with the Securities Act
of 1933, as amended (the "Act"), and except in compliance with all applicable
state securities statutes.
(b) The Company may cause the following legend, or its equivalent, to be
set forth on each certificate representing the Warrant Securities, or any other
security issued or issuable upon exercise of this Warrant, not theretofore
distributed to the public or sold to underwriters, as defined by the Act, for
distribution to the public pursuant to Section 8 above:
"The shares represented by this Certificate have not been registered under
the Securities Act of 1933 ("the Act") and are 'restricted securities' as
that term is defined in Rule 144 under the Act. The shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company."
10. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of all or any part of this
Warrant. With respect to any fraction of a share of any security called for
upon any exercise of this Warrant, the Company shall pay to the Holder an amount
in money equal to that fraction multiplied by the current market value of that
share. The current market value shall be determined as follows:
(i) if the security at issue is listed on a national securities exchange
or admitted to unlisted trading privileges on such an exchange or
listed on the National Association of Securities Dealers National
Market System, the current value shall be the last reported sale price
of that security on such exchange or system on the last business day
prior to the date of the applicable exercise of this Warrant or, if no
such sale is made on such day, the average of the highest closing bid
and lowest asked price for such day on such exchange or system; or
(ii) if the security at issue is not so listed or admitted to unlisted
trading privileges, the current market value shall be the average of
the last reported highest bid and lowest asked prices quoted on the
National Association of Securities Dealers Automated Quotations System
or, if not so quoted, then by the National Quotation Bureau, Inc. on
the last business day prior to the day of the applicable exercise of
this Warrant; or
(iii) if the security at issue is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not reported, the
current market value shall be determined in such reasonable manner as
may be prescribed from time to time by the Board of Directors of the
Company, subject to the objection and arbitration procedure as
described in Section 5
above.
11. Rights of the Holder. The Holder shall not be entitled to any rights
as a shareholder in the Company by reason of this Warrant, either at law or
equity, except as specifically provided for herein. The Company covenants,
however, that for so long as this Warrant is at least partially unexercised, it
will furnish any Holder of this Warrant with copies of all reports and
communications furnished to the shareholders of the Company.
12. Charges Due Upon Exercise. The Company shall pay any and all issue or
transfer taxes, including, but not limited to, all federal or state taxes, that
may be payable with respect to the transfer of this Warrant or the issue or
delivery of Warrant Securities upon the exercise of this Warrant.
13. Warrant Securities to be Fully Paid. The Company covenants that all
Warrant Securities that may be issued and delivered to a Holder of this Warrant
upon the exercise of this Warrant will be, upon such delivery, validly and duly
issued, fully paid and nonassessable.
14. Notices. All notices, certificates, requests, or other similar
items provided for in this Warrant shall be in writing and shall be
personally delivered or deposited in the United States mail, postage prepaid,
addressed to the respective party as indicated in the portions of this
Warrant preceding Section 1. All notices shall be deemed to be delivered
upon personal delivery or upon the expiration of 3 business days following
deposit in the United States mail, postage prepaid. The addresses of the
parties may be changed, and addresses of other Holders and holders of Warrant
Securities may be specified, by written notice delivered pursuant to this
Section 14. The Company's principal office shall be deemed to be the address
provided pursuant to this Section for the delivery of notices to the Company.
15. Applicable Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Colorado, and courts located in
Colorado shall have exclusive jurisdiction over all disputes arising
hereunder.
16. Arbitration. The Company and the Holder, and by receipt of this
Warrant or any Warrant Securities, all subsequent Holders or holders of
Warrant Securities, agree to submit all controversies, claims, disputes and
matters of difference with respect to this Warrant, including, without
limitation, the application of this Section 16 to arbitration in Denver,
Colorado, according to the rules and practices of the American Arbitration
Association from time to time in force; provided, however, that if such rules
and practices conflict with the applicable procedures of Colorado courts of
general jurisdiction or any other provisions of Colorado law then in force,
those Colorado rules and provisions shall govern. This agreement to
arbitrate shall be specifically enforceable. Arbitration may proceed in the
absence of any party if notice of the proceeding has been given to that
party. The parties agree to abide by all awards rendered in any such
proceeding. These awards shall be final and binding on all parties to the
extent and in the manner provided by the rules of civil procedure enacted in
Colorado. All awards may be filed, as a basis of judgment and of the
issuance of execution for its collection, with the clerk of one or more
courts, state or federal, having jurisdiction over either the party against
whom that award is
rendered or its property. No party shall be considered in default hereunder
during the pendency of arbitration proceedings relating to that default.
17. Miscellaneous Provisions.
(a) Subject to the terms and conditions contained herein, this Warrant
shall be binding on the Company and its successors and shall inure to the
benefit of the original Holder, its successors and assigns and all holders of
Warrant Securities and the exercise of this Warrant in full shall not
terminate the provisions of this Warrant as it relates to holders of Warrant
Securities.
(b) If the Company fails to perform any of its obligations hereunder,
it shall be liable to the Holder for all damages, costs and expenses
resulting from the failure, including, but not limited to, all reasonable
attorney's fees and disbursements.
(c) This Warrant cannot be changed or terminated or any performance or
condition waived in whole or in part except by an agreement in writing signed
by the party against whom enforcement of the change, termination or waiver is
sought.
(d) If any provision of this Warrant shall be held to be invalid,
illegal or unenforceable, such provision shall be severed, enforced to the
extent possible, or modified in such a way as to make it enforceable, and the
invalidity, illegality or unenforceability shall not affect the remainder of
this Warrant.
(e) The Company agrees to execute such further agreements, conveyances,
certificates and other documents as may be reasonably requested by the Holder
to effectuate the intent and provisions of this Warrant.
(f) Paragraph headings used in this Warrant are for convenience only
and shall not be taken or construed to define or limit any of the terms or
provisions of this Warrant. Unless otherwise provided, or unless the context
shall otherwise require, the use of the singular shall include the plural and
the use of any gender shall include all genders.
IMAGENETIX, INC.
ATTEST:
By:
------------------------------ -------------------------------
Xxxxx X. Xxxxxxx, Secretary Xxxxxxx X. Xxxxxxx, President
EXHIBIT A
NOTICE OF EXERCISE
(To be executed by a Holder desiring to exercise the right to purchase Shares
pursuant to a Warrant.)
The undersigned Holder of a Warrant hereby
(a) irrevocably elects to exercise the Warrant to the extent of purchasing
_______________ Shares;
(b) makes payment in full of the aggregate Exercise Price for those Shares
in the amount of $_________________ by the delivery of certified funds or a bank
cashier's check in the amount of $_________________; or makes payment by
delivery of shares of stock of the Company or Warrants pursuant to the following
formula:
(c) requests that certificates evidencing the Shares be issued in the name
of the undersigned, or, if the name and address of some other person is
specified below, in the name of such other person:
(Name and address of person OTHER than the
undersigned in whose name Shares are to be registered)
(d) requests, if the number of Shares purchased are not all the Shares
purchasable pursuant to the unexercised portion of the Warrant, that a new
Warrant of like tenor for the remaining Shares purchasable pursuant to the
Warrant be issued and delivered to the undersigned at the address stated below.
Dated:
------------------- -----------------------------------
Signature (This signature must
conform in all respects to the name
of the Holder as specified on the
face of the Warrant.)
-------------------------- -----------------------------------
Social Security Number Printed Name
or Employer ID Number
Address:
-------------------------
-----------------------------------
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned, , hereby sells,
assigns and transfers unto:
Name:
(Please type or print in block letters)
Address:
the right to purchase _________________ Shares of Imagenetix, Inc. (the
"Company") pursuant to the terms and conditions of the Warrant held by the
undersigned. The undersigned hereby authorizes and directs the Company (i)
to issue and deliver to the above-named assignee at the above address a new
Warrant pursuant to which the rights to purchase being assigned may be
exercised, and (ii) if there are rights to purchase Shares remaining pursuant
to the undersigned's Warrant after the assignment contemplated herein, to
issue and deliver to the undersigned at the address stated below a new
Warrant evidencing the right to purchase the number of Shares remaining after
issuance and delivery of the Warrant to the above-named assignee. Except for
the number of Shares purchasable, the new Warrants to be issued and delivered
by the Company are to contain the same terms and conditions as the
undersigned's Warrant. To complete the assignment contemplated by this
Assignment Form, the undersigned hereby irrevocably constitutes and appoints
as the undersigned's attorney-in-fact to transfer the
Warrants and the rights thereunder on the books of the Company with full
power of substitution for these purposes.
Dated:
------------------- -----------------------------------
Signature
(This signature must conform in all
respects to the name of the Holder
as specified on the fact of the
Warrant.)
-----------------------------------
Printed Name
Address:
--------------------------
-----------------------------------
