WARRANT AGREEMENT
Exhibit
10.4
Execution
Copy
|
Warrant
No.
|
Issuance
Date: March 30, 2009
|
THE
SECURITES REPRESENTED BY THIS AGREEMENT HAVE BEEN SOLD IN RELIANCE UPON AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITITES ACT”), AND HAVE NOT BEEN REGISTERED OR QUALIFIED
UNDER THE SECRUITIES ACT OR THE SECURTIES LAWS OF ANY STATE. THE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, PLEDGED, HYPOTHECATED,
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
OR OTHER EVIDENCE REASONABLY SATISFACTORY TO DIATECT INTERNATIONAL CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED.
THIS
WARRANT AGREEMENT (this “Agreement”) is dated this 30th day of March, 2009, by
and between Diatect International Corporation, a California corporation (the
“Company”), and JACKTONY MANAGEMENT CORPORATION, a Florida corporation (the
“Warrant Holder”).
W I T N E S S E T H
WHEREAS,
as part of the Agreement, the Company agreed to issue to the Warrant Holder a
warrant (the “Warrant”) to purchase an aggregate of Eight Hundred and
Thirty-Three Thousand, Three Hundred and Thirty-Three (833,333) shares of the
Company’s Common Stock, par value $0.001 per share (the “Common
Stock”).
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Incorporation of
Recitals. The Recitals portion of this Agreement is hereby
incorporated by this reference as though it were fully set forth and rewritten
herein, and the affirmative statements therein contained shall be deemed to be
representations of the Company and the Warrant Holder, which are hereby
confirmed.
2. Grant of
Warrant.
2.1(a) The
Company hereby agrees that the Warrant Holder, for value received, is entitled,
subject to the provisions of this Warrant, to purchase from the Company, in
whole or in part and at any time or from time to time, during the period
commencing on the date hereof and expiring at 5:00 p.m., Heber City, Utah, time,
on the Expiration Date (as defined below), 30th day of
March, 2011, fully paid and non-assessable shares of Common Stock (as defined
below). The “Exercise Price” for such shares shall be equal to $0.03
per share, subject to adjustment as set forth in Section 4
below. This Warrant is being granted in connection with, and in
consideration of investment of common stock.
Execution
Copy
(b) The
term “Common Stock” means the common stock, par value
$0.001 per share, of the Company as constituted on
the date hereof, together with any other equity securities that may be issued by
the Company in substitution therefor. The number of shares of Common
Stock to be received upon the exercise of this Warrant, and the Exercise Price,
shall be adjusted from time to time as hereinafter set forth. The
shares of Common Stock deliverable upon such exercise, and as adjusted from time
to time, are hereinafter referred to as “Warrant Stock” or “Warrant
Shares.” The term “Company” means and includes the Company as well as
(i) any successor corporation resulting from the merger or consolidation of the
Company with another corporation, or (ii) any corporation to which the Company
has transferred its property or assets as an entirety or substantially as an
entirety.
3. Exercise of
Warrant.
3.1(a) Subject
to the limitations set forth in Section 5, this Warrant may be exercised in
whole or in part at any time or from time to time during the period commencing
on the date hereof and expiring at 5:00 p.m., Heber City, Utah, time, on March
30, 2011, or, if such date is a day on which banking institutions in Utah are
authorized by law to close, then on the next succeeding day that banking
institutions in Utah shall not be authorized to close.
(b)
The Holder may exercise this Warrant by presentation and surrender of this
Warrant to the Company at its principal office with the Warrant Exercise Form
attached as Exhibit
A hereto (the “Notice of Exercise”), duly executed by the Warrant
Holder and
accompanied by payment (either in cash, wire transfer, or by certified or
official bank check, payable to the order of the Company) of an amount equal to
the Exercise Price multiplied by the number of shares of Warrant Stock purchased
(the “Purchase Price”). The Purchase Price shall be payable in
cash.
(c) If
this Warrant is exercised in part only, the Company shall, upon surrender of
this Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the shares purchasable
hereunder.
(d) Upon
receipt by the Company of this Warrant, together with the Purchase Price, at its
office in proper form for exercise, the Holder shall be deemed to be the holder
of record of the shares of Common Stock issuable upon such exercise, not
withstanding 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 the Holder.
3.2 Issuance of
Certificates. As soon as practicable after the exercise of the
Warrant (in whole or in part) in accordance with Section 3.1 hereof, the
Company, at its expense, shall cause to be issued in the name of and delivered
to the Warrant Holder (i) a certificate or certificates for the number of
fully-paid and non-assessable Shares to which the Warrant Holder shall be
entitled upon such exercise and (if applicable) (ii) a new warrant agreement of
like tenor to purchase all of the Shares that may be purchased pursuant to the
portion, if any, of the Warrant not exercised by the Warrant
Holder. The Warrant Holder shall for all purposes be deemed to have
become the holder of record of such Shares on the date on which the Notice of
Exercise and payment of the Purchase Price in accordance with Section 3.1 hereof
were delivered and made, respectively, irrespective of the date of delivery of
such certificate or certificates, except that if the date of such delivery,
notice and payment is a date when the stock transfer books of the Company are
closed, such person shall be deemed to have become the holder of record of such
Shares at the close of business on the next succeeding date on which the stock
transfer books are open.
Execution
Copy
3.3 Market
Price. The “Market Price” of a share of Common Stock
means: the average of the daily volume weighted average price of
shares of Common Stock on the principal market on which shares of the Common
Stock are traded for the five (5) trading days immediately preceding the date of
the determination of the Market Price. If shares of Common Stock are
not traded on any public market (e.g. NYSE, AMEX, NASDAQ, OTCBB or Pink Sheets),
the Market Price of the Common Stock shall be determined, in good faith, by the
Board of Directors of the Company.
4. Adjustments.
4.1 Stock Splits, Stock
Dividends and Combinations. If the Company at any time
subdivides the outstanding shares of the Common Stock or issues a stock dividend
(in Common Stock) on the outstanding shares of the Common Stock, the Exercise
Price in effect immediately prior to such subdivision or the issuance of such
stock dividend shall be proportionately decreased, and the number of Shares
subject hereto shall be proportionately increased, and if the Company at any
time combines (by reverse stock split or otherwise) the outstanding shares of
Common Stock, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased, and the number of Shares subject hereto
shall be proportionately decreased, effective at the close of business on the
date of such subdivision, stock dividend or combination, as the case may
be.
4.2 Merger or
Consolidation. In the case of any consolidation of the Company
with, or merger of the Company with or into another entity (other than a
consolidation or merger which does not result in any reclassification or change
of the outstanding capital stock of the Company), the entity formed by such
consolidation or merger shall execute and deliver to the Warrant Holder a
supplemental warrant agreement providing that the Warrant Holder of the Warrant
then outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such Warrant, the kind
and amount of shares of capital stock and other securities and property
receivable upon such consolidation or merger by a holder of the number of Shares
for which such Warrant might have been exercised immediately prior to such
consolidation or merger. Such supplemental warrant agreement shall
provide for adjustments which shall be identical to the adjustments provided in
Section 4.1 hereof and to the provisions of Section 11 hereof. This
Section 4.2 shall similarly apply to successive consolidations or
mergers.
5. Transfers.
5.1 Unregistered
Securities. Warrant Holder hereby acknowledges and agrees that
the Warrant and the Shares have not been registered under the Securities Act of
1933, as amended (the “Securities Act”), and are “restricted securities” under
the Securities Act inasmuch as they are being acquired in a transaction not
involving a public offering, and the Warrant Holder agrees not to sell, pledge,
distribute, offer for sale, transfer or otherwise dispose of the Warrant or any
Shares issued upon exercise of the Warrant in the absence of (a) an effective
registration statement under the Securities Act as to the Warrant or such Shares
and registration and/or qualification of the Warrant or such Shares under any
applicable Federal or state securities law then in effect or (b) an opinion of
counsel, reasonably satisfactory to the Company, that such registration and
qualification are not required.
Execution
Copy
5.2 Transferability. Subject
to the provisions of Section 5.1 hereof, the rights under this Agreement are
freely transferable, in whole or in part, by the Warrant Holder, and such
transferee shall have the same rights hereunder as the Warrant
Holder.
5.3 Warrant
Register. The Company will maintain a register containing the
names and addresses of the Warrant Holders of the Warrant. Until any
transfer of Warrant in accordance with this Agreement is reflected in the
warrant register, the Company may treat the Warrant Holder as the absolute owner
hereof for all purposes. Any Warrant Holder may change such Warrant
Xxxxxx’s address as shown on the warrant register by written notice to the
Company requesting such change.
6. No Fractional
Shares. Any adjustment in the number of Shares purchasable
hereunder shall be rounded to the nearest whole share.
7. Investment
Representations. The Warrant Holder agrees and acknowledges
that it is acquiring the Warrant and will be acquiring the Shares for its own
account and not with a view to any resale or distribution other than in
accordance with Federal and state securities laws. The Warrant Holder
is an “accredited investor” within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act.
8. Covenants as to the
Shares. The Company covenants and agrees that the shares of
Common Stock issuable upon exercise of the Warrant, will, upon issuance in
accordance with the terms hereof, be duly and validly issued and outstanding,
fully-paid and non-assessable, with no personal liability attaching to the
ownership thereof, and free from all taxes, liens and charges with respect to
the issuance thereof imposed by or through the Company; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any certificates in
respect of such shares in a name other than that of the Warrant Holder and the
Company shall not be required to issue or deliver such certificates unless or
until the person(s) requesting the issuance thereof shall have paid to the
Company the amount of such tax or it shall be established to the satisfaction of
the Company that such tax has been paid. The Company further
covenants and agrees that the Company will at all times have authorized and
reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented under this Agreement.
9. Legend. Any
certificate evidencing the Shares issuable upon exercise hereof will bear a
legend indicating that such securities have not been registered under the
Securities Act or under any state securities laws and may not be sold or offered
for sale in the absence of an effective registration statement as to the
securities under the Securities Act and any applicable state securities law or
an opinion of counsel reasonably satisfactory to the Company that such
registration is not required.
10. Rights Applicable to the
Warrant Shares. The parties hereby acknowledge and agree that
the Shares, when issued in accordance with the terms hereof, shall be entitled
to all of the same rights and privileges provided to the Company’s Common
Stock.
Execution
Copy
11. Dividends and Other
Distributions. In the event that the Company shall, at
any time prior to the exercise of all Warrants, declare a dividend (other than a
dividend consisting solely of shares of Common Stock) or otherwise distribute to
its stockholders any assets, properties, rights, evidence of indebtedness,
securities (other than shares of Common Stock), whether issued by the Company or
by another, or any other thing of value, the Warrant Holder shall thereafter be
entitled, in addition to the shares of Common Stock or other securities and
property receivable upon the exercise thereof, to receive, upon the exercise of
such Warrant, the same assets, property, rights, evidences of indebtedness,
securities or any other thing of value that the Warrant Holder would have been
entitled to receive at the time of such dividend or distribution as if the
Warrant had been exercised immediately prior to such dividend or
distribution. At the time of any such dividend or distribution, the
Company shall make (and maintain) appropriate reserves to ensure the timely
performance of the provisions of this Section 11.
12. Vesting. The
Warrants vest immediately upon signing.
13. Miscellaneous.
13.1 Waivers and
Amendments. This Agreement or any provisions hereof may be
changed, waived, discharged or terminated only by a statement in writing signed
by the Company and by the Warrant Holder.
13.2 Governing
Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Utah.
13.3 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed to have been given when delivered by hand or by facsimile transmission,
when telexed, or upon receipt when mailed by registered or certified mail
(return receipt requested), postage prepaid, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) If
to Company:
Diatect
International Corporation
000 Xxxxx
Xxxxxxxxxx Xxxxxxx
Heber
City, UT 84032
Phone: (000)
000-0000
Attention: Xxxxxx
Xxxxxx
Facsimile: (000)
000-0000
(ii) If
to Warrant Holder:
JACKTONY
MANAGEMENT CORPORATION
0000
Xxxxx Xxxxxxx Xxxx., Xxxxx 000
New Port
Xxxxxx, FL 34655
Execution
Copy
13.4 Headings. The
headings in this Agreement are for convenience of reference only, and shall not
limit or otherwise affect the terms hereof.
13.5 Closing of
Books. The Company will at no time close its transfer books
against the transfer of any Shares issued or issuable upon the exercise of the
Warrant in a manner that interferes with the timely exercise of the
Warrant.
13.6 No Rights or Liabilities as
a Stockholder. This Agreement shall not entitle the Warrant
Holder hereof to any voting rights or other rights as a stockholder of the
Company with respect to the Shares prior to the exercise of the
Warrant. No provision of this Agreement, in the absence of
affirmative action by the Warrant Holder to purchase the Shares, and no mere
enumeration herein of the rights or privileges of the Warrant Holder, shall give
rise to any liability of such Holder for the Exercise Price or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
13.7 Successors. All
the covenants and provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns and transferees.
13.8 Severability. If
any provision of this Agreement shall be held to be invalid and unenforceable,
such invalidity or unenforceability shall not affect any other provision of this
Agreement.
[SIGNATURE
PAGE FOLLOWS]
Execution
Copy
IN WITNESS WHEREOF, the undersigned
have caused this Agreement to be executed as of the date first written
above.
DIATECT
INTERNATIONAL CORPORATION
By:__________________________________
Xxxxxx
Xxxxxx
Chief
Financial Officer
Execution
Copy
EXHIBIT
A
NOTICE OF
EXERCISE
(To be
signed only on exercise of Warrant)
Dated:________________________
To: Diatect
International Corporation.
The
undersigned, pursuant to the provisions set forth in the attached Warrant
Agreement, hereby irrevocably elects to:
o purchase
_____ shares of Common Stock covered by such Warrant Agreement and herewith
makes a cash payment of $_____________, representing the full purchase price for
such shares at the price per share provided for in such Warrant
Agreement.
o
purchase _____ shares of Common Stock covered by such Warrant Agreement and
herewith delivers _____ shares of Common Stock having a Market Price as of the
last trading day preceding the date hereof of $______, representing the full
purchase price for such shares at the price per shares provided for in such
Warrant Agreement.
Please
issue a certificate or certificates representing such shares of Common Stock in
the name of the undersigned or in such other name as is specified
below.
|
Signature:
__________________________
|
|
|
Name
(print): ________________________
|
|
|
Title
(if applicable): ___________________
|
|
|
Company
(if applicable): _______________
|
Execution
Copy
WARRANT EXERCISE
FORM
The
undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing __________ shares of common stock, par value $0.001 per
share, of Diatect International Corporation, a California corporation, and
hereby makes payment of $____________ in payment therefore.
___________________
Signature
___________________
Signature,
if jointly held
Date:
********************************************************************************************
INSTRUCTIONS FOR ISSUANCE OF
STOCK
(if other
than to the registered holder of the within Warrant)
Name
(Please
typewrite or print in block letters)
Address
Social
Security or Taxpayer Identification Number
********************************************************************************************
ASSIGNMENT
FORM
|
FOR
VALUE RECEIVED, ______________________________ hereby sells, assigns and
transfers unto
|
|
|
Name (please typewrite or print in block letters) |
|
|
the
right to purchase common stock, par value $0.001 per share, of Diatect International
Corporation, a California corporation (the “Company”), represented by this
Warrant to the extent of shares as to which such right is exercisable and
does hereby irrevocably constitute and appoint
______________________________, as its attorney in fact, to transfer the
same on the books of the Company with full power of substitution in the
premises.
|
Dated: ___________________
Signature
Signature, if jointly held
